Amazon is facing a looming crisis of running out of people in its US warehouses by 2024, according to a leaked internal memo.
The memo contained internal research from 2021 that predicted a looming employment crisis for the e-commerce giant that could affect some regions faster than others.
For example, the memo estimated that Amazon could exhaust its labor supply in Phoenix, Arizona by the end of 2021 and in California by the end of 2022.
The available pool of workers was calculated using factors such as income levels and proximity to existing or planned Amazon facilities.
If this happens, the online retailer’s service quality, growth plans, and control over e-commerce may be at risk.
The report urged the company to take steps to address the future employment gap. This includes raising wages to retain its existing workforce and attract more new employees.
It also suggested increasing automation in warehouses. If we continue with business as usual, Amazon will exhaust the available labor supply in the US network by 2024, the report’s authors wrote.
An Amazon spokesperson said: “The leaked document is not an accurate assessment of the employment situation. “There are many draft documents written on many topics across the company that are used to test assumptions and consider different potential scenarios,” wrote Rina Lunak, director of global operations and field communications at Amazon. But it is no longer used in making decisions. This leaked document is one of them.
She added: This does not represent the actual situation. We are continuing to recruit in Phoenix, California, and across the country.
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Amazon has invested heavily in automation with the acquisition of Kiva Systems in 2012. But Amazon’s warehouse robots aren’t capable of handling advanced fulfillment tasks that only a human worker can perform.
Human workers were once a bountiful resource for the company. The tech giant is the second-largest private employer in the United States. It is also the largest private employer in a number of US states and cities.
The company announced plans to hire 125,000 workers last fall, roughly equal to the population of Savannah, Georgia.
But the new hires appear to largely replace workers who have been laid off or quit. The percentage of employees who leave Amazon is about 150% annually or twice the size of the retail and logistics industries in general.
Amazon’s attrition rate is worse in Phoenix and California. It also has to compete with supermarkets like Walmart and Target, which now offer competitive wages to those with warehouse experience.