Wednesday, February 29, 2012

The Human Cost of Free Shipping

3pl is the abbreviation for a third party logistics contractor. These contractors provide services such as: warehousing, packaging, inventory management, and freight forwarding. Many big companies use 3pls. Last week I wrote about Hershey exploiting foreign labor. Hershey's 3pl contractor, Exel, was fined for safety violations. Exel is the largest 3pl in the United States.

Mother Jones Magazine
has published an expose done by writer Mac McClelland, who went undercover at one of the biggest 3pls: Amalgamated Product Giant Shipping Worldwide Inc.

Before she even starts the job, Mac is counseled by a woman at the local chamber of commerce not to take anything that they say to her personally. Mac asks if people are going to be mean to her:

She smiles. "Oh, yeah." This town somewhere west of the Mississippi is not big; everyone knows someone or is someone who's worked for Amalgamated. "But look at it from their perspective. They need you to work as fast as possible to push out as much as they can as fast as they can. So they're gonna give you goals, and then you know what? If you make those goals, they're gonna increase the goals. But they'll be yelling at you all the time. It's like the military. They have to break you down so they can turn you into what they want you to be. So they're going to tell you, 'You're not good enough, you're not good enough, you're not good enough,' to make you work harder. Don't say, 'This is the best I can do.' Say, 'I'll try,' even if you know you can't do it. Because if you say, 'This is the best I can do,' they'll let you go. They hire and fire constantly, every day. You'll see people dropping all around you. But don't take it personally and break down or start crying when they yell at you."

Mac goes through the training. She is assigned to be a "picker" someone who locates, scans, and puts the requested item in a bin on a conveyor belt. The pickers are assigned to a particular section of the vast warehouses:

The place is immense. Cold, cavernous. Silent, despite thousands of people quietly doing their picking, or standing along the conveyors quietly packing or box-taping, nothing noisy but the occasional whir of a passing forklift. My scanner tells me in what exact section—there are nine merchandise sections, so sprawling that there's a map attached to my ID badge—of vast shelving systems the item I'm supposed to find resides. It also tells me how many seconds it thinks I should take to get there. Dallas sector, section yellow, row H34, bin 22, level D: wearable blanket. Battery-operated flour sifter. Twenty seconds. I count how many steps it takes me to speed-walk to my destination: 20. At 5-foot-9, I've got a decently long stride, and I only cover the 20 steps and locate the exact shelving unit in the allotted time if I don't hesitate for one second or get lost or take a drink of water before heading in the right direction as fast as I can walk or even occasionally jog.

Most of the people working at this site aren't even permanent employees. The 3pls use temps, because they can pay them less and provide them no benefits.

From the temp agency, Amalgamated has ordered the exact number of humans it should take to fill this week's orders if we work at top capacity. Lots of retailers use temporary help in peak season, and online ones are no exception. But lots of warehousing and distribution centers like this also use temps year-round. The Bureau of Labor Statistics found that more than 15 percent of pickers, packers, movers, and unloaders are temps. They make $3 less an hour on average than permanent workers. And they can be "temporary" for years. There are so many temps in this warehouse that the staffing agency has its own office here. Industry consultants describe the temp-staffing business as "very, very busy." "On fire." Maximizing profits means making sure no employee has a slow day, means having only as many employees as are necessary to get the job done, the number of which can be determined and ordered from a huge pool of on-demand labor literally by the day. Often, temp workers have to call in before shifts to see if they'll get work. Sometimes, they're paid piece rate, according to the number of units they fill or unload or move. Always, they can be let go in an instant, and replaced just as quickly.

The typical work day is a blur. No cell phones are allowed inside, so workers who need to check on their children have to stash their cell phones in a break room notorious for theft. The pickers cover, on average, about 12 miles a day; on cold concrete flooring. This is destined to generate a great deal of physical pain.

Indeed, and I'm working for a gigantic, immensely profitable company. Or for the staffing company that works for that company, anyway. Which is a nice arrangement, because temporary-staffing agencies keep the stink of unacceptable labor conditions off the companies whose names you know. When temps working at a Walmart warehouse sued for not getting paid for all their hours, and for then getting sent home without pay for complaining, Walmart—not technically their employer—wasn't named as a defendant. (Though Amazon has been named in a similar suit.) Temporary staffers aren't legally entitled to decent health care because they are just short-term "contractors" no matter how long they keep the same job. They aren't entitled to raises, either, and they don't get vacation and they'd have a hell of a time unionizing and they don't have the privilege of knowing if they'll have work on a particular day or for how long they'll have a job. And that is how you slash prices and deliver products superfast and offer free shipping and still post profits in the millions or billions.

The workers are working in inhuman conditions at an inhuman pace. Pain is a constant. Increasing numbers of companies are relying on the services of 3pls. It's unlikely that most companies are aware of the way the workers in these warehouses are exploited. Meanwhile, the bad economy guarantees a constant labor pool of people so desperate that they will take these jobs. That's what the 3pls are counting on.

It won't come as a surprise that many of these giant warehouses are in right to work states.

The entire story is 4 pages long. Please read the whole thing - it's filled with terrible and important information.

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