Amazon’s Hiring Spree Shows Difficulties for American Middle Class

New jobs like those found in Amazon fulfillment centers aren't an antidote to the weak recovery; they are a symptom of it

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Dan Harr / AdMedia / Corbis

President Barack Obama made a stop at Amazon's distribution center in Chattanooga, Tenn., where he spoke to the gathered crowd about jobs creation and lowering the unemployment rate, on July 30, 2013

President Obama on Tuesday traveled to Chattanooga, Tenn., to one of Amazon’s brand-new fulfillment centers, part of the e-commerce giant’s massive expansion effort that will enable faster delivery of goods and add 5,000 full-time jobs across the country.

The topic of the President’s speech was creating jobs for the middle class, but the choice of an Amazon fulfillment center as a setting for such a speech was curious given how little the firm pays its workers.

Amazon says the median pay for jobs inside its fulfillment centers is “30% higher than that of people who work in traditional retail stores,” though the company doesn’t share the arithmetic that leads it to this conclusion. Amazon has previously said it pays workers in its fulfillment centers roughly $11 per hour, and according to the Bureau of Labor Statistics, the median retail worker makes $10.15 per hour, while the median cashier makes $9.12 per hour.

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In other words, while Amazon is paying above the industry average, it’s not paying its workers a 30% premium. (Amazon did not return requests for comment.) Furthermore, at 40 hours per week, an $11-per-hour salary comes to just $22,880 per year, which is below the federal poverty level for a family of four.

None of this is criticism of Amazon. The company deserves praise for heavily investing in its business and hiring full-time workers at a time when many other firms are playing it safe. Even an extremely healthy economy is going to include jobs that don’t pay very well. But the fact that President Obama has chosen an Amazon fulfillment center as the backdrop for a speech on how to bring back strong, middle-class jobs illustrates the difficult position the government finds itself in as it tries to encourage a more robust recovery.

In fact, new jobs like those found in Amazon fulfillment centers aren’t an antidote to the weak recovery; they are a symptom of it. Though we’ve added more than 7 million new jobs since the beginning of the recovery, those positions have been concentrated in the low-wage service sector: exactly the kind of jobs Amazon will be looking to fill during its expansion.

And though the President has made it a priority to refocus his attention on the tepid recovery, the solutions he’s outlined in recent weeks are nothing new. On Tuesday he proposed a combination of corporate tax reform and infrastructure investment in a repackaging of past proposals that he feels has a better chance of gaining Republican support. But as my colleague Zeke Miller noted, Republicans are already falling over themselves to reject the new plan.

What gets lost in the fog of political war is the fact that even if one party or the other had the ability to unilaterally impose its economic vision on the country, there’s not much reason to believe our ills can be cured by Washington policies. Macro trends like globalization and automation are hollowing out the middle class, and for a generation jobs losses have been concentrated at the middle of the income spectrum while job gains have gone to the upper and lower classes. And while there’s reason to believe the decline in union membership has in part led to the decline of the middle class, even countries with heavy union membership like Canada and Germany are experiencing variations of the problems we have in the U.S.

Our economic problems are much bigger than the complexity of the tax code or the level of investment in infrastructure. They are the result of larger forces in the global economy somewhat beyond the reach of any particular national government. Standard economic theory argues that in the long run we will all be better off once the convulsions of globalization and rapid technological change work themselves out. But in the meantime, those of us living through such changes can expect a bumpy ride.

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36 comments
jtmboy978
jtmboy978

I call BS on the average retail and cashier wages. Most start out at minimum wage or slightly higher. Amazon starts out at 11.50 an hour plus full benefits day 1 which include medical, 401K, and stocks. Amazon is by far the best company I've worked for and it pays more than Wal-Mart or any other retailer in my area. The only retailer that pays anything close to the wages in the story is Sheetz that starts at about 9.00. Plus Amazon lets you work overtime pretty much year round. You can get up to 60 hours a week during the hoidays.

innateliar
innateliar

The article does not look at things in a rational manner and decides to hype up that Amazon is creating low paying jobs. Amazon is a primarily a retailer and it mainly competes with Wal-Mart, Target and other retailers. There are two aspects to retailing: 

1. front end store experience 

Now, what Amazon does is replace the Front end store experience with website and home delivery. People in retail stores are being replaced with workers in home delivery i.e. USPS, UPS, and Fedex. So it would be fair to compare the salary, benefits and required effort with front end retailer workers. 

2. Back end or supply chain

Amazon does not or cannot replace back end supply chain. Most amazon fulfillment center are very similar to the ones owned by Wal-Mart, Target etc. There are other 3rd party fulfillment centers which do the same job