Employees across the country are accusing Amazon of ruining Christmas with its Oct. 2 decision to raise the minimum wage to $15.
Though the announcement was initially lauded by labor advocates, Vermont senator Bernie Sanders and the thousands of people who staff Amazon’s more than 75 fulfillment centers, the details have begun to spark backlash. Among the biggest complaints: Starting Nov. 1, Amazon is ending variable compensation pay — a program many workers rely on to finance their holiday shopping.
According to several warehouse employees who spoke to Money on the condition of anonymity because they’re afraid of repercussions, the company has suddenly made Christmas a lot harder to afford.
“We plan our lives around our pay,” says a fulfillment center worker in the Midwest. “How many families just got their holiday season cut to shreds?”
A Raise by Any Other Name
Before the announcement, Amazon had a unique pay structure. Employees got restricted stock units, shares that would vest after a certain amount of time at the company, as well as variable compensation pay, or VCP. In non-Amazon jargon, it’s essentially a form of incentive pay. For most of the year, VCP allowed people to make a monthly bonus of up to 8% if they had good attendance and the facility met its goals.
However, in October, November and December — peak sales season for Amazon, which shipped more than 1 billion items during the 2016 holidays — maximum VCP would double to 16% in many locations. It was a win-win: Employees got extra money, and Amazon got extra productivity.
Like they have in the past, some Amazon workers were expecting to pull in hundreds of dollars in bonuses over the next two months. Then came Oct. 2. The company wiped out VCP and (much of) the stock program in one fell swoop.
The news felt like “a slap in the face” to one employee at a fulfillment center in the west. (Money verified that she, and the others quoted in this story, do work at Amazon.)
“Every December, I counted on it,” she says. “I would go to the store and just spend it all on [my grandbaby] and make sure he had a special Christmas. This year’s going to be tough.”
Amazon spokeswoman Ashley Robinson tells Money that it’ll even out in the end. Employees who had double VCP for October will still see it in their paychecks, as the changes don’t take place for a couple of weeks. She also says “all hourly Operations and Customer Service employees will see an increase in their total compensation.”
“The significant increase in hourly cash wages effective November 1 more than compensates for the phase out of incentive pay and future [stock options],” she adds. “In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”
But the timing stings for another worker in the mid-Atlantic, a single mom on food stamps who says she was blindsided by the announcement. She estimates she’ll make about the same amount of money yearly once the raise kicks in, but she’s short on cash in the meantime.
“I have no room in my budget. I literally have no idea what I’m going to be doing,” she says. “I was depending on that VCP.”
In previous years, her bonuses totaled almost $200 per pay period. She always put it toward buying gifts for her kids. Last year, they wanted Hatchimals; this year, they’re eyeing video games.
“I live paycheck to paycheck. That extra $200 — that’s my Christmas presents,” she says. “We got it every year, and now it’s gone.”
She says she’s trying to figure out how she can cut back on gifts. So far, her only idea is to knit as many things as possible. That’s all she can afford.
‘I Just Lost Everything’
A fulfillment center worker who lives on the west coast says she was originally happy to hear about the $15 minimum wage increase. She thought she was getting a raise in addition to her VCP and stock options, but then she went online and discovered that wasn’t the case.
“I was like, ‘Oh my goodness, we’re about to lose a lot of money,'” she says.
For her, the lost VCP amounts to hundreds of dollars over the next two months. In the past, she used the pay to not only purchase gifts but also get rid of debt. Half of a Christmastime check would be enough to pay off two of her credit cards and shop for her son.
“For me, it was a stress reliever. All year, I was like, ‘By the holidays, I’m going to be back in the green,'” she says. “To abruptly get that information with no warning, and everyone’s about to enter into peak… I just lost everything I was working toward.”
Robinson says the company worked quickly to get the update to teams “knowing there would be certain cases that would need to be adjusted.”
Some of those adjustments have already happened.
On Oct. 10, Bloomberg reported that Amazon was awarding $1.25 raises to some employees who were already at $15 an hour as well as cash bonuses to workers who hit certain milestones in their careers ($1,500 when they reach five years and $3,000 every five years afterward). The company also promised $100 checks to people who have good attendance during December.
The math doesn’t work in everyone’s favor. Imagine you’re an Amazon employee, and before the announcement, you were making $15 an hour and working 160 hours a month. If you were earning 16% more in the double-down period, that’s $2.40 an hour, or about $384 extra per month before any overtime, overnight or holiday pay.
But now, say you’re getting that $1.25 raise. Multiply that $1.25 times 160 hours a month, and you’re only getting $200 extra.
As a result, the west coast employee says she’s reconsidering whether she wants to stay at Amazon.
“During peak, we really give it our all. Everyone is on that same [mission]: ‘Don’t crash. Eat properly. Have your soda and coffee,'” she says. “What helps us come to work is we know that payout is going to be worth it.”
She likes her job, but holiday shifts are so exhausting she sometimes has to sit in her car in the parking lot until she gathers enough energy to drive home.
“Now that [VCP is] gone, all I’ve been thinking about is, is it worth putting my body through that?” she says.
Going Beyond Christmas
Some Amazon workers interpret the $15 news to mean the company prioritizes newer, seasonal workers over its veteran, year-round ones. In its news release, the company says the minimum wage increase will benefit “100,000 seasonal employees who will be hired at Amazon sites across the country this holiday.”
Marc Perrone, the international president of the 1.3 million-member United Food and Commercial Workers International Union, tells Money he thinks Amazon is trying to attract new hires in a time when unemployment is low. The company’s big announcement helped create buzz — at the expense of existing staff.
“While it made good copy for the newspapers and for television, the actual workers have found out it was a bait-and-switch,” he says. “They’re chasing potential employees, and they wanted a way to pay for it.” Perrone’s organization does not have official ties to Amazon, which is not unionized, but he has long been a vocal critic of the company.
Robinson says the company plans to touch on the effect of the additional expense in its upcoming third quarter earnings guidance.
“We value all associates, those who are new and those who have been with us for many years,” she adds.
But disgruntled workers aren’t returning the love.
At least one warehouse saw people quit after the Oct. 2 announcement, and workers in other warehouses have begun to circulate petitions or privately discuss the possibility of protesting as Black Friday approaches. In the United Kingdom, a group of 41 employees sent emails directly to CEO Jeff Bezos asking him to reinstate the stock and incentive pay programs.
For his part, the Midwesterner says he’s insulted by the way Amazon is framing the news as a raise for everyone.
A longtime employee, he says he usually puts VCP into a savings account, which by the end of the year can reach $4,000. He’s shaken by the fact that Amazon would take away VCP right before the time when people need it most, and he thinks Amazon should offer to cover the difference in paychecks for the next few months.
Christmas, and the company culture, are at stake.
“It’s an Amazonian thing: You get your stock, you get your VCP, everybody works for a goal, and we meet a goal,” he says. “Once you take that, you take apart what Amazon’s about.”