How Amazon Landed on Mamdani’s Labor Agenda

0:00Josh Eidelson:So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.

0:57Josh Eidelson:IBM. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan. Pure opportunity. Seize your opportunity at michiganbusiness.org. Bloomberg Audio Studios. Podcasts. Radio. News. Special delivery.

1:41Josh Eidelson:New York City Mayor Zoran Mamdani ran for office on a promise to take on powerful companies that he says exploit workers and avoid accountability. His latest focus is Amazon. It looks like an Amazon delivery. And it drives like an Amazon delivery.

2:01Spencer Soper:Then it's an Amazon delivery.

2:04Josh Eidelson:Amazon relies on a network of thousands of drivers around the city to get its packages delivered on time. Those drivers are employed by third-party contractors, not by Amazon itself. Amazon tells these subcontractors where to drive, who to hire, and what hours to work. Mamdani says Amazon should hire them.

2:27Spencer Soper:This is why I'm proud to support the Delivery Protection Act.

2:30Josh Eidelson:The Delivery Protection Act was introduced in New York City Council last year. And last week, the mayor announced his support. The bill would establish a licensing system for last-mile facilities, which are the final sorting and distribution sites before packages get to customers. It would also make companies like Amazon responsible for employing workers at those facilities, the workers who do the delivering. Amazon has come out against the bill, and it's poured$5 million into a campaign to defeat it. In response to Bloomberg's reporting, a spokesperson said the bill is, quote, forcing us to consider relocating delivery operations outside of the city, unquote, something the spokesperson said could lead to slower and more expensive delivery service.

3:17Josh Eidelson:They said Amazon is trying to work, quote, collaboratively with the city council, unquote, to prevent that outcome. This fight over worker classification has been a long time coming. This is part of a larger phenomenon. I call it the who's the boss problem in the U.S. economy. Josh Idelson is a senior reporter at Bloomberg covering labor and work. You have many workers who are core to a company's brand. drivers for Uber, coders for Google, cashiers for McDonald's, who are generating a lot of profit for a company and following rules set by that company, but on paper are not considered by that company to be their employees.

4:04Spencer Soper:It's been this legally murky area for decades that companies have just been able to kind of swim in.

4:12Josh Eidelson:Bloomberg e-commerce reporter Spencer Soper says, If the Delivery Protection Act passes, it could make things a lot less murky, at least in New York. But the implications could reach much further.

4:24Spencer Soper:It obliterates this delivery service partner model that they've built nationally, internationally, actually. It obliterates it in New York. And so that's why Amazon is so worried about this, because they do see it as its test case.

4:42Josh Eidelson:I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, New York City Council takes on Amazon's delivery driver model and tries to answer that crucial question, who's the boss?

5:01Josh Eidelson:Amazon has an army of hundreds of thousands of drivers delivering millions of packages who are on paper employed not by Amazon, but by what Amazon calls delivery service partners. Much, much smaller businesses who Amazon contracts with to manage these drivers. Bloomberg's Josh Idelson says these drivers have similar concerns as gig workers like Uber drivers, but they're classified differently. Often when people talk about gig workers, they're talking about workers who are classified by the company they're working for as independent contractors. 1099, people who are no one else's employee on paper.

5:48Josh Eidelson:Sub-contracted workers like fast food cashiers or content moderators for some tech companies or these delivery drivers, often they are classified as W-2 employees, meaning they have to be paid minimum wage and so on, but employees of somebody that most Americans have never heard of. In both cases, you have a big, famous, powerful company that says it is not the employer of a group of workers. And Spencer, why does the company use this model? What are the benefits for Amazon?

6:25Spencer Soper:If you look at what the benefits of this model can be, it does separate the type of benefits workers can get. So if Amazon were employing all of these drivers directly, it would have to offer them the same health and medical benefits as like employees on Amazon's payroll. The way they do this now, it's up to those smaller companies to decide what kind of benefits to offer. And you can see some disparity in the benefits level. It also comes down to liability. There's so many other things that you pay into for having employees, things like workers' compensation insurance, unemployment insurance, the insurance on the vehicles.

