Amazon to Increase Wages for Contracted Drivers Amid Unionization Push

Amazon.Com Inc AMZN has announced plans to increase wages for contracted drivers as part of a $440 million investment in its third-party delivery program this year. 

The company revealed this wage increase during its annual closed-door conference, Ignite Live, attended by 3,500 small businesses that constitute its delivery service partner program, CNBC reports. 

The move coincides with renewed efforts by the International Brotherhood of Teamsters to unionize Amazon's delivery driver workforce. The union forged a deal with United Parcel Service, Inc UPS to hike the hourly wages for UPS employees over the next five years, with senior UPS drivers potentially earning an average top rate of $49 per hour. Amazon pays its delivery drivers around $19 per hour.

The union has set up picket lines at numerous Amazon warehouses in the U.S. since June, raising concerns about working conditions. 

Launched in 2018, the DSP program includes approximately 279,000 drivers recognizable by their blue Amazon-branded vans, responsible for delivering packages the last few miles to customers' doorsteps.

Beryl Tomay, Amazon's Vice President of Last Mile Delivery and Technology, emphasized that DSPs can establish their wage and incentive structures. 

At the same time, Amazon sets a minimum pay standard through its contracts with these companies.

Although Amazon did not specify the exact wage increase, it anticipates that the average delivery associate will earn an average of $20.50 per hour or more, along with benefits. 

DSPs frequently pay above Amazon's minimum wage standards, and the company routinely audits their wage structures. The actual wage increase will vary based on location and other factors. These pay raises will commence in mid-October.

The DSP program plays a pivotal role in Amazon's logistics strategy, allowing the company to reduce reliance on carriers like the U.S. Postal Service and FedEx Corp FDX while expediting deliveries. 

Since its inception, Amazon has invested approximately $8.9 billion in the program, which has generated over $45 billion in revenue over the past five years.

Amazon had been at loggerheads with unionization efforts at its warehouses in the U.S. and the U.K. 

Price Action: AMZN shares are trading lower by 0.16% at $141.00 premarket on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.