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Tag: business

How Amazon Chose Speed Over Safety In Its Delivery Network

Reprinted with permission from ProPublica.

As they prepared for last year’s holiday rush, managers at Amazon unveiled a plan to make the company’s sprawling delivery network the safest in the world.

Amazon, which ships millions of packages a day to homes and businesses across America, had seen a string of fatal crashes involving vans making those deliveries over the previous few years. Improving safety, the plan said, was “Amazon’s Greatest Opportunity.”

A key part of the proposal was a five-day course that would put new drivers through on-road assessments overseen by an outside organization with four decades of experience in driver training.

But the defensive-driving course didn’t materialize.

Amid the rush of what would become Amazon’s busiest holiday season ever, the class was vetoed. With more than a billion packages shipping in a span of six weeks, the company needed to put drivers to work almost as soon as they were hired, internal documents show.

“We chose to not have onroad practical training because it was a bottleneck” that would keep new drivers off the road, noted a memo written by a senior manager in the logistics division just after the peak season wrapped up.

In just a few years, Amazon has built a delivery system that has disrupted a decades-old business dominated by FedEx and United Parcel Service. But in its relentless drive to get bigger while keeping costs low, Amazon’s logistics operation has repeatedly emphasized speed and cost over safety, a new investigation by ProPublica and BuzzFeed News has found.

Time after time, internal documents and interviews with company insiders show, Amazon officials have ignored or overlooked signs that the company was overloading its fast-growing delivery network while eschewing the expansive sort of training and oversight provided by a legacy carrier like UPS.

One such incident hit particularly close to home. Just as the company began to build its delivery network six years ago, a delivery van carrying Amazon packages struck a cyclist in a San Francisco suburb. The cyclist was Joy Covey, Amazon’s first chief financial officer. She was killed, leaving behind a young son.

But for all the heartbreak among her former colleagues, the fatal crash did not alter the course the company was charting on delivery. Indeed, the system Amazon was creating would come to rely on low-cost contractors like the one involved in the crash that killed Covey.

In a statement, Amazon rejected the notion that it had put speed ahead of safety, calling the new investigation “another attempt by ProPublica and BuzzFeed to push a preconceived narrative that is simply untrue. Nothing is more important to us than safety.”

Amazon said that in the U.S., it provided more than 1 million hours of safety training last year to its employees and its delivery contractors, though it did not say how many people in its vast workforce — which numbers well in excess of 250,000 employees in the U.S. alone — received training. Amazon also said that last year it implemented “safety improvement projects” totaling $55 million, which would represent about one-fifth of 1% of the $27.7 billion the company spent on shipping last year.

Amazon would not say how many people had been killed this year or in past years in crashes involving its network of delivery drivers. Internal company documents show that Amazon routinely tracks crashes and has developed a corporate protocol for responding to fatalities.

The company, citing a federal safety rate that is not specific to deliveries or even commercial driving, says that its rate of fatal crashes this year is better than the most recent federal rate. But that rate — which divides the total number of miles driven in the U.S. by the number of fatal crashes — encompasses virtually all American vehicles, from a sedan owned by a family to an 18-wheeler owned by a Fortune 500 company.

“Unfortunately,” Amazon’s statement said, “statistically at this scale, traffic incidents have occurred and will occur again, but these are exceptions, and we will not be satisfied until we achieve zero incidents across our delivery operations.”

To trace the history of how Amazon built its delivery network, ProPublica and BuzzFeed News interviewed current and former Amazon employees, delivery drivers and contractors, many of whom requested anonymity because they feared that speaking about Amazon could harm their careers.

Those interviews, as well as internal documents, reveal how executives at a company that prides itself on starting every meeting with a safety tip repeatedly quashed or delayed safety initiatives out of concern that they could jeopardize its mission of satisfying customers with ever-faster delivery.

Investigations by ProPublica and BuzzFeed News this year revealed that drivers delivering Amazon packages had been involved in more than 60 crashes that led to serious injuries, including 10 deaths. Since then, the news organizations have learned of three more deaths.

Amazon, which keeps a tight grip on how drivers working for contractors do their jobs, has told courts around the country it was not responsible when delivery vans crashed or workers were exploited. It is a position that is facing more legal and legislative challenges, as some states seek to force tech companies such as Uber to take more financial responsibility for the contract workers who underlie their businesses.

In the early days of Amazon’s expansion into logistics, executives wrestled over what price to put on safety. One shot down another’s plan to boost safety by giving drivers longer rest breaks and capping the number of packages per route. Those measures would have cost 4 cents per package.

Several years later, an audit team found that some delivery contractors were exploiting drivers or failing to carry enough insurance. Amazon chose to lay off the head of the audit team, according to people familiar with the matter.

Last year, as the number of packages soared, one manager simply dialed up the speed on the conveyor belts in a delivery station, injuring workers and prompting an internal investigation, documents show. To get the ever increasing volume of packages to customers, Amazon rushed new drivers through the hiring process, adding one who suffered from night blindness and another who acknowledged medicinal use of marijuana, company documents and interviews show.

This year, Amazon has even more riding on the logistics empire it has built, according to company documents. For the first time, the company anticipates delivering more than half of its holiday season shipments — hundreds of millions of packages — using its own network of independent contractors and employee drivers.

Inside Amazon, some employees have worried that the company loads up drivers with too many packages and expects them to complete deliveries at an inhuman pace.

“The means to the end is something they don’t care about,” said a former Amazon manager who quit in frustration in 2017. “If we are forcing these drivers to go like bats out of hell to get this stuff all over town, that’s OK, because we are making it great for our customers. The human cost of this is too much.”

Fear of Extinction

In Amazon’s earliest days, its founder and CEO Jeff Bezos dropped packages full of customers’ book orders at the post office himself. As the company got bigger, it began relying on UPS and FedEx as well as the U.S. Postal Service.

All of it was in service of Bezos’ core idea that “delighting” customers should always be the priority.

“I tell everybody at Amazon.com to wake up every morning absolutely terrified, drenching in sweat, but that they should be afraid of something very precise. They should be afraid of customers not of competitors,” Bezos said in an April 1999 interview with Charlie Rose. “And the reason is that it’s the customers we have a relationship with. Our customers are loyal to us right up until the second that somebody else offers them a better service.”

This ethos continues to power Amazon’s disruptive culture. The moment the company stopped embracing speed, action and risk-taking, Bezos argued, was the day it was headed for the corporate boneyard. To avoid extinction, Amazonians needed to work every moment like it was “Day 1.” That’s the name he gave to one of the office towers that make up the company’s headquarters in Seattle.

Bezos had long entertained proposals from managers calling for Amazon to exert more control over the “last mile,” the final leg of delivery between the warehouse and a customer’s doorstep. In the 2000s, Amazon, dissatisfied with the inflexibility of UPS and FedEx, for whom Amazon was just one of a long line of customers, started experimenting with using small and regional carriers to deliver packages.

After a 2010 snowstorm in the U.K. disrupted the Royal Mail and led to the late arrival of many holiday deliveries, executives within Amazon realized that their dependence on major carriers there and in the U.S. could trigger the kind of extinction event that Bezos warned about. They needed to build a delivery network they could control.

Amazon didn’t want to simply copy FedEx and UPS. It wanted to be faster, cheaper, and, someday, bigger, and it saw technology as its competitive advantage. In early 2013, the head of the transportation group was a longtime Amazonian named Girish Lakshman. His team, responsible for creating delivery routes globally, was under pressure. Because Amazon was building its delivery network from scratch, it had little data about how to plan the most efficient routes. In early experiments, some drivers were overwhelmed by the sheer number of packages, while others had too little work, according to people in the group.

Around June 2013, Lakshman proposed in a white paper that drivers be paid on a per-package basis and that the number of packages per route be capped to ensure that drivers had adequate breaks and enough time to deal with weather or unexpected traffic delays, according to people familiar with the matter. He estimated these measures would cost an additional 4 cents per package.

To get the proposal through, Lakshman needed buy-in from his new boss, Dave Clark, who had just been elevated to become Amazon’s new logistics and operations chief after fine-tuning the company’s warehouses.