7:07Spencer Soper:And so all of these things through a subcontracted model, it puts Amazon at arm's length. It's not a nice, clean break. They're not completely removed from it. But it definitely blurs the situation when bad things happen, like someone gets into a car accident, someone slips and hurts themselves, someone gets bit by a dog. These are all things that can regularly happen in the course of home delivery. And it just muddies the waters a bit when it comes time to say, OK, who's responsible?

7:39Josh Eidelson:What does the company say about why it works with these delivery service partners and doesn't hire its drivers directly? Amazon says that they believe small businesses in local communities know best and that those businesses are managing their own business. Josh, you wrote about a recent effort to get Amazon to recognize a group of its subcontracted drivers as direct employees. Tell us about that effort. A couple years ago in Palmdale, California, a group of drivers signed up to unionize with the Teamsters. And what was particularly unusual about this situation is the business owner, Jonathan Irvin, owner of Battle-Tested Strategies, did not fight the workers' effort to unionize and agreed to recognize the union and negotiate.

8:33Josh Eidelson:The union argued that Amazon was a joint employer along with BTS, and that because Amazon, they said, was a joint employer, Amazon was also obligated to negotiate when these workers chose to unionize. When the business owner agreed to recognize the union, Amazon had already said that it was shutting off the contract with BTS. and from Amazon's perspective, this business owner and the Teamsters were trying to voice collective bargaining onto Amazon. From the union's perspective and the perspective of workers that I talked to, Amazon had so much control over the operations that it was really the boss of these workers and when the majority of them chose to unionize, it was on Amazon to negotiate about the terms And the workers brought a case to the U.S.

9:33Josh Eidelson:National Labor Relations Board arguing that Amazon really was also legally their boss, a so-called joint employer, and therefore that Amazon had violated the law by refusing to negotiate with them. So the workers brought their case to the NLRB. Why was this legal challenge so significant? This was a potential pivotal test case about whether judge and agency members, the members of the National Labor Relations Board, would rule Amazon to be the boss of a group of these subcontracted delivery drivers. There was a hope from labor organizers that this case in California would establish a significant precedent.

10:20Josh Eidelson:That case, when Joe Biden was president, reached the point of the government issuing a complaint against Amazon, alleging that Amazon was the boss of these workers. and it was proceeding even in the first year of the second Trump administration. There was a trial underway and the proceedings came to a halt mid-trial after a former attorney for Amazon became the general counsel of the National Labor Relations Board under President Trump. So what ended up happening with this case after Trump installed this new general counsel at the NLRB? The general counsel's office reached a settlement in which Amazon was not deemed the joint employer of these workers, and the issue was diffused.

11:06Josh Eidelson:What we did get out of this case is thousands of pages of internal company documents that shed new light on how Amazon governs not only what drivers deliver, but when they deliver it, where they drive, the turns that they make to get from one stop to another, the cleanliness of their fingernails, what they post on social media. And the documents in that case, from the perspective of some of the drivers and advocates, strengthen the argument that this is another example of a company wanting to have its cake and offload the calories and the cleanup of the crumbs to somebody else. And what did Amazon say when you presented your reporting drawn from these documents that gave you new insights into the level of control Amazon appears to have over the people it calls its subcontractors?

12:03Josh Eidelson:Amazon says that some of the assignments it makes are suggestions and not mandates. Amazon says that delivery service partners run their own business independently and that it has the delivery service partner program because local businesses know best how to operate successfully in their communities. And how did the Teamsters Union respond to this NLRB settlement? What has the next course of action been for them? The Teamsters have continued to fight this settlement. They have pointed out that the general counsel of the NLRB formerly was an outside attorney for Amazon. There's been congressional inquiry into her decision not to recuse herself in this case.

12:52Josh Eidelson:The Teamsters Union, they say drivers at dozens of these so-called delivery service partners have signed up to organize with the Teamsters. The union has also been pushing at the city level for legislation to force companies like Amazon to directly employ drivers. And Spencer, how did this case and the outcome from this case pave the way for this effort we're seeing in New York City?

