How Amazon Is Conquering (and Ruining) the Package Delivery Market

To fulfill billions of orders, Amazon leans on gig workers and subcontractors—an anti-labor practice afflicting most sectors of the economy. We spoke to the preeminent expert on the subject.

The days of “FedExed” as an easily understood verb—and the brown UPS truck as the universal symbol of an incoming package—are fading fast.

Last month, four researchers (David Weil, Daniel Schneider, Julie Su, and Kevin Bruey) released a report about the dire working conditions of many American delivery drivers. Pulling rigorous data from The Shift Project, the report shows that Amazon is wrecking a long-steady, well-organized profession.

Unionized drivers at UPS make an average of $35 an hour, and “wages increase sharply the longer a worker has been on the job,” the report says. The average hourly rate for Amazon delivery drivers is much less: $19 an hour, with almost zero upwards mobility. Amazon delivery drivers don’t actually directly report to Amazon, either: in some cases, they’re independent contractors using their own cars, and in other cases they’re working for subcontracted companies. The extra degrees of separation are an intentional choice by Amazon to make it more difficult for delivery drivers to organize or push for workplace protections/wage increases.

At the same time Amazon is squeezing its workforce, it’s also surpassed both UPS and FedEx in total market share. The report cites some mind-numbing statistics, including that there are roughly 9 billion Amazon packages delivered per year, and 83% of U.S. households were on the receiving end of an Amazon delivery in 2024. In an attempt to cut costs and keep up with Amazon, UPS has reportedly instituted layoffs and buyouts, and is beginning to utilize cheaper, non-unionized delivery drivers who are independent contractors.

David Weil, one of the four researchers on the report, is acutely aware of how Amazon has captured the parcel deliveries market while keeping its drivers at arm’s length. An economics professor at Brandeis University, Weil wrote The Fissured Workplace, which explores how corporations have steadily weaseled out of directly employing as many people as possible, while still benefitting from their labor.

During the Obama administration, Weil led the Labor Department’s Wage and Hour Division, a Senate-confirmed position. Weil focused much of his efforts on the intentional misclassification of employees as independent contractors, an issue that’s prevalent across industries and workers of all wages.

One such example: journalism. When I interviewed Weil last week, I told him that during my first year working at GQ, I was listed as an independent contractor. I was eventually brought “in-house” under the Conde Nast umbrella, which was not formally a promotion, but certainly felt like one (my health insurance definitely got better). Weil wasn’t surprised—he said most journalists he speaks to these days have experienced a similar situation.

Same, too, with workers in the tech industry. Weil recalled how, in the 2010s, he visited a Google office in Boston. He checked out the lunch room, which used to be famous for its plentiful, free offerings. But there was a catch for the contractors, he said: “There were cards that contractors wore, and those cards meant they didn’t get all the free food that the other Google workers got. There was a clear boundary set. And that is true in many different kinds of workplace arrangements, where you have employees working side-by-side with contract workers.” (Roughly half of Alphabet’s workforce is made up of independent contractors.)

After Weil left the Labor Department, he kept railing against the gig economy—especially Uber and Lyft’s insistence on referring to their workforce as independent contractors. In 2021, President Biden nominated Weil to once again lead the Wage and Hour Division, but by then, Weil had upset too many business interests. His nomination was voted down in the Senate, 47-53, in 2022; three Democrats joined with Republicans to squash his chances.

I spoke to Weil about his research into Amazon and the precarious position of their delivery drivers, as well as a host of other labor issues.

This interview has been edited and condensed for clarity. A full video interview will be released this week.

Alex Shultz: The working conditions for Amazon drivers are deeply troubling, but don’t seem to be as well-known as the significant issues at Amazon fulfillment centers. Why is that?

David Weil: There is an anonymity to the process that distances you from the people who do the work. We go online, we order our things, it says, “Do you want it later today? Do you want it tomorrow?” We say yes. And then before we know it, we open our door, it’s sitting there. The party who delivered it is not visible to us. Amazon, the brand, hides the process of that last mile of getting the package to the door. And that’s why people don’t realize an Amazon person delivering the goods is a very different worker than the person in a brown uniform from UPS, who used to deliver our packages.

Alex Shultz: There are two subcategories of Amazon delivery drivers: Amazon Flex, and DSP. What are the differences between the two?

David Weil: A Flex driver is an individual who is being paid as an independent contractor to deliver a bundle of items in their car, so long as they hit the time requirements, and the other requirements Amazon places on them. Amazon has no direct employment relationship with them.

DSPs are subcontracted companies, pretty small companies in geographic markets, that do work solely for Amazon. Their business model is delivering Amazon products. A DSP hires lots of workers who are not employees of Amazon. They are employees of the subcontracted company. The subcontractors depend entirely on Amazon’s business, which gives Amazon enormous leverage. DSPs operate entirely under the Amazon system: their standards, delivery times, windows, where the stuff gets picked up. All that is managed by Amazon and their enormous information systems.

But this also means that in the cases where a DSP has been organized—which has been a big effort by the Teamsters in particular—Amazon has cut those DSP operations off, telling them, “You are no longer our provider.” They usually dress it up by saying, “You haven’t been meeting our standards.” But it’s had the direct, chilling effect of whenever a union has been successfully organized, it can be very easily undermined by Amazon saying, “Okay, we don’t wanna do business with you anymore.”

Alex Shultz: What are the motivating factors for companies to use subcontractors? Why does Amazon use subcontractors?

David Weil: In one sense, what Amazon is doing is not new. It is part of a playbook that really started to take hold in the 1980s, originally in manufacturing and in some service sectors like the hotel industry.

