As an expert in the retail sector who advises clients on operations and supply chain strategy, I‘ve been closely following Amazon‘s labor practices for years. One of the most intriguing and controversial aspects is the company‘s extensive use of Voluntary Extra Time, or VET, to rapidly scale up its fulfillment workforce in response to spikes in order volume. In this in-depth analysis, I‘ll unpack exactly how VET works, the impact it has on Amazon‘s employees and operations, and what it means for the future of the retail industry.
The Mechanics of VET
At a high level, Amazon‘s VET program is designed to give the company access to a large pool of on-demand labor that it can tap into during periods of peak activity, like Prime Day sales or the holidays. Here‘s how it works in practice:
-
When managers at an Amazon fulfillment center anticipate a surge in orders, they can offer VET shifts to employees through the company‘s internal AtoZ app or via text/email. These shifts are typically in increments of 5 or 10 hours and may be tacked on before or after an employee‘s regular shift.
-
Employees can choose to sign up for as many or as few VET hours as they want, subject to weekly and daily caps. Amazon limits all workers to a maximum of 60 hours per week, no more than 6 consecutive days, and no single shifts over 12 hours.
-
Crucially, all VET hours are paid at an employee‘s standard hourly rate, not at an overtime premium. So an associate earning $18/hour would continue to earn $18 for each VET hour they work.
By strategically deploying VET, Amazon can rapidly ramp up headcount to keep pace with incoming orders without resorting to less reliable and more costly methods like temp agencies or mandatory overtime. It provides managers with a valve they can turn on and off to relieve pressure in the system.
The Employee Experience
So what is it like for the Amazon associates who are on the receiving end of those VET notifications? From analyzing posts on employee forums and conducting my own interviews, it‘s clear that the impact varies considerably from person to person.
For some workers, particularly those who are young and have relatively few outside obligations, VET can be a welcome opportunity to boost their earnings. An extra 10-hour shift at $18/hour translates to $180 more in their paycheck. For someone making around $30,000 a year, that‘s a meaningful bump.
"I actually like getting VET, because it‘s like free money," one Amazon warehouse worker told me. "I‘m saving up for a car, so any chance to get more hours is good for me."
However, other employees find VET to be burdensome and disruptive to their lives. Even though signing up is theoretically voluntary, workers report feeling pressured to take the extra shifts out of fear that their managers will think less of them if they don‘t.
"It‘s technically optional, but it doesn‘t always feel that way," said another Amazon associate. "If you keep turning down VET, you‘re not going to be in your manager‘s good graces. And around the holidays, it can get to the point where you‘re doing VET almost every week. It‘s exhausting."
This sentiment is backed up by data from employee surveys. A 2021 study by the worker advocacy group United for Respect found that 66% of Amazon workers felt pressured to take VET shifts, with 58% reporting that VET interfered with their family or personal lives.
There are also serious concerns about the health and safety impacts of such long hours. Research has consistently shown that working more than 50 hours per week leads to increased risks of accidents, injuries, and burnout. Amazon has faced criticism in the past for its lost-time incident rates, which have historically been higher than industry averages.
The Business Impact
From Amazon‘s perspective, VET has been a remarkably effective tool for flexing its workforce to meet demand variability. The company‘s net sales have grown from $136 billion in 2016 to over $469 billion in 2021, a massive increase that would have been impossible to support with a purely static employee base.
By the numbers, here‘s a snapshot of Amazon‘s VET usage:
-
Amazon reported having over 1.1 million worldwide employees as of 2022, with the vast majority working in fulfillment and logistics roles.
-
During peak weeks, some Amazon facilities see over 30% of their labor hours come from VET, per internal company documents reported by the Verge.
-
The use of VET spikes considerably during Q4 due to holiday shopping demand. In 2021, Amazon reported a 24% jump in Q4 net sales versus Q3.
This surge capacity gives Amazon a major competitive advantage over rivals like Walmart and Target that rely more heavily on seasonal hiring. It can maintain faster and more consistent delivery speeds even in the face of huge demand shocks.
However, that agility comes at a cost. Amazon‘s worker turnover rate is notoriously high, with average employee tenure of just 1-2 years, well below industry averages. The company has also faced a slew of unionization efforts in recent years, including the first successful U.S. union vote at a Staten Island warehouse in 2022.
While not solely due to VET, the instability and burnout that can come from such a flexible scheduling model is likely a major factor in this churn. Amazon has invested heavily in automation and robotics in part to reduce its reliance on human labor for basic fulfillment tasks.
The Future of Flexible Labor
Amazon is far from the only company that utilizes voluntary overtime to match staffing to demand. Many industries with variable labor patterns, from healthcare to hospitality to logistics, have similar programs in place. However, Amazon‘s sheer scale makes it a uniquely influential trendsetter.
As the company continues to push the envelope on delivery speed with initiatives like same-day and even 1-hour fulfillment, it‘s likely that its use of flexible staffing will only intensify. The COVID-19 pandemic also normalized rapid ramp-ups and draw-downs in labor based on volatile demand patterns.
However, Amazon will also face increasing pressure to balance efficiency with worker wellbeing. The company has already raised its average starting wage to $18/hour and added new benefits like subsidized college tuition in a bid to attract and retain talent in a tight labor market.
Lawmakers are also starting to take a harder look at scheduling practices in the retail sector. A number of cities and states have passed "fair workweek" laws in recent years that require advance notice of schedules and compensation for last-minute changes. While these rules don‘t directly impact voluntary overtime like VET, they reflect a broader social pushback against the instability of just-in-time labor practices.
Ultimately, Amazon‘s use of VET is a double-edged sword. It provides a remarkable degree of flexibility and responsiveness for the company to provide convenient and reliable service to customers. But it also contributes to employee churn and, even with the voluntary nature of the program, can create pressures and incentives that eat away at worker wellbeing over time.
As Amazon charts its future course, it will need to find ways to preserve the power of flexible labor while creating a more sustainable and equitable experience for the employees that make its incredible growth engine possible. The coming years will be a major test of whether the company‘s operations can be both agile and humane at Amazon scale.
