Amazon Invests $440 Million to Boost Delivery Driver Wages

Amazon is investing $440 million so the 3,500 delivery service partners (DSPs) it works with can raise wages for their contracted drivers.

The Seattle company believes their hourly pay will average $20.50 or more as a result. Individual wages and benefits will vary according to each delivery company and where they’re located. The wage increase will go into effect starting mid-October.

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The move comes the Teamsters union wants to organize contracted drivers at Amazon’s delivery service partners.

Since June, the influential union has set up picket lines at a dozen Amazon warehouses in the U.S. to raise concerns about working conditions, after the company cut ties with a California-based delivery contractor, Battle-Tested Strategies, that unionized with the Teamsters in April. The 84 drivers and dispatchers that were let go filed unfair labor practices against Amazon the next month.

Sourcing Journal reached out to the Teamsters for comment.

The $440 million is part of an $840 million delivery contractor investment Amazon announced at its Ignite Live event. Amazon said it will have invested more than $8 billion since the the program began.

“Our focus has always been to help these small business owners build successful companies and great teams and we’re excited to see the impact that these investments will have in furthering that goal,” Beryl Tomay, vice president, last mile delivery and technology at Amazon, wrote in a blog post.

The DSP program, launched in 2018, comprises roughly 279,000 drivers, delivers more than 20 million packages every day, and has generated $45 billion in revenue since it started.

Drivers pick up packages from Amazon delivery stations and drop them at doorsteps. This allows the company to outsource last-mile delivery to hundreds of small businesses and avoid many of the costs associated with employment and vehicle upkeep. Critics have argued that Amazon relies on subcontracted delivery drivers to skirt liability and avoid unionization.

Another new perk from the DSP investment includes the Next Mile education program, provided by enterprise education provider InStride. The program offers eligible employees access to over 2,000 academic programs and up to $5,250 in tuition coverage per year. The program will expand to Canada in 2024.

Amazon also announced a new child care support service for delivery contractors. Upwards includes a 24/7 concierge service where drivers employed by delivery contractors can find a caregiver, post a care opportunity such as a babysitting job, or search and reach out to a caregiver directly. Amazon also launched the “Together, We Give” program to give delivery contractors in the U.S. and Canada access to grants up to $5,000 to support charitable donations to nonprofits in their local community.

The investment announcement came the same day Amazon that unveiled its new office in Midtown Manhattan, which occupies the former Lord & Taylor department store at 424 Fifth Avenue.

Amazon bought the building for $978 million from WeWork in March 2020. It began construction about two years later. The 600,000-square-foot facility accommodates roughly 2,000 employees.

The opening comes weeks after Amazon CEO Andy Jassy told employees to comply with the company’s return-to-office plan or “it’s probably not going to work out for you.” Amazon’s U.S. workers are expected report to a physical office at least three days a week.

New York City Mayor Eric Adams attended the Midtown office’s ribbon-cutting ceremony and praised the company for renovating the former department store into “fertilizer” for the future of the city.

Adams also stated that Amazon is “delivering good jobs to New Yorkers,” with one union head quickly countering the mayor’s take.

“Amazon is not delivering good jobs for New Yorkers—period. Thousands of Amazon workers in New York alone suffer acute and prolonged, often debilitating, injuries from working in their warehouse,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union (RWDSU), in a statement. “As we’ve said from the beginning, Amazon shouldn’t be welcomed by our government until they change the way they treat their employees. Workers deserve the right to organize fairly, to achieve a fair union contract, and real health and safety measures that don’t send workers home suffering after a shift or worse, never to return home. Amazon shouldn’t be heralded for delivering good jobs.”

The RWDSU represents 100,000 members in the U.S. While it doesn’t currently represent Amazon, workers at a Bessemer, Ala. warehouse sought representation under the union when they attempted to organize in 2021.

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