Although Clark was open to ideas for improving safety, he questioned whether the 4-cent-per-package safety measures would actually make deliveries safer, according to two people familiar with the debate. He argued Amazon could find better ways to incentivize safe behavior, these people say, and preferred paying for delivery on a per-route basis and not locking the company into a structure that could prove expensive as Amazon scaled up from delivering millions of packages to billions, these people say.

Clark, now a senior vice president and among Amazon’s highest-ranking employees, called Lakshman’s proposal “garbage” before rejecting it, according to the people familiar with the proposal.

Last week, Lakshman forwarded a reporter’s questions about the 4-cent safety proposal to Clark. An Amazon spokeswoman, Rena Lunak, said any characterization suggesting “contention” between the two men over the white paper was “simply not true.” Lunak said hundreds of white papers like the one prepared by Lakshman are reviewed every day at Amazon. She defended Clark as a leader with “backbone” and added that “being direct and clear as a leader through these types of white paper reviews is a benefit, not a defect.”

Clark, in a separate statement, said the company has “learned a lot in the years since we started delivering packages and we’ll continue to learn more… We’ve always had a focus on safety and continuous improvement and that won’t change.”

It was a few months after that debate that the life of the company’s first chief financial officer, Joy Covey, came to an end in the collision on a hill in San Francisco’s South Bay suburbs.

Covey, 50, had gone out for an afternoon bike ride. As she zipped down a forested stretch of Skyline Boulevard on Sept. 18, 2013, a delivery van turned left directly into her path.

“I heard a scream, immediately followed by a crash,” the van’s driver later testified. Covey was killed.

The white Mazda had been sent out by OnTrac, one of the regional carriers Amazon had been using to gain a measure of shipping independence. The driver, a subcontractor, later testified that the “vast majority” of his deliveries were for Amazon, but he was not using Amazon’s routing technology or directions. OnTrac did not respond to written questions seeking comment. Insurers for the company, its contractor and the driver eventually paid $6.25 million to settle the case filed by the guardian of Covey’s son.

Covey’s death made the risks of last-mile delivery more obvious — and more personal. In Amazon’s early days, it was Covey who had persuaded Wall Street to buy into Bezos’ long-term vision when the company was losing money. After leading Amazon through its initial public offering, Covey left in 2000 to become an investor and philanthropist.

When Bezos spoke at her November 2013 memorial service, he choked up, the author Brad Stone wrote in his book, “The Everything Store.”

“Joy and I talked often about a day in the future when we would sit down together with our grandkids and tell the Amazon story,” Bezos said.

The crash could have caused Amazon to rethink the way it handled safety issues but it didn’t. Senior managers in the logistics division at the time regarded the death as a just another traffic accident, according to three people familiar with their conversations.

Just weeks after Covey’s memorial service, Amazon faced another holiday delivery debacle — this time in the U.S.

In the third week of December, a million people signed up for Amazon Prime memberships, and orders surged to record levels. UPS was swamped, and customers were left on Christmas Eve without presents they were expecting for the next morning. Amazon, devoted to “delighting” customers, had instead incensed them.

In the aftermath, Amazon doubled down on a delivery strategy intended to give it more control over deliveries and ensure that such a fiasco was never repeated. Within weeks, Amazon’s newly formed logistics division circulated a planning document that called for expanding to 10 new metro areas, including New York, Washington and Philadelphia. Given that the company was “behind in all regions,” the memo asked, how could the delivery network “launch faster?”

The confidential directive details Amazon’s plans to use “disruptive” technology to onboard and monitor delivery contractors. The goal, it says, was “supporting rapid expansion — never blocking it.” In its 20 pages, it mentions reducing costs nine times; it mentions safety just once.

“Maniacal Focus”

In June 2015, Agnes Acerra was crossing a street in Hoboken, New Jersey, when a white Ford van filled with Amazon packages turned left and ran over her. The 89-year-old, who had formerly worked as a sales clerk at Macy’s flagship store in Manhattan, suffered a broken pelvis, a concussion and a broken leg. She died soon after from internal hemorrhaging.

The driver was ticketed for failing to yield, and after an ambulance carried Acerra away, he finished his delivery route. The company that employed the driver, SDS Global Logistics, was one of the small independent firms that Amazon had chosen to deliver packages to customers.

As part of the sprint to build out its network, Amazon had initially considered operating its own fleet of UPS-sized trucks. But in an experiment in San Francisco, the trucks had difficulty navigating the city’s narrow, hilly streets, former Amazon managers recalled. Independent third-party contractors with their own fleets of cargo vans proved a cheaper, more nimble option.

Unlike OnTrac or UPS, these contractors operated out of Amazon’s own delivery stations; they carried only Amazon packages; and they followed the instructions of Amazon routing software, which dictated the number of packages loaded onto their vans and the order of the stops on their routes. They were held to extremely high performance standards, including a requirement that 999 out of 1,000 packages be delivered on time.

The costs of acquiring and maintaining the vans would fall to the contractors, not Amazon, and unlike the trucks used by UPS, they fell under the weight threshold for regulation by the federal Department of Transportation. That meant they didn’t have to adhere to safety mandates such as vehicle inspections by federal regulators or limits on the number of consecutive hours drivers could spend behind the wheel.

The arrangement gave Amazon considerable power over its contractors. With most or all of their business tied up with Amazon, the contractors had little leverage with which to negotiate on price. Amazon set prices on its own terms, sometimes paying one company significantly less than another for the same route in the same market, a review of contracts shows.

The contracts drafted by Amazon’s lawyers for the delivery companies also shielded the e-commerce giant from just about every imaginable liability. The delivery companies were on the hook for anything that went wrong, from workers complaining they were mistreated or underpaid to pedestrians and drivers hurt in crashes. And when Amazon was sued in such cases, the delivery companies were even responsible for paying all of Amazon’s legal bills.

The same month Acerra died, an Amazon employee in the Seattle headquarters named Will Gordon began building a team that worked to improve route planning and maximize the efficiency of deliveries.

“There was a maniacal focus on increasing shipments per route,” recalled Gordon, who left Amazon in 2016 and is now the founder of a Seattle startup called Latchel, which coordinates rental-property maintenance. “Everything was about getting more shipments per truck. It was the one metric that drove the organization.”

Every delivery company wants to maximize the number of packages drivers deliver, but Gordon said Amazon took things to an extreme. He said the company would have been better off focusing on large packages, which cost more to send through other carriers. Instead, in its race to boost the “shipments-per-route” metric — which he said was far and away the company’s top priority — Amazon stuffed vans with small-sized packages, parcels that could have been more economically delivered by the U.S. Postal Service.

In some metro areas such as Los Angeles, Gordon said, Amazon underestimated the time it took to complete routes by failing to factor in rush hour traffic. This led to harried drivers who felt pressured to rush to complete their routes. Amazon collected an enormous quantity of data about its shipping operation, analyzing practically every possible input on each shipment. Yet one element of delivery was routinely overlooked in the U.S., Gordon said: safety.

“It should have come up more often,” Gordon said.

“Machine-Oriented System”

By late 2016, Amazon had launched delivery stations in most major metro areas, and it was hurrying to expand to smaller cities in order to keep up with demand. As the critical peak season approached, the pace was straining many contractors.

That fall, Amazon invited representatives from more than a dozen contractors to a New Jersey conference room overlooking Manhattan for the company’s first delivery summit. The meeting was supposed to be a forum for constructive feedback about the program. Instead, attendees recalled, it dragged on for hours as contractors barraged Amazon managers with complaints about nearly every aspect of the system they had created.

Contractors protested that Amazon forced drivers to wait for hours, then overloaded them with boxes and expected them to complete deliveries in an unrealistic time frame. Drivers quit constantly because the job, which often required them to deliver as many as 300 packages a day, was so demanding. Amazon’s unreliable routing and navigation software only made matters worse, according to two people who attended.

Amazon required delivery contractors to use an app called Rabbit, which not only scanned packages but also told drivers which packages to deliver in which order and provided turn-by-turn directions. But the company began using the in-house app before it was ready, former Amazon employees say. After the app’s launch, Trip O’Dell, a design manager, was tasked with heading a team to make improvements to Rabbit, which he described as a work in progress. “In sort of the typical Amazon way where you will try something then stomp on the accelerator, it often ends up ready, fire, aim.”

