The president traveled to an Amazon.com fulfillment center this week to announce a “grand bargain.” He offered Republicans corporate tax reform in return for their support for a legislative package intended to create middle-class jobs. Both ideas have merit, and they provide the president with a new economic offensive — something he has sorely lacked. But the choice of Amazon as backdrop is interesting.
From the consumer perspective, the retailer is magnificent. Who doesn’t love its ease, convenience and breadth of choice? It offers near-instant gratification at prices less than most retailers. Amazon founder and chief executive Jeff Bezos, along with Bill Gates, Steve Jobs and the Google twins, are this generation’s Carnegie, Rockefeller, Ford and Vanderbilt: great pioneers of capitalism.
But the story is more complex. Bezos’ company has infamously thin profit margins (and it lost money last quarter), despite having a stratospheric market valuation. And while the Amazon business model has benefited customers, shareholders and some small businesses along its vast distribution network, Amazon, along with Wal-Mart, has hastened the demise of thousands of other retail jobs and placed downward pressure on earnings in publishing and other creative services.
Moreover, it’s fair to ask whether the bulk of its jobs are the kind President Obama would call conducive to a middle-class life. As Amazon expands and builds fulfillment centers across the United States to speed distribution, it is creating a lot of jobs: 7,000 were announced ahead of the president’s visit. Estimates are that these jobs pay an average of $24,000 a year. The poverty line for a family of four is $23,550, so Amazon may pay a “living” wage but not a particularly good one.
My point is not to bash Amazon or to denigrate the people who work hard there, but to comment on how much our economy has changed and how hard it will be to reclaim one in which the majority of Americans are thriving, not just surviving. Twenty years ago, the starting wage at a union automobile factory was $17 an hour, plus generous benefits. The starting wage at an Amazon warehouse today is about $11 an hour. Into that wage gap have fallen the broken dreams of millions of Americans.
Once, our nation’s most admired companies paid strong wages. They were admired for their products and services, their share value and their ability to build the middle class. Today, only two legs of our private-sector stool seem steady.