Amazon investing $450 million in contract driver pay, benefits

Amazon is offering funding for higher pay and two new employee benefits to members of its Delivery Service Partners (DSPs) program.

Launched in 2018, the DSPs program provides support to Amazon employees who leave their jobs to build their own contract delivery businesses. The e-tail giant will invest a combined $450 million in the next year in additional rate increases to support DSPs in increasing their employees’ pay, and also in offering them retirement plans and educational opportunities.

Now, Amazon is offering a 401(k) program to U.S.-based DSPs and supporting them in matching contributions for drivers. Amazon will provide DSPs an estimated $60 million in the first year to help offset the costs for DSPs that match employee contributions to their teams' retirement savings and reimburse 100% of the administrative costs through a select third-party provider of retirement savings benefits.

In addition, a new academic program, Next Mile, provides drivers employed by participating DSPs with up to $5,250 per year to participate in more than 1,700 academic programs, including bachelor's and associate degrees, skill certifications, and high school completion courses.

The Next Mile program is offered by InStride and was inspired by Amazon's Career Choice program, which offers college tuition prepaid to more than 750,000 hourly Amazon employees. Next Mile provides participating DSPs and their drivers access to technical training and upskilling opportunities.

[Read more: Amazon adds academic and career coaching to employee benefits]

DSPs and drivers will have access to skill-based programs, GEDs, or degree programs at educational institutions across the United States. The program also provides access to curated career pathways to help participants identify educational programs and career options based on skills and interests. Next Mile will be available to all participating DSPs and their employees starting in January 2023, with Amazon reimbursing DSPs for tuition expenses for all eligible drivers.

"Through the DSP program, small businesses around the world have generated over $26 billion in revenue for their companies since launching four years ago," said Parisa Sadrzadeh, VP of Amazon's Worldwide Delivery Service Partner Program. "We couldn’t have done that without DSPs and their incredible teams. We will continue to innovate with them and use our economies of scale and resources to help them provide best-in-class offerings to their employees. Investing in our DSPs means that we are continuing to invest in communities nationwide. I can't wait to see the future success stories of what these drivers achieve."

According to Amazon, these new programs are a direct result of feedback from DSPs and drivers. Today, Amazon says it works with more than 3,500 DSPs around the world that employ more than 275,000 drivers, who deliver more than 10 million customer packages every day. DSPs and their teams support Amazon deliveries worldwide in over 15 countries, including France, Italy, Ireland, Brazil, the Netherlands, India, Belgium, Austria, Luxembourg, and Saudi Arabia.

Amazon says it has invested over $7 billion worldwide over the past four years in safety technology, driver training programs, increases the rates it pays DSPs, and program improvements.