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Amazon fights high warehouse turnover with offer of free college tuition

Amazon fights high warehouse turnover with offer of free college tuition
Written by publishing team

Zoom / Adriana Ramirez packages items in envelopes at Amazon’s Fulfillment Center on March 19, 2019, in Thornton, Colorado. The facility, which opened in July 2018, has an area of ​​855,000 square feet and employs more than 1,500 people.

As Amazon struggles to recruit employees for its warehouses, it is joining forces with other big employers by offering to pay college tuition in a bid to attract and retain hourly employees.

The e-commerce giant announced Thursday that it will expand its educational benefits by giving more than 750,000 employees the chance to attend college or finish high school for free. Employees only have to work for the company for 90 days to be eligible, and if they leave, they won’t have to reimburse Amazon for any tuition or fees paid during their time with the company.

Notably, it’s not a compensation program — Amazon pays tuition and fees up front so employees don’t have to indulge in savings to sign up. The company expects to roll out the new features in January. In addition to bachelor’s and associate’s degrees and GEDs, the program will cover English as a second language. Amazon has also announced skills and apprenticeship programs for entry-level employees working in AWS and other IT positions. As long as the employee works at Amazon, they will be able to use the feature, potentially earning multiple degrees or certifications if they choose.

Full-time employees are eligible for fully subsidized tuition, while part-time workers who score at least 20 hours per week will receive half the benefit. Although the company still has details to work with, it says employees can use the feature at “hundreds of education partners across the country.” Workers may be limited in terms of the degree programs they can apply to, and programs may vary by region. Arden Williams, the company’s vice president of workforce development, told the Wall Street Journal that she expects the company to support degrees in technology, engineering and health care. The extended benefit goes beyond what Amazon previously offered — 95 percent of the cost of an associate’s degree or other certification.

One potential hurdle may be scheduling, although Amazon says it will provide flexible work schedules for students to match school and work.

Altogether, Amazon expects the software to cost $1.2 billion by 2025. Last year, the company generated $21.3 billion in profits and $386 billion in revenue. Other companies like Walmart, Target, Chipotle and JBS, a meat processor, offer similar fee subsidy programs, according to the Wall Street Journal.

retention strategy

The move comes as Amazon has experienced high turnover in front-line operations, particularly its warehouses. Since the pandemic began, Amazon says it has hired 400,000 new workers who are eligible for the benefit. Some of that has come as a result of expanding operations, but much of it as a result of people quitting smoking. Among hourly employees, turnover is 3 percent per week or about 150 percent per year, according to a New York Times investigation. In other words, in one year, Amazon has to hire the equivalent of one and a half times of its hourly staff.

Chris O’Leary, chief economist at the WE Upjohn Institute for Employment Research, told the Wall Street Journal that the education advantage may help lower that rate somewhat. “They may be able to get enough productive months or years from someone to make it worth the investment.”

The economic recovery led to a boom in employment that increased the demand for workers. Wage increases helped employer employees somewhat, but this did not limit workers’ desires to advance in their careers, not just to get paid a little more. (Don’t rule out financial motivation, however—people who finish college earn about 20 percent more than those with only a high school diploma, and those with a bachelor’s degree earn about 80 percent more.)

Education benefits may help attract employees who are more willing to tolerate working conditions in Amazon warehouses. Workers are tracked as they complete tasks around the warehouse and pushed to finish them faster. This has led to higher infection rates, according to one investigation, and cases in which workers have said they skipped breaks to stay on top of their assignments.

The California legislature addressed the problem with a bill intended to limit the use of accounting control and quotas that could lead to unsafe conditions. The legislation would require companies to disclose productivity quotas to government agencies and employees alike, and prohibit employers from setting quotas that prevent workers from taking legal breaks or skipping trips to the bathroom.

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