O’Dell recruited an idealistic band of designers to Amazon with the pitch that they were going to make life on the road better for drivers. But Paula Wood, a member of this group, quickly became disillusioned with the technology and Amazon’s commitment to drivers. “It was ludicrous to expect drivers to be able to deliver in the tiny slices of time,” Wood said. “They put humans into a machine-oriented system.”

Wood said that on many routes, drivers didn’t have enough time to go to the bathroom or eat, so they skipped meals and breaks and urinated in bottles. Navigation directions were terrible, she said. Drivers were, for example, directed to curbs that were no-stopping zones during rush hour. The Rabbit sent drivers on dangerous paths, back and forth across busy roads, she said, full of repeated U-turns and left turns, like the ones that killed Covey and Acerra.

Research shows left turns can be risky because they require the driver to cross oncoming traffic, and the pillar between the windshield and the door can make it harder to see pedestrians in crosswalks. The algorithm that powers the turn-by-turn directions UPS uses, by contrast, programs out most left turns.

One former Amazon manager recalled watching a driver on a ride-along pounding furiously on the phone while shouting: “I hate this Rabbit! I hate this Rabbit!”

The company said there are “hundreds of technologists at Amazon who are focused on continuously improving the functionality of the Rabbit app” and, based on feedback from drivers and contractors, it has made more than 500 changes this year alone. Amazon added that it has “included functionality to avoid left and U-turns, even if that means a route takes longer” and that drivers “have always been able to stop at any time to take a bathroom break.”

Penny Register-Shaw, a former FedEx lawyer, was hired by Amazon in September 2016 to whip the delivery contractor program into shape, according to four people familiar with the program at the time. One of her first orders of business was to attend the New Jersey summit, where at least one contractor said he felt like at last someone was listening and would present the plight of drivers to Amazon management.

But Register-Shaw had trouble persuading her bosses. She spoke gently and slowly, the cadence of her voice reflecting her Tennessee upbringing, and was interrupted so frequently by her new Amazon colleagues that she rarely finished a sentence, according to several people who worked with her.

Register-Shaw and her team proposed changes to make deliveries safer for both drivers and the public, according to interviews with people familiar with the group. They recommended a drug testing regimen for contractor drivers who were already on the road. The plan called for random tests “so drivers would not know when they were coming,” said a person familiar with the white paper proposing the tests. But the idea was nixed by higher-ups, according to people familiar with the matter.

Asked about this account, Lunak, the Amazon spokeswoman, initially said it was false. But when asked additional questions about the company’s drug testing practices, she explained that Amazon required “comprehensive” pre-employment drug screening and said that drivers “are subject to additional screening if there is reasonable cause or if there is an accident.”

At some delivery stations, drivers had to retrieve their vans from distant lots before picking up their packages, and that often put them behind schedule before they even began their routes, according to two people on Register-Shaw’s team. They said her group pushed for closer parking and when that did not happen, the group recommended that drivers’ travel time be taken into account when planning shifts. That idea did not move forward either.

Members of Register-Shaw’s team were mortified by reports of drivers urinating in bottles rather than taking bathroom breaks, and even defecating outside of customers’ homes. “Humans don’t do that unless they’re under tremendous pressure,” a former member of the team said.

In early 2018, an audit team that Register-Shaw had assigned to evaluate the growing pool of delivery contractors working for Amazon reported that it had discovered dozens of the companies were out of compliance.

Some contractors didn’t have the amount of insurance Amazon required, and others weren’t paying for legally mandated overtime and rest breaks, according to several people familiar with the audit.

The findings posed a problem for Udit Madan, the executive Amazon had just put in charge of its last-mile program, according to people familiar with the audit team’s work. Putting as many drivers on the road as possible every day was a priority for Amazon. In one delivery station, the package count nearly doubled overnight, according to a manager who worked there; the e-commerce giant could ill afford to lose established delivery partners to carry those shipments to the customer.

“You felt the pressure,” said a person close to the audit team. “If you take 200 vans off the street, that would have an impact on the customer promise of two-day delivery.”

Register-Shaw eventually took the fall, resigning rather than firing members of the audit team, according to a person familiar with the matter. The head of the audit team was forced out soon after, and the team was dispersed. When asked to comment about the details in this report, Register-Shaw, who now works for Amazon’s largest retail competitor, Walmart, answered, “I wish I could have done more.”

Amazon disputed aspects of this account, saying that its monitoring of delivery contractors has improved since the leadership reshuffle. “Due to issues with the auditing program at the time, the team was moved to a centralized compliance organization,” Amazon said in a statement. “That move and new leadership, created immediate results, including increasing the scope and rate of the audits.”

Madan did not respond to questions sent through an Amazon spokesperson. The company said it monitors its contractors’ compliance with the law and expects those who are not performing to correct their problems within 30 days or “risk having their contract terminated.”

“Our transportation network is not about anyone working faster than is safe,” Amazon said in a statement. “It’s about processes and our overall operations network coming together to be able to serve customers.”

Stuck in the Mud

In June 2018, Amazon invited the news media to Seattle for an event at a picturesque venue overlooking Elliott Bay. Instead of unveiling a new drone or other high-tech project, Dave Clark, standing in front of a van, announced that the company was rebooting its delivery network, shifting much of its package volume to smaller contractors.

The new firms would manage between 20 and 40 routes apiece, compared with hundreds run by the bigger contractors Amazon had previously signed up. Amazon would make it as easy as possible: It helped new delivery companies with legal paperwork, arranged for leases of new vans emblazoned with the company logo and even recommended preferred vendors to handle insurance and payroll. Would-be entrepreneurs — some with no experience in logistics — rushed to sign up for the program, which handed Amazon even more control over nearly every aspect of delivery while also increasing its financial leverage over the tiny firms.

At the same time the program was gearing up, at Amazon managers were putting the final touches on an ambitious road safety plan, the one that aspired to make the company “the safest last mile carrier in the world.”

The July 2018 document, World Wide Amazon Logistics On Road Safety Plan, emphasized that achieving that goal would require a radical shift in the company’s safety culture. Each delivery station, for example, would have a “number of days safe” sign on the wall, all vehicles would be professionally inspected every year for roadworthiness, prospective hires would face more vetting and Amazon would implement a zero-tolerance policy for serious safety violations.

It also detailed the plan in which instructors from the National Traffic Safety Institute would teach new drivers a “defensive driving curriculum.”

“Training is a critical first step to creating the right culture, building a shared vocabulary, and developing the right behaviors,” the plan said.

Although Amazon managers overseeing delivery initially greeted the goals of the safety plan with enthusiasm, according to one person familiar with the plan, their tune changed as the all-important peak season approached.

Between Thanksgiving and Christmas 2018, Amazon roughly doubled its shipments nationwide from the previous year, surpassing the billion package mark for the first time. The company encouraged its delivery contractors to recruit as many drivers as possible. Amazon for its part hired an additional 3,949 employee drivers in the space of just a few weeks, renting “nearly every van in the United States” for them to drive, internal documents show.

In the end, the peak 2018 season looked very little like what the safety team had laid out in its proposal just four months earlier.

Employees charged with inspecting new delivery stations for safety compliance noted in an internal memo that they had been unable to visit every new station prior to launch. In some stations they did manage to visit during peak season, they were chagrined to discover scenes of chaos: inadequately trained managers, severe understaffing, haphazard traffic flows for delivery vans entering and exiting stations, and packages scattered on the floor.

Many of the stations were little more than tents erected in suburban parking lots, referred to internally as “Carnival” stations. Often, the sites suffered from a shortage of bathrooms, unsanitary working conditions, insufficient heat, a lack of ice scrapers for vehicles and poor drainage, according to internal memos and interviews with current and former Amazon employees. Some stations flooded, drivers and packages were “exposed to wind, rain, and snow,” and some parking lots became mired in thick mud that stranded delivery vans. One memo offered a solution for the mud: Put bags of kitty litter in every van.

Human resources employees complained that they “operated with a skeleton crew” while being tasked with recruiting and hiring thousands of seasonal employees who were subsequently taught how to do their jobs by instructors who “lacked the requisite skills to train someone.”