Big companies were under a lot of pressure from capital markets to focus on what a business school person would call a core competency. What are you really good at? That’s what we want to invest in. A lot of companies started to hive off any business that wasn’t core to them, but they also started shedding activities to other entities. If you had higher and higher demands on your information technology to be good, and you weren’t an IT company, then there’s some sense in getting someone who’s a professional in that field to set up your system, and then they’re gone. But what companies started to do more and more was dictate everything without being the employer of record. They’d either subcontract the work, or turn it over to a third-party manager, or use a staffing agency, or set up franchising.

That’s why I started using this weird word “fissuring,” because I wanted to say it’s not just outsourcing; outsourcing implies you’re turning everything over to someone else. That’s not what’s happening here. Amazon not only wants to, but has to, dictate all the terms because that’s critical to their brand. They want people to trust them as the party who’s going to deliver. You want the customer to believe that you are in charge of the whole package. But if you can escape all of the things that come with employment, that historically we build our laws around—paying workers comp, unemployment insurance, making sure your workplace is safe, paying people what they’re supposed to be paid based on the minimum wage or overtime or whatever else—that’s core to this fissured recipe. I think what we have seen over time is not only the fissures spreading to other industries, but also spreading to higher-skilled jobs.

Photo by Olivier Rouge on Unsplash

Alex Shultz: For contracted workers, it seems there’s even less recourse to raise workplace protections issues, push for better healthcare, whatever else it may be. This all ties back to the really fragile state of the National Labor Relations Board and the National Labor Relations Act. How enforceable is that act under Trump 2.0?

David Weil: For decades, the National Labor Relations Act has become less and less effective as a force allowing workers to decide whether or not they want to be in a union. And one of the principal reasons that’s true is this use of subcontracting to distance the main company from the workforce. Amazon is a great example of this. If the Teamsters wanted to organize DSPs, they’d have to go separate DSP by DSP, these small work units that are very vulnerable.

During the Obama administration, my colleague on the National Labor Relations Board was Dick Griffin, who was the general counsel at the time. He was arguing for joint employment, a broader notion that you can’t play this shell game and pretend you’re not directing everything, you have to have joint employment under the acts I administered as the head of the Wage and Hour Division. But that was a very challenging thing and was resisted by businesses strenuously. Now, we have several cases working their way up to the Supreme Court that are basically arguing the National Labor Relations Act itself is unconstitutional. I can tell you a year ago when some of this litigation was first trotted out, people said, “This is an absurd argument.” This is a law that has existed since 1935, for God’s sake. How can we suddenly say it’s not constitutional? Well, there is a reasonable chance that the whole act will be thrown out.

Separate from that, the whole way the National Labor Relations Act works is that it created a board that adjudicates big cases. The Trump administration has left three of the five positions empty, which essentially means the board can’t do anything. And the general counsel of the board, which is the party that brings things forward, has said, “We’re being challenged in court as unconstitutional and we don’t have enough board members, so I’m just not gonna bring cases.”

I will add, though: I’m sure there are businesses that are worried about the National Labor Relations Act going away, because that means we’re in open season. There’s no formal process to adjudicate workers’ rights. The act itself was passed in 1935 after waves of strikes around this country precisely because there were workers who were unhappy with their conditions, and there was no specific process to channel that into union organizing and ultimately collective bargaining. We could be back to that world if the whole edifice of labor relations falls apart in the next year or so.

Alex Shultz: Your second nomination to lead the Wage and Hour Division didn’t make it through because three Democratic Senators joined with Republicans to vote it down. At the time, Robert Kuttner wrote an article for The American Prospect about why your nomination likely failed. He made some great points about Chuck Schumer; basically, that it’s hard to believe Schumer didn’t know your nomination was doomed before the votes were cast.

I can’t help but see some parallels to what’s going on right now with the eight Senate Democrats who just voted to reopen the government over the supposed objections of Schumer. What do you make of the idea that there’s always a hidden faction of Democrats in Congress ready to do things like kill off your nomination, or step out of line from their colleagues to imperil Americans’ healthcare?

David Weil: As you were asking the question, I immediately thought of the old labor song, “Which Side Are You On?” And I think that’s often the question that it comes down to. I will tell you the explicit objection to my nomination was that I was too aggressive in enforcing the law when I worked for President Obama. I mean, Mark Kelly said just that. Kyrsten Sinema said just that. I had several long sessions with Joe Manchin to try to convince him to vote for me along those lines, and my principal adversaries were a number of groups in the business community.

The problem for the Democratic Party right now is that going back to the Clinton era, the party played it both ways. You’ve had very powerful business interests who were supporters of the Democratic candidate and the party, but the Democrats also pursued a pro-worker agenda. With things like NAFTA, this idea that you can’t have it both ways started to fester. It exploded when Donald Trump was elected for the first time in 2016.

There is an internal tension between keeping enough people happy to run modern campaigns with all the money it requires, and being true to an agenda that workplace policy is about balancing what is inherently an unequal playing field. The labor market is not like every market. The labor market is inherently—and I’m quoting the Supreme Court of the 1930s—on an uneven playing field, and that’s why we have labor protections.

So the Democratic Party is in an existential moment deciding what kind of party it is. If the progressive side of our political spectrum does not figure out how to embrace the concerns of working people in a more consistent way—and that’s also about affordability, as we saw in the election results a few weeks ago—then we’re in a very precarious place. Your question cited people who have tried to play it both ways. I think the public is being more and more clear that they’re not willing to live with that. You can’t say, “I really like working people, but I also like Wall Street and tech an awful lot, and will do their bidding.”

What we’re reading this week:

• Check out the full study from Weil and his colleagues about workplace protections for delivery drivers.

• Wired has a fascinating, thorough interview with Steven Adler, who was formerly the head of product safety at OpenAI and recently wrote an op-ed for the New York Times detailing his concerns about the company’s embrace of AI-powered erotica.