Whether or not this 'passes the smell test', it is provably what Amazon does, as confirmed by extensive reporting and several court cases. I think you just aren't in the same situation.

The difference, if I had to guess? You want "dependable, trustworthy employees who work diligently and productively." That's an excellent goal, and I realize that it's a hard thing to find. Employees who are known to have these traits make a significant premium over minimum wage, even at unskilled tasks.

Amazon... doesn't seek that. These are backend workers, so attitude and customer service aren't relevant. Their warehouse workers are run through metal detectors to prevent theft. They're forbidden from having phones on the job. They can't perform self-directed work; instead they're directed in every task in close detail by software. They can't schedule anything themselves; food and bathroom breaks are rigorously limited, and require checking out through metal detectors to access. Diligence is replaced by incredibly demanding standards for minimum performance.

In short, they've opted out of seeking workers with the desirable traits you mention. With decent wages in low-employment areas, people will suck up all of that, at least for a time.