Last January, various departments within Amazon’s logistics operation shared memos detailing “lessons learned” during 2018’s peak season.

Managers overseeing the delivery contractors lamented that there was still “no current metric to measure safety” among their tens of thousands of drivers. During peak, those managers noted, drivers were frequently caught speeding through parking lots, yet there was no way to hold them accountable.

A group at Amazon responsible for education and training, meanwhile, reported in its memo that it had fallen far short of its hiring goals for driver trainers. Nearly three weeks after peak season ended, 24 delivery stations still didn’t have any driver training at all, the memo said.

In a statement, Amazon said all delivery drivers are required to undergo training “before they are able to deliver even one package.” The company also said that the use of interim facilities such as Carnival stations is “standard practice” in the logistics industry and that it is currently converting those sites into permanent delivery stations.

Internal Amazon documents show that managers in charge of the delivery contractor program worried that the pressure on the system would only intensify during the 2019 holiday rush, as Amazon planned to build 80 new delivery stations, triple the size of its delivery contractor program, and, in April, make overnight delivery the default option for Prime members.

In a memo filed this past January by the group overseeing delivery contractors, one manager warned, “We need a greater focus on safety.”

Fantastic Plus

Today, Amazon’s delivery operations are under increasing scrutiny as the press, politicians and Amazon’s own former managers question the company’s aggressive approach to logistics.

Citing the BuzzFeed News and ProPublica investigations on the hidden human toll of Amazon’s delivery network, U.S. Sen. Richard Blumenthal in September lambasted the company. On Twitter he called Amazon “callous,” “heartless” and “morally bankrupt.”

Amazon’s Clark tweeted back, “Senator you have been misinformed.” He wrote that the company took responsibility for its actions and had requirements for safety, insurance and “numerous other safeguards for our delivery service partners which we regularly audit for compliance.”

A few days later, Blumenthal and two other senators, Sherrod Brown and Elizabeth Warren, demanded answers from Bezos.

“Innocent bystanders — as young as 9 months old — have lost their lives and sustained serious injuries from drivers improperly trained and under immense pressure by Amazon to meet delivery deadlines,” the senators wrote in a September letter to Jeff Bezos. “It is simply unacceptable for Amazon to turn the other way as drivers are forced into potentially unsafe vehicles and given dangerous workloads.”

In the run-up to this year’s peak season, Amazon has adjusted the benchmarks it uses to monitor the performance of its delivery contractors, introducing new safety metrics, according to interviews with delivery contractors and reviews of scorecards used to measure their performance. For example, Amazon began tracking the use of seat belts by drivers and incorporating that data into weekly scores for delivery businesses. Data is collected through an app that most drivers must use and that monitors speed, acceleration and braking, among other metrics.

Every week, Amazon rates the performance of its more than 800 delivery contractors. Those that earn the highest scores — identified by Amazon as “fantastic” or “fantastic plus” — receive bonus pay, which some delivery contractors say can represent the difference between losing money or turning a profit.

In a scorecard from November, safety represented 17% of the total score, compared with 33% for a category labeled “quality.” Amazon said that if a delivery contractor doesn’t have a high combined score in its safety and compliance metrics, it cannot reach “fantastic” or “fantastic plus” overall, and that firms that consistently receive low scores can be threatened with termination or see their routes reduced.

In the end, Bezos didn’t reply to the senators’ letter. Instead, a company lobbyist did. He wrote that Amazon empowered hundreds of small businesses through its delivery contractor program and outlined safety and labor compliance tools that he said went far beyond what’s required by law.

“Safety,” the lobbyist wrote, “is Amazon’s top priority.”

One month after that letter was sent, a contractor delivering Amazon packages in a suburban Chicago townhouse complex turned left on a private drive, striking a toddler who had wandered into a puddle in the roadway.

“She didn’t see him,” said Deputy Chief Ron Wilke of the Lisle Police Department, which is still investigating the crash.

The 23-month-old boy died at the hospital that same day.

Help Us Investigate

Do you have access to information about Amazon that should be public? Email any of the reporters: patricia.callahan@propublica.org, james.bandler@propublica.org, caroline.odonovan@buzzfeed.com or ken.bensinger@buzzfeed.com. If you want to send tips securely, here’s how.

Despite Settlement, Facebook Ads Can Still Discriminate

Reprinted with permission from ProPublica.

For Dolese Bros. Co. construction and supply company, which has a fleet of 300 trucks, recruiting enough qualified drivers in rural Oklahoma has been a challenge. The company has hung up banners at its plants. It has bought classified ads in newspapers. It has even turned its massive mixer trucks into moving billboards, with bumper stickers telling people how to apply.

But Dolese fills most jobs, according to community relations director Kermit Frank, by advertising on Facebook. On Nov. 4, the company placed a video ad featuring a longtime driver in a hardhat wiping down his truck, talking about all the reasons he appreciates the company: “Here, I’m home every night. And I make really good money. And I get to see my family a lot more.”

The company used Facebook’s new special ads portal, which doesn’t allow targeting by gender, age, race or ethnicity. That was fine with Dolese. While its drivers tend to be men, the company has no gender preference. “The gals we have in our group are fabulous,” Frank said. “We’d take any and all of them we could ever get.”

By the time the ad stopped running ten days later, more than 20,000 people had seen it. Eighty-seven percent of them were men.

In March, Facebook reached a “historic“ settlement of five lawsuits by civil rights groups. Under the terms of the settlement, the social media giant created the special ads portal to prevent discrimination in employment, housing and credit ads against legally protected groups such as women and older workers. The new portal also restricts Facebook’s algorithm from considering gender and age when finding audiences for these ads. “Getting this right,” Facebook CFO Sheryl Sandberg said in a press release, “is deeply important to me and all of us at Facebook because inclusivity is a core value for our company.”

But new research, as well as advertising information available on Facebook, suggest that the social media giant has not gotten this right. As Facebook promised in the settlement, advertisers on the new portal can no longer explicitly target by age or gender. Nevertheless, the composition of audiences can still tilt toward demographic groups such as men or younger workers, according to a study published today by researchers at Northeastern University and Upturn, a nonprofit group that focuses on digital inequities. ProPublica helped design the research with Northeastern and Upturn and placed some additional ads of its own.

“We’ve gone above and beyond others to help prevent discrimination in ads by restricting targeting and adding transparency,” Facebook spokesman Joe Osborne said in an emailed statement. “An advertiser determined to discriminate against people can do so on any online or offline medium today, which is why laws exist…We are the only digital media platform to make such meaningful changes in ads and we’re proud of our progress.” Osborne did not respond to questions about specific ads.

One reason for the persistent bias is that Facebook’s modified algorithm appears to rely on proxy characteristics that correlate with age or gender, said Alan Mislove, a Northeastern University professor of computer science and one of the study’s co-authors. “Our research shows that simply removing a few protected features from an algorithm is unlikely to provide any meaningful protection against discrimination,” Mislove said. If the advertiser provides a sample audience of software engineers, for example, that might be considered a proxy for male profiles.

Facebook’s ad delivery algorithm further skews the audience based on the content of the ad itself, the researchers previously found. As a result, even when advertisers try to reach a diverse audience, they aren’t always able to. Dolese’s ad, for example, could have reached a predominantly male audience because it featured a man, or because an interest in trucking acts as a proxy for maleness, or both. (A Dolese spokeswoman said the ad targeted categories “that would appeal to someone in this line of work.”) The settlement did not resolve the potential bias from proxies and ad content, but said Facebook would study the issue.

ProPublica spotted multiple real-world employment advertisements that favored men or excluded older potential applicants. We found these ads and others in Facebook’s ad library, an archive of advertisements on the platform. Some inactive ads in the library, such as those from Dolese, contain information about how they performed, including a breakdown of age and gender. The analysis does not contain information about the targeting choices the advertiser made on the front end.

In addition, testing by ProPublica found that housing and employment advertisers could circumvent the special ads portal and go through Facebook’s old system, which allowed them to target by age, race and gender. The settlement imposed a Sept. 30 deadline for implementing the new portal, but didn’t set a date for rerouting misplaced ads into it. A Facebook spokesman said the company stepped up policing on Dec. 4 with the launch of a special archive for housing. Employment and credit ads are expected to be added to the archive.

