Amazon Says It Will Retrain Workers It’s Automating Out of Jobs. But Does ‘Upskilling’ Even Work?
Amazon made waves when it announced late last week that it planned to spend $700 million to retrain one-third of its U.S. workforce—100,000 employees—as part of its ‘Upskilling 2025’ initiative. The sizable commitment, which the Wall Street Journal notes is “among the biggest corporate retraining initiatives” yet announced, will fund pilot programs, classes, and tuition fees for employees. “The American workforce is changing,” Amazon’s announcement proclaims, and “there’s a greater need for technical skills in the workplace than ever before.” Translation: We will be automating your job soon, and if you want to keep a decent paying gig here, study up.
As is often the case when the online retail giant makes a sweeping, headline-grabbing announcement, we’re left with at least as many questions as answers. The first among them being: Is upskilling—or retraining, or reskilling—that many employees even plausible? If it were, what would it look like in practice?
It’s a pretty important question to answer, because ‘retrain the workers’ is probably the most common policy idea we hear from politicians and business leaders whenever they’re confronted with questions about how we might cope with an increasingly automated economy. Every conference panel discussion, political talking point, and sobering news report about automated job loss seems to feature pablum about the urgent need to educate workers to prepare them for the modernizing world.
And it’s safe to say upskilling is already being embraced among corporations: AT&T, JPMorgan Chase, Accenture, and, now, Amazon have all made splashy investments in programs that purport to future-proof its workers. According to a survey by McKinsey, 66 percent of executives see “addressing potential skills gaps related to automation/digitization within their workforces as at least a top-ten priority.”
“I think it’s extraordinarily positive that Amazon is doing this, and I think there are things they can do to make sure it succeeds,” says Jane Oates, a former Obama administration official who helped modernize some of its federal retraining programs and the president of WorkingNation, a nonprofit founded by venture capitalist Art Bilger to spread the word of the coming employment crisis.
Yet the nation’s largest private sector labor union, United Food and Commercial Workers, sees Amazon’s retraining initiative as little more than a way for the company to gloss over the fact that it plans to eliminate its workers’ jobs. “Jeff Bezos’s vision is clear—he wants to automate every good job out of existence, regardless of whether it’s at Whole Foods, Amazon warehouses, or competing retail and grocery stores,” UFCW President Marc Perrone said in a statement.
The Union Network International, which has been assisting Amazon workers around the world in their efforts to organize, points out the initiative was rolled out without the input or participation of workers. “Amazon’s history of disregarding the safety and rights of employees raises red flags about it unilaterally restructuring operations without the input from workers and their unions,” UNI General Secretary Christy Hoffman wrote me in a statement. “Until Amazon negotiates with workers, many of the same problems—unfair scheduling, anti-union harassment, and extremely pressurized working conditions—will remain, even if the nature of the work has shifted.”
As Perrone, puts it, “Amazon is throwing money at a problem it created and somehow thinks that it deserves applause. … Amazon has become an economic arsonist that suddenly decided to put out the fires it is starting.”
But the question remains: Could Amazon put out this fire through mass retraining, even if it really wanted to? Can it feasibly re-educate a full third of its sprawling American workforce?
In the U.S., the history of corporate job retraining has been spotty to say the least. The WSJ recently ran a story headlined ‘Why Companies Are Failing at Reskilling,’ which detailed the myriad shortcomings in the arena, including the fact that many employees were unable to meaningfully access the programs.
Federal job-retraining efforts have historically produced dismal results, too, sometimes fantastically so. One of the most comprehensive studies of federal programs designed to retrain dislocated workers, published by the Department of Labor in 2008, concluded that “the gains from participation are, at best, very modest, even three to four years after entry. Overall, it appears possible that ultimate gains from participation are small or nonexistent.”
That may be why Andrew Yang, the Democratic presidential candidate campaigning behind a promise to address the looming threat of mass job automation, often calls out retraining programs. “The efficacy level of federally funded retraining programs for manufacturing workers was approximately 0-15%,” he tweeted in March (without citing a source). “Almost half of the workers left the workforce. If retraining is the answer we would need to be much better at it.”
There were some bright spots in the Obama administration’s efforts to upgrade the long-ailing federal job retraining apparatus, and U.S. initiatives have long suffered from a relative lack of funding and resources (out of 29 developed nations, the U.S. is second to last in dollars spent). Yet the highest profile examples are those like Janesville, Wisconsin, where GM closed a major manufacturing plant and served as the subject of Amy Goldstein’s haunting book about the impacts of mass job loss—and showed federal retraining to be helpless to revive the town that depended on those jobs.
According to the DOL report, other studies, and surveys of America’s failed experiments with retraining, there are a lot of reasons that reskilling programs flounder. Older workers are reluctant to reenter the classroom environment. Employees are wary of investing time, energy, and resources on retraining if there isn’t a guarantee that a job will be waiting for them when they’re done. Employers usually make retraining voluntary, after-hours, and don’t pay employees to undertake it. (Amazon, for its part, says it will cover 95 percent of tuition, and offers employees “paid study time” but doesn’t elaborate. The company did not respond to my request for comment.) And then employees face the challenges of entering a brand new field—and of being inexperienced in it.
“The challenge is you’re trying to take workers who were reasonably well paid, far into their career, and train them for a new type of job,” says Carolyn J. Heinrich, the lead investigator in the aforementioned DOL study and a professor of public policy at Vanderbilt University. “Workers come out and earn entry level wages. In no way do they earn what they were making in the past.” Mobility is an issue, too. “Some of the jobs they trained for will be in other states—if you’re paying off a mortgage on a house, or kids in high school, you’re not going to be able to move very easily.”
All of these are going to be problematic for any broader program that tries to address automation with retraining, but some are less likely to afflict companies like Amazon, where lower-skilled workers are not making such comfortable wages in the first place.
“What’s different here is you’ve got a company retraining its own workers for jobs it knows it’s going to be able to provide,” Heinrich says. She says that this entire initiative is probably borne out of a cost-benefit analysis that concluded the best way to fill currently empty and future roles in an extremely tight labor market was to invest in retraining its own workforce. Amazon is currently trying to fill 20,000 roles; retraining current employees who’ve proven amenable to Amazon for those and future jobs, at a cost of $7,000-per-employee, could be cheaper than recruiting. “You have to look at the employers’ perspective—what’s going to make them profitable and successful? It’s much easier for Amazon to have data on who they think is most likely to be successful in training, instead of having to go out and find these people. It should be a cost savings for them to do that within their own workforce.”
Remember, Amazon is huge, and it keeps reams of data on its employees and their productivity. They may have reason to believe that a particularly efficient fulfillment center associate would make for an effective, say, sales or IT worker.
“When we looked at the problems with the worker training programs i