What’s behind Amazon’s Job Plan?
Move seen as measure to curry favor with Trump
During Amazon’s 4Q16 earnings call, the management didn’t offer a detailed explanation about how it would create the additional 100,000 full-time jobs it promised last month. However, the company reiterated its other recent announcement to build its first air cargo hub at the Cincinnati/Northern Kentucky Airport, saying the project would create thousands of jobs. The air cargo hub’s employment is likely to be part of the more than 100,000 full-time jobs the company pledged to add in the coming 18 months.
Given how President Donald Trump has been critical of technology companies in light of waning domestic employment, Amazon’s plan to create 100,000 full-time jobs in the US has been viewed by some as a measure aimed at currying favor with the new administration in Washington. However, Amazon insists the hiring is designed to meet its workforce demand as it expands.
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A tricky balancing act
While Amazon’s hiring spree may put the company in President Trump’s good graces, investors who have recently focused more on profitability are worried such a move would inflate Amazon’s operating expenses and crimp earnings. Amazon’s operating expenses increased 24.3% in 4Q16 following an increase of 26% in the prior quarter.
Critics have also questioned whether Amazon’s announced hiring makes any difference. They argue that Amazon’s e-commerce business has destroyed far more retail jobs than the company can possibly replace in its warehouses.