The findings by Northeastern and Upturn are likely to fuel the growing debate over whether algorithms that appear to favor one gender, age group or race over another violate the law even when they don’t explicitly consider such factors — an area of civil rights doctrine known as “disparate impact.” For example, the New York State Department of Financial Services is scrutinizing the criteria used by Apple’s credit card after reports last month that the company was extending smaller lines of credit to women than to men. Goldman Sachs, the bank behind the Apple Card, told ProPublica that it “has not and will never make decisions based on factors like gender, race, age, sexual orientation or any other legally prohibited factors when determining credit worthiness.” New York’s financial services department has also opened an investigation of Facebook over discrimination in ads for housing and other opportunities. The department declined to comment because the investigation is pending.

The Trump administration, which has backed away from Obama-era policies against disparate impact in education, is similarly retreating in its interpretation of housing law. In September, the U.S. Department of Housing and Urban Development introduced a rule that as long as an algorithm involved in housing decisions is not programmed with explicit information about protected classes, like race, or closely related proxies, like zip code, banks and landlords cannot be held liable for its disproportionate effect on people of color. In an apparent contradiction of this stance, HUD also has a pending lawsuit against Facebook, alleging that its advertising system violated fair housing laws. HUD didn’t respond to repeated requests for comment.

Osborne did not respond to emailed questions about the investigations by HUD and the New York financial services department.

Fair housing, employment and credit laws, which prohibit overt discrimination against protected groups such as women, minorities and older people, have been interpreted to apply to digital advertising. In September, the Equal Employment Opportunity Commission found that seven employers broke the law when they excluded women and older workers from seeing job ads on Facebook. The EEOC has said it is considering charges against dozens of more employers.

The settlement talks in the five lawsuits accusing Facebook of enabling advertising discrimination were confidential. But the civil rights groups involved in the case say that while they anticipated the potential for machine bias, the new portal’s potential for disparate impact doesn’t violate the current settlement.

Galen Sherwin, a senior staff attorney at the ACLU, which represented the plaintiffs in the civil rights lawsuits, called the findings “unfortunate but not unexpected. The settlement was a step forward to eliminate the most overt forms of targeting handed to advertisers, but we knew that it wouldn’t solve the continued problem of targeting advertising based on vast troves of user data. The removal of just a few data points is not going to change the targeting outcome. There’s still a lot of work to be done to eradicate the bias that remains on the platform.”

Since targeted advertising is the core of Facebook’s business model, any effort to reduce a marketer’s ability to target by age or gender can hurt the company’s bottom line. Facebook has acknowledged in SEC filings that its anti-discrimination initiatives have had “a small negative impact” on its advertising business.

The company, which controls 22 percent of the U.S. market share for digital ads according to eMarketer, has repeatedly come under fire for allowing advertisers to unlawfully discriminate against black homebuyers, older people and female debtors, among others. In 2016, ProPublica first reported that Facebook’s tools allowed housing marketers to exclude blacks, Hispanics and other groups protected by the Fair Housing Act. Facebook promised to fix the problem, but in 2017, we found that it hadn’t: Advertisers could still target housing ads to whites only and exclude African Americans, Jews and Spanish speakers from seeing them. This reporting spurred the five lawsuits resolved by this year’s settlement.

Prior to the March settlement, housing, credit and employment advertisers had access to a “Lookalike audience” feature, in which they could upload a list of users, known as a “source audience,” and Facebook would reach more people who “look like” them, based on criteria that included age, race and gender. Now, if these advertisers want to upload a source audience, they use a modified version of the “lookalike feature” known as a “special ad audience.” The algorithm for the special ad audiences no longer considers the fields on a Facebook user’s profile identifying “age, gender, relationship status, religious views, school, political views, interested in, or zip code” as inputs.

Nevertheless, the researchers found that Facebook’s algorithm perpetuates existing discrepancies in gender and age in a given source audience through a myriad of related characteristics. The study suggests that a similar bias would appear for race, but it is harder to document; Facebook gives advertisers data on the people they reached by age and gender, but not by race.

In one experiment, the researchers created two source audiences: one composed of more than 11,000 Facebook employees and the other of more than 11,000 random Americans. They uploaded each of these source audiences into Facebook’s new special ad audience system, ran the same generic employment ad — “Find your next career!” with a link to Indeed.com job search site — and compared the results. When the special audience was generated from the source list of Facebook’s employees, the ad was delivered to a new audience that was significantly biased along age and gender lines, reaching 88 percent men, nearly half of whom were aged 25 to 34.

These proportions roughly reflected Facebook’s workforce, which has beencriticized for its lack of diversity. According to its 2019 diversity report, 77 percent of the company’s technical workers are male. Facebook does not disclose ages, but according to the market research firm Statista, the median age of a Facebook employee is 28. In another indication that the algorithm tends to replicate the source demographics, half of this special audience lived in California, where Facebook is headquartered. By comparison, the ad audience generated from the list of random Americans reached 54 percent men, of whom 15 percent were aged 25 to 34, and 2 percent lived in California.

Such examples raise concerns that employers could still tailor their audience to focus on groups that they consider the most appealing job candidates, said Peter Romer-Friedman, a lawyer with Outten & Golden in Washington who represented several plaintiffs in the cases against Facebook. “It was certainly a fear of mine that advertisers in good or bad faith could circumvent anti-discrimination measures by uploading their own unbalanced list of Facebook users,” he said. “We knew that this would be a very real risk and that Facebook had not taken any measures to prevent discriminatory custom audience lists from being used.”

Also potentially contributing to disparate impact is Facebook’s ad delivery algorithm. To make sure that ads are seen by people who Facebook thinks are most likely to click on and engage with them, Facebook skews the audience depending on the content of the ad itself, said Piotr Sapiezynski, an associate research scientist at Northeastern and the lead author of the new study. How many women see a job listing for an open janitorial position, for instance, depends not just on what the advertiser tells Facebook, but on how Facebook interprets the advertisement’s image and text.

This effect persists in the new portal. The researchers uploaded a demographically representative audience and ran ads for artificial intelligence and supermarket jobs without any targeting. An ad for a supermarket job reached an audience that was 72 percent women and mostly aged 35 or older, whereas the audience for AI jobs was 66 percent male and almost exclusively younger than 35. Why the algorithm picked these audiences is not known, though it may have observed that women are more likely to shop for groceries and men are more likely to work in computer science.

Facebook’s system appears to draw similar conclusions about construction, a historically male trade. This assumption, however, can thwart advertisers who are trying to make the future of construction look different than its past.

The Chicago-based chapter of the International Union of Operating Engineers, Local 150, has long used Facebook, along with traditional TV and print advertising, to publicize an apprenticeship program for people interested in a career in construction. Ed Maher, the union’s communications director, said that the goal of its advertising was to attract diverse candidates and show that “there’s room for everyone in Local 150 trades.”

But the union’s goals may have been stymied, as Maher put it, by “nuances of the algorithm that lay entirely outside our control.” Several of the union’s Facebook’s ads, purchased in November, feature videos and photos of female members and women of color; the ads are not targeted by gender, but by location and to those interested in construction. Nevertheless, Maher said, the audience reached by the ads is about two-thirds men.

Paradoxically, because advertisers can no longer target by age or gender, they have little recourse to remedy these disproportions. “It’s an unintended consequence,” Mislove said.

“You can’t say steer it toward men instead. Facebook gives you no way to say, ‘I want this to be balanced.’”

The Muslim Public Affairs Council, a non-partisan advocacy group for Muslim representation, has experienced this constraint firsthand. Each summer, the non-profit runs a 10-week program for college-aged students in Washington D.C. Known as the Congressional Leadership Development Program, the internship offers housing, a stipend and the opportunity to work on the Hill. According to Ann Vallebuona, a digital media manager with the MPAC, the program goes out of its way to reach a diverse group of applicants. One Facebook ad, which started running on Nov. 12, read: “Apply to MPAC’s Congressional Leadership Development Program today. WORK ON CAPITOL HILL! Don’t wait. Apply now. 🏛” The accompanying video features six young Muslim American men and women, discussing the internship’s highlights over peppy techno beats.

