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When Sears flourished, so did workers; at Amazon, it’s more complicated
[NEW YORK] Half a century ago, a typical Sears salesman could walk out of the store at retirement with a nest egg worth well over US$1 million in today's dollars, feathered with company stock. A warehouse worker hired now at Amazon who stays until retirement would leave with a fraction of that.
Much as Sears has declined in the intervening decades, so has the willingness of corporate America to share the rewards of success. Shareholders now come first, and employees have been pushed to the back of the line.
This shift is broader than a single company's culture, reflecting deep changes in how business is conducted in America. Profit-sharing and pensions are a rarity among the rank-and-file, while top executives take home an increasing share of the spoils.
Amazon shareholders have benefited more than workers, but Sears, in its heyday, tried to serve both.
The company earmarked 10 per cent of pre-tax earnings for a retirement plan for full-time employees, and by the 1950s, the workers owned a quarter of Sears.
This month, Amazon stopped giving stock to hundreds of thousands of employees, even as it lifted its minimum hourly wage to US$15. While the raise garnered headlines, the move to curb stock awards may ultimately be more significant.
Amazon's decision underscores how lower-paid employees across corporate America have been locked out of profit-sharing and stock grants.
"What's happened is that shareholders' interests have squeezed out other stakeholders," said Arthur Martinez, who ran Sears during the 1990s and was credited with a turnaround. "The mantra is shareholders above all else."
Fifty years ago, Sears provided all of that plus a much larger annual retirement contribution. While the typical Amazon employee receives US$680 from the company in a 401(k), the average Sears worker got the present-day equivalent of US$2,744. Dividends on accumulated stock could add thousands annually.
If Amazon's 575,000 total employees owned the same proportion of their employer's stock as the Sears workers did in the 1950s, they would each own shares worth US$381,000.
Until this month, Amazon had been awarding two shares a year to warehouse employees, worth about US$3,500 at the current price.