13:19Spencer Soper:With the NLRB in the union question, there was all of this anticipation, like finally we'll get some clarity about whether Amazon is the boss, but there was no clarity. And so what we're seeing in New York is a recognition about how murky this is, how there's really no traction on anything at the federal level to clarify it. And so you have a city council and mayor stepping in and saying, you know what, we're going to tidy this up.

13:55Josh Eidelson:After the break, inside that effort in New York City.

14:04Josh Eidelson:This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. DoorDash, the largest food delivery company in the U.S., is building its own delivery drones and has gained the necessary FAA approvals to operate them commercially, the latest in its effort to delegate more orders to robots as a way of cutting delivery times. Bloomberg's Natalie Lung reports the company says it has been conducting pilot programs with various restaurants, some of which have seen their order volume grow during the test period. The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business.

14:47Josh Eidelson:Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode, available on Plus and Pro Plans. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day.

15:28Josh Eidelson:They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills.

16:03Josh Eidelson:Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

16:37Josh Eidelson:but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. 4certain.

17:12Josh Eidelson:Spencer Soper and his colleague Naha Khatan interviewed 20 drivers as part of their reporting on the Delivery Protection Act. They heard stories about the conditions that workers are facing on the job and how they feel about New York City's proposed legislation.

17:28Spencer Soper:The fears are the unknown and job loss and also just not really seeing what this will do for them. There's nothing in the legislation that says you're going to get a raise. There's nothing in the legislation that says you're not going to have to deliver as many boxes. It's a lot of these theoretical benefits, like it might make it easier to form a union. The city will have some leverage to help you if things go poorly. One woman that my colleague Naha talked to is 38. She was in the back of the van on a really hot day and passed out, you know, and had to call 911 and go to the hospital for heat exhaustion.

18:04Spencer Soper:And then you start questioning, like, I'm really putting my body on the line here. Who's benefiting? Am I getting enough out of this? And then the hope is, hey, we just need someone to go to. You know, this company is so powerful. I'm out there delivering packages. It's not clear, like, how I can use some judgment. If I don't feel safe, will there be a consequence? Am I going to get scolded when I get back for not delivering the package? I think people just want some higher power that doesn't have their judgment clouded by their financial interest stepping in to help arbiter what is reasonable to expect of somebody making$20 an hour delivering packages on the streets of New York City.

18:50Josh Eidelson:Walk me through the proposal that the mayor is actually backing in New York City. What would the Delivery Protection Act do to change these circumstances?

18:59Spencer Soper:That's a great question because it's not entirely clear. I mean, it does address the employment question, right? Another important thing, it requires licensing, right? So if you're going to run a delivery hub in New York City, you know, every two years, you've got to go to the city's Department of Consumer and Worker Protection and get a license to operate. And just the fact that you need a license every two years is going to give the city some leverage over how you operate. And then the other big thing that Amazon is really pushing back hard on and is the number one contributor to the opposition campaign by a huge margin, it says if you have a delivery hub within the city where workers are doing the last mile of delivery, those workers are your employees.

19:42Spencer Soper:You have to directly employ them. And there's no wiggle room around that.

19:46Josh Eidelson:So that's a lot of clarity for Amazon here. How much would it cost them if it passed?

19:52Spencer Soper:There's no clear estimate on that. There's a group that did a study pinning down the cost per shopper, and their worst-case scenario was like the typical customer if this bill passes. And again, this isn't just specific to Amazon delivery, but just in general, it would cost the typical shopper like an extra$600 a year for deliveries. It would certainly cost Amazon money, and that's the calculation Amazon's doing is, do we pull up stakes and abandon a lot of this infrastructure that we have in the city now, all of these delivery hubs, and instead start making deliveries from Hoboken or New Hyde Park or Mount Vernon, you know, just over the city limits or not?

20:31Spencer Soper:Or is it some kind of combination of the two? We really don't know precisely what they'll do. And I'm sure they're calculating multiple different scenarios.

20:41Josh Eidelson:Who are the proposal's biggest supporters?