When ProPublica told Vallebuona that Facebook’s archive indicated that the council’s ad was reaching 73 percent men, she was shocked. “It really is a quite alarming difference between females and males being reached,” she said, adding that far more women than men actually apply to the program.

Osborne did not respond to questions about whether Facebook’s algorithm considered words like “leadership” or “congressional” more relevant to men. He said that the ad system is designed to show ads to people most likely to take action, based on their behavior and intent.

Similarly, last week, the Christian charity Lifewater International advertised an engineering job to support its missions in Africa and Southeast Asia. Gary Weyel, director of marketing and communications at Lifewater International, said that he used the special ads portal to run his job advertisement, and had no desire to target by age or gender. Yet the ad’s audience was almost 70 percent men, and mostly between the ages of 18 and 34.

“I want to get this in front of qualified applicants, who are aligned with our mission and values. They’re making it difficult to do that, especially if there are behind-the-scenes algorithms like this,” he said.

Most of Facebook’s safeguards against bias live within the new special ads portal. Advertisers who want to run housing, credit or employment ads are supposed to click a button identifying their ads, and Facebook requires them to sign a “self-certifcation” statement that they have agreed to follow anti-discrimination laws.

As part of the settlement, the company has introduced an automated classification system to detect these “special ads” and route them into the portal. It also promised to add automated and human reviewers to make sure that advertisers were using the new system. But, at least until last week, Facebook may not have been catching many of the discriminatory housing, employment or credit ads bought through all of its traditional tools, which allow for targeting by age, gender and race.

Last month, ProPublica bought dozens of housing and employment ads on Facebook, but did not designate them as such. The classification program rejected a few of them, including one that read, “We’re hiring. Are you the right gentleman for the job?”

But it did not stop most of them, even when the ad copy specifically said, “We’re hiring” or, “Rent this home.”

We purchased multiple ads linking to employment sites such as Indeed.com, with copy such as “Come work with us,” targeting these mock opportunities exclusively to men under the age of 40. We also bought housing ads targeted by age, gender and family status. One ad only reached people between the ages of 25 to 45 with the relationship status of “married” and with an interest in parenting school-aged children or pre-teens.

The ads started running within minutes. ProPublica has since removed them.

Facebook’s Osborne said that the company had not been tightly monitoring how employment, housing and credit ads were purchased across its advertising platforms until Dec. 4. Facebook’s protections would have caught the ads had they run after that date, he said.

We may not be the only group to have run employment ads outside of the portal. Some ads in Facebook’s library have been shown to almost 100 percent men or 100 percent women, a breakdown that should be impossible without specific targeting. This includes a Nov. 4 ad from Barker and Sons Plumbing, recruiting plumbers in California into the “Barker and Sons family.” According to the ad, the jobs offered “competitive wages, comprehensive medical insurance, training programs and more.” It was shown only to men.

Several days later, Quantum Health, a medical benefits counseling firm, advertised openings for a “healthcare hero,” a “customer service pro,” or “a recent college graduate driven by a passion for helping people.”

The opportunities were shown almost exclusively to Facebook users under the age of 44.

Barker and Quantum did not respond to repeated requests for comment.

As the settlement requires, Facebook is studying how to protect against potential discrimination in ads, and engaging with academics, civil rights groups, and other experts, Osborne said. The company is not required to take specific actions or make this research public, according to plaintiffs in the case.

Steven Linder, a talent acquisition expert with with the Society for Human Resources Management, a coalition of human resources professionals, said employers concerned about legal liability for recruiting discrimination should take the new findings seriously: “If the algorithm is proving to be discriminatory, the employer should stop using Facebook,” he said. “That’s what I would advise my clients.”

Why Would Auto Makers Support Trump’s Environmental Vandalism?

Ask not why the Trump administration must dismantle America’s environmental laws with such gusto. By now, that’s a given. Instead, let’s ask why some automakers, businesses that must plan years in advance, are siding with a president intent on sowing chaos in their own industry.

The issue at hand is President Donald Trump’s pointless crusade to strip California of its unique right to limit tailpipe emissions of vehicles sold there. You’ve got to wonder whether the companies backing these efforts — GM, Toyota, Fiat Chrysler, Subaru and Nissan — are out of their ever-loving minds.

This comes at a time when apocalyptic fires are consuming much of the West as rampaging water drowns other regions — all under the wrath of a warming planet. Americans, young ones in particular, have rightly labeled climate change the existential threat of our time.

Automakers understandably don’t want to make two sets of vehicles, efficient models for California, the District of Columbia and the 14 states that follow California’s lead, and less-efficient ones for the rest of the country. (The higher price charged for the technologically advanced vehicles would be more than made up by lower fuel bills, according to Consumer Reports.)

The Obama administration solved the schism problem by coordinating with California and the carmakers to establish a single set of standards for improving mileage. Trump will most likely roll back higher standards already in place for later years and cap them at the first goals — a fleet average of about 37 miles per gallon by 2020.

Happy to work with California are Ford, Honda, Volkswagen and BMW of North America. With growing numbers of Americans combining a strong desire for clean energy with a dislike of Trump, these companies are well positioned to bite into the other automakers’ market share.

Ford has invested in upping the mileage of its popular F-150 truck, America’s bestselling pickup for over 40 years. Since 2008, its fuel efficiency has risen by 50 percent. All the while, the trucks are adding towing power and horsepower.

Ford has just unveiled the fully electric Mustang Mach-E. What is this creature? It’s an SUV whose body bears resemblance to the Mustang pony car. The top-end version of this electric vehicle comes with the equivalent of 459 horsepower and goes zero to 60 mph in “the mid 3-second range.” One of the three drive modes is labeled “unbridled.”

Clearly, this vehicle is about more than fuel efficiency.

Why Toyota has backed Trump’s efforts to weaken efficiency standards remains a mystery. This is the company that gave birth to the Toyota Prius — the popular hybrid that became an icon of environmental awareness.

Toyota owners have apparently been complaining to the company about what looks like a change of values. Perhaps fearing a boycott by formerly loyal customers, the company stated that it was not trying to appease Trump but that the federal government is the best authority to regulate tailpipe emissions.

Under Trump, it clearly isn’t.

Honda, meanwhile, boasts that its brand represents the most fuel-efficient fleet of vehicles sold in the U.S. It undoubtedly doesn’t want to be seen succumbing to pressure from Washington.

Get this. The Trump administration has launched an antitrust investigation of the four companies bucking his wishes. Consider the warped thinking that might lead to legal action against companies for wanting to voluntarily make cleaner cars.

One can only guess the intimidation Trump has applied against automakers willing to work with California. That several foreign-based companies have joined with him has led to speculation about tariff threats.

Let’s just say that more and more Americans are voting with their dollars for green products. Automakers will ignore them at their own risk.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

Tarred With Racism And Misogyny, Trump Tower Chicago’s Profits Plummet

Reprinted with permission from Alternet

Bashing Chicago is common among right-wing politicians and media figures, who associate the city with one of the objects of their hatred: former President Barack Obama. And that includes President Donald Trump; the Republican president loves to point to Chicago as a glaring example of what he views as Democratic Party failures. But journalist Bess Levin, in a Vanity Fair article published this week, gives another reason for Trump to resent Chicago: his Trump Tower Chicago has been losing money in a huge way.

Levin notes that some Trump properties have been profiting handsomely from his presidency, especially his Mar-a-Lago resort in Palm Beach, Florida

“When he spends countless weekends at Mar-a-Lago,” Levin observes, “his Palm Beach resort charges taxpayers top dollar for rooms for the Secret Service and other members of his entourage, in addition to their bar tabs — money that goes directly into the president’s pocket.”

But Trump Tower Chicago, Levin asserts, is another matter. Citing figures reported in the Washington Post, Levin points out that from 2015-2018, Trump Tower Chicago’s profits fell by 89 percent and went from $16.7 million to $1.8 million. Those figures are based on documents filed with Cook County, Illinois.

“There’s the issue of his properties becoming synonymous with corruption, racism, misogyny, insanity and some possible light tax fraud,” Levin writes. “In May, we learned that tenants in New York’s Trump Tower were selling their condos at a loss just to escape the taint by association.”

The Trump Organization, earlier this year, issued a statement blaming Trump Tower Chicago’s financial problems on the city where the property is located. But the Washington Post disagreed, reporting, “The problem was not Chicago. In fact, Trump’s competitors in the city’s luxury market were seeing increases in room revenue, even while his hotel saw a drop.”

Union Wins ‘Major Gains’ In GM Strike Settlement

Bargainers for General Motors and the United Auto Workers reached a tentative contract deal on Wednesday that could end a monthlong strike that brought the company’s U.S. factories to a standstill.

The deal, which the union says offers “major gains” for workers, was hammered out after months of bargaining but won’t bring an immediate end to the strike by 49,000 hourly workers. They will likely stay on the picket lines for at least two more days as two union committees vote on the deal, after which the members will have to approve.

Terms of the tentative four-year contract were not released, but it’s likely to include some pay raises, lump sum payments to workers and requirements that GM build new vehicles in U.S. factories.

Analysts say the strike probably cost GM $2 billion in lost production, while workers lost on average more than $3,000 in wages and had to live on $250 per week in strike pay.

“Everybody lost out on this. We did, they did,” said Mark Nichols, who works at GM’s transmission plant in Toledo, Ohio.

Nichols, who thought the strike would last only a week or two, said he’s ready to get back to work because his savings are running low. “I just hope it gets done,” he said.

The deal now will be used as a template for talks with GM’s crosstown rivals, Ford and Fiat Chrysler. Normally the major provisions carry over to the other two companies and cover about 140,000 auto workers nationwide. It wasn’t clear which company the union would bargain with next, or whether there would be another strike.

Art Schwartz, a former GM negotiator who now runs a labor consulting business, said depending on the contents, the contract could influence wages and benefits at other manufacturers. But he said foreign automakers with U.S. factories, mainly in the South, always give pay raises and shouldn’t be affected much.

“They’re located in low-wage areas and they pay well,” he said. “The people who work there are kings of the locality.”

The strike did show that the union still has power in the auto industry. “I think economically the UAW will do just fine in this agreement,” Schwartz said.

Early on, GM offered new products in Detroit and Lordstown, Ohio, two of the four U.S. cities where it planned to close factories.

The company said it would build a new electric pickup truck to keep the Detroit-Hamtramck plant open and to build an electric vehicle battery factory in or near Lordstown, Ohio, where GM is closing an assembly plant. The battery factory would employ far fewer workers and pay less money than the assembly plant.

Clarence Trinity, a worker at GM’s engine and transmission plant in the Detroit suburb of Romulus, Michigan, said the deal sounds good, “But I have to see it in writing or hear from the leaders.”

Trinity said he can’t figure out why it took 31 days for the strike to end. “I don’t understand what General Motors was expecting to get out of us. Maybe they didn’t expect us to strike. Maybe they didn’t expect us to strike this long.”

It’s unclear if GM will be able to make up some of the production lost to the strike by increasing assembly line speeds or paying workers overtime. Many GM dealers reported still healthy inventories of vehicles even with the strike.

If all of the committees bless the deal, it’s likely to take several days for GM to get its factories restarted.
Matt Himes, a worker at the GM plant in Spring Hill, Tennessee, heard news of the deal in Ohio, where he’s trying to help his wife sell their house after the Lordstown GM plant where he used to work was shuttered.

He hopes good news keeps coming. If they can sell their house, his wife can finally move down to Tennessee with him.

“I’m proud that we stuck our ground and everybody stuck together,” Himes said of the union workers during a phone interview. “And I’m relieved that hopefully it worked out, got us a good contract and we can move on and get back to work making cars like we should be.”

Wall Street investors liked news that the strike could end. GM shares jumped 2.6 percent just after the news broke, but they eased back by early afternoon with the stock up 1.2 percent to $36.68.

GM and the union have been negotiating at a time of troubling uncertainty for the U.S. auto industry. Driven up by the longest economic expansion in American history, auto sales appear to have peaked and are now heading in the other direction. GM and other carmakers are also struggling to make the transition to electric and autonomous vehicles.

Meanwhile, Donald Trump’s trade war with China and his tariffs on imported steel and aluminum have raised costs for auto companies. A revamped North American free trade deal is stalled in Congress, raising doubts about the future of America’s trade in autos and auto parts with Canada and Mexico, which last year came to $257 billion.

Amid that uncertainty, GM workers have wanted to lock in as much as they can before things get ugly. They argue that they had given up pay raises and made other concessions to keep GM afloat during its 2009 trip through bankruptcy protection. Now that GM has been nursed back to health — earning $2.42 billion in its latest quarter — they want a bigger share.

The union’s bargainers have voted to recommend the deal to the UAW International Executive Board, which will vote on the agreement. Union leaders from factories nationwide will travel to Detroit for a vote on Thursday. The earliest workers could return would be after that.

In past years, it’s taken a minimum of three or four days and as long as several weeks for the national ratification vote. Workers took almost two weeks to finish voting on their last GM agreement, in October 2015. Then skilled-trades workers rejected it, causing further delays.

“The No. 1 priority of the national negotiation team has been to secure a strong and fair contract that our members deserve,” union Vice President Terry Dittes, the chief bargainer with GM, said in a statement Wednesday. The agreement, he said, has “major gains” for UAW workers.

The strike had shut down 33 GM manufacturing plants in nine states across the U.S., and also took down factories in Canada and Mexico. It was the first national strike by the union since a two-day walkout in 2007, and the longest since a 54-day strike in Flint, Michigan, in 1998 that also halted most of GM’s production.

New Report Details Factory Decline Under Trump

Reprinted with permission from Alternet

During President Donald Trump’s 2016 campaign, a key part of his “Make America Great Again” pitch was bringing manufacturing jobs back to the United States in a big way. But business reporter Andrew Van Dam, in a new Washington Post article, stresses that the U.S. has been seeing a manufacturing slowdown in recent months and offers some reasons why.

Trump, Van Dam notes, inherited an increase in manufacturing jobs when he was sworn in as president in January 2017

“In the first quarter of 2017, as Trump’s term began, manufacturing posted its best quarter since 2014,” Van Dam recalls. “The turnaround appears to have started under President Barack Obama and accelerated under Trump.”

One of the things Trump railed against in 2016 was American companies outsourcing and manufacturing their products in other countries. That didn’t end after he became president, although Van Dam explains that the U.S. did experience a manufacturing increase at the end of the Obama era and during the Trump era in 2017 and 2018.

“When Trump was born in 1946,” Van Dam observes, “factories employed more than a third of the American workforce. In July, they tied a record low of 8.5 percent.” Van Dam cites a number of factors for sluggish manufacturing in the U.S., from “trade war turbulence” to “an uncertain world.”

“It’s difficult to discern where the fallout from the trade war ends and where the global slowdown begins, especially because one helped beget the other,” Van Dam writes. And the uncertainty in the world, according to Van Dam, ranges from Brexit to “escalating disputes with Iran” to “chaos in Venezuela.”

According to one widely watched index, global policy uncertainty is hovering near its highest levels on record.

“Trump has promised that a range of elusive trade deals, particularly with China, will revive U.S. manufacturing,” Van Dam reports. “But there is no sign of a breakthrough. And in the interim, many U.S. companies are waiting to see what happens.”

 

With Foxconn, Americans Get Snookered Again

Reprinted with permission from Creators.

 

At the White House celebration of a planned new factory in Wisconsin — “the size of three Pentagons” — the Great Negotiator was all smiles. That would be Terry Gou, CEO of the Taiwanese electronics giant Foxconn.

The guy standing next to him was Donald Trump. The president said that Foxconn would invest $10 billion and create up to 13,000 well-paying manufacturing jobs. He later called the project “the eighth wonder of the world.” That was 18 months ago.

The ninth wonder of the world is that anyone took Foxconn’s word seriously. Foxconn has a history of making flashy job announcements and then not providing the jobs. The American side got a foretaste of disappointment last month when Gou’s special assistant, Louis Woo, told Reuters, “In terms of TV, we have no place in the U.S.” Only then did Foxconn publicly announce a change in plans. The Wisconsin plant would be more focused on research and development.

An uproar followed, and Foxconn changed its wording. Yes, there would be R & D but also some screen manufacturing. Even with that revision, this means there won’t be anywhere near 13,000 choice blue-collar jobs. And that assumes you believe a word the company says, which you shouldn’t.

Six years ago, Foxconn announced it would invest $30 million in a plant in Pennsylvania. It didn’t. Later, it said it would spend $5 billion in India and create 50,000 jobs. So far, nothing. It said it would invest up to $10 billion on an electronics plant in Indonesia and then lowered the figure to $1 billion. And its follow-through on plans to invest $12 billion in Brazil, with 100,000 jobs to follow, is a fraction of what was promised.

The one Foxconn project that remains on course is a $9 billion factory in Guangzhou, China, expected to create 10,000 jobs. It will be making flat-panel display screens similar to those allegedly planned for the factory outside Racine.

Even with the taxpayer incentives, the economics of making flat panels in the U.S. have never added up. Foxconn workers in China make about $8,000 a year. Gou was promising Wisconsinites an average $53,875 a year.

In hammering out the deal for an “advanced manufacturing facility,” Americans got rolled. Wisconsin’s Republican governor and Republican Legislature put state taxpayers on the hook for more than $4 billion in various incentives. This would have amounted to a subsidy of $15,000 to $19,000 per job per year. That is at least six times the typical subsidy for such jobs, according to the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.

I note that this screwy attempt to buy jobs was the handiwork of Republicans not because Democrats don’t do stupid deals — they do — but because handing out taxpayer subsidies goes against what conservatives say they believe in. Rather than improve the business climate for all the state’s employers, Wisconsin Republicans chose a “winner” on whom to shower the taxpayers’ money.

These are the same state leaders who claimed they had run out of funds for the University of Wisconsin. An educated workforce is economic development, too, you know. Rather, politicians are buying bragging rights about creating jobs. The hope, of course, is that the public doesn’t quite understand how much it’s spending for those jobs — or what jobs are lost as other companies have to cover the taxes the “winner” isn’t paying.

The only rationale for building in Wisconsin was as protection in the event of a trade war with China. Gou probably now figures that Trump’s trade war isn’t going to go far.

Trump tweeted last week, “Great news on Foxconn in Wisconsin after my conversation with Terry Gou!” Boy, does Gou have him pegged.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

 

Why Billionaires Make Horrible Candidates And Presidents

This article was produced by Economy for All, a project of the Independent Media Institute.

 

Billionaires are pretty damn sure they know what’s best for you. No more taxes on the rich and none of that Medicare for All is what’s best for you, according to two billionaires toying with seeking the presidency.

Or, maybe, that’s what’s best for them.

One of those billionaires, former Starbucks CEO Howard Schultz, called Medicare for All un-American. Actually, what is un-American is the fact that America is the only first-world country that fails to provide universal health insurance.

Schultz and Michael Bloomberg, the other billionaire who thinks he should be president, revealed themselves as out-of-touch, private-jet-riding, multi-mansion-owning, gold-leaf-latte-sippers by condemning lawmakers who have proposed raising taxes on the nation’s most obscenely rich.

Bloomberg said, for example, “We need a healthy economy, and we shouldn’t be embarrassed about our system.”

No? It’s not embarrassing that 40 percent of Americans don’t have $400 for an emergency expense? It’s not humiliating that in the richest country in the world federal workers couldn’t afford their insulin during the government shutdown because their low pay forces them to live paycheck to paycheck? It causes no discomfort that 5 million Americans are stuck in part-time jobs when they need full-time ones to get by? Or that so many more are trapped in precarious or contract work without security or benefits, when they need—you know—security and benefits? It’s not shameful that the number of Americans without health insurance increased by 3.2 million in the first year of billionaire Donald Trump’s presidency?

Well, the Americans who are demeaned and degraded by our system, the D.C. cafeteria workers who make so little they live in cars, the people who can only dream of affording a $5 Schultz latte don’t need or want billionaires telling them how to run their lives or how to fix the system that has rendered so many so desperate. They’ve got their own ideas.

They want an American system that fulfills its promise of equality. Not equality of income. No one is demanding that. They want a democracy that provides them with equality as self-determining citizens. They want political equality. They don’t have that parity when they are financially desperate. They don’t have it when they are uninsured or covered by insurance so costly that they can’t afford to use it. They know they are not politically equal to a Schultz or Bloomberg or Trump who can buy themselves hordes of lobbyists to get what they want from Washington, can purchase even the presidency itself, and then, with that power, sustain a system that benefits the very rich at the expense of everyone else.

In recent weeks, several lawmakers have offered ideas to change the system for average Americans. Sen. Elizabeth Warren (D-MA) suggested a small tax on the wealth of those worth more than $50 million. Rep. Alexandria Ocasio-Cortez (D-NY) proposed taxing at 70 percent income above $10 million. Both of them, Sen. Kamala Harris (D-CA), Sen. Bernie Sanders (I-VT), and others support Medicare for All. Reducing health care costs for most Americans and increasing taxes on the uber-rich could help fund universal childcare, student debt relief and other programs to ease financial stress on the 99 percent. And that would free them to engage in political activism, to become marginally more politically equal.

These populist pitches to rein in rule by plutocrats left Bloomberg and Schultz gagging. Barely containing his condescension, $3.4 billionaire Schultz called Ocasio-Cortez “a bit misinformed” and her tax plan, “punitive,” as if a levy on ultra-millionaires that would be lower than the 91 percent charged in 1950 would be punitive, but pay so pathetic that full-time D.C. workers are reduced to homelessness is not.

Bloomberg said he knew of no country in the world with a wealth tax like the one Warren suggested. In fact, the number of nations charging such a tax has declined from 12 in 1990, as income and wealth inequality has risen worldwide, but there are still four, France, Norway, Spain and Switzerland.

Bloomberg just does not think the rich should be paying taxes. He said President Barack Obama’s proposal to raise taxes on the rich was “about as dumb a policy as I can think of.”

This is the guy who wants to tax the poor with a levy on soda pop. The $47 billionaire believes that poor people consume too many sugary drinks. He was going to “help” them keep weight off by making pop unaffordable. Rich guys like him can quaff as many $1,000 bottles of Chateau Lafite Rothschild 2009 as they want, with twice as many calories per cup as Cherry Dr. Pepper. But he was going to try to control the lives of poor people.

The rich got their way in December of 2017. At the behest of billionaire Donald Trump, Congress substantially cut taxes on the wealthy and on corporations. They promised that gift to the rich would trickle down on the rest and that corporations would take those big fat savings and invest them in American factories, research and hiring. And, they claimed, there’d be so much more economic activity that the tax cut would pay for itself.

None of it happened. Corporations didn’t invest. A quarterly poll by business economists released this week found the tax cut had almost no impact on investment or hiring. Instead, corporations spent the money on stock buybacks, a scheme that enriches already-wealthy CEOs and stockholders. Buybacks hit a record $1 trillion last year, nearly 50 percent more than the year before.

The Congressional Budget Office said this week that the tax cuts pushed the federal budget deficit up to $900 billion, that they didn’t come close to paying for themselves and that their stimulus effects would wane this year.

To close that budget deficit, Republicans in Congress and the billionaire in the Oval Office refuse to consider reinstating higher taxes on the rich and corporations. Instead, they’re talking about repealing the estate tax charged only to a tiny percent of the nation’s most wealthy and slashing the very programs that non-rich Americans cherish and depend on—Medicare, Medicaid and Social Security.

All of this defies logic in a democracy. Nearly 80 percent of Americans want Social Security and Medicare expanded, not cut. At least 56 percent support Medicare for All, not cuts to federal health insurance programs for the poor and elderly. And the vast majority of non-rich people in this country are all for increasing taxes on fat cats. Even a recent poll by the conservative Fox News found that to be the case. It determined that by a 46 point margin, voters want to raises taxes on those earning more than $10 million. It was 70 percent in favor to a tiny 24 percent opposed.

But U.S. workers don’t get what they want. The rich determine which bitter pill to shove down the throats of the 99 percent. And billionaires like Schultz and Bloomberg believe they have the absolute right to prescribe that pill, political equality and self-determination be damned.

This article was produced by Economy for All, a project of the Independent Media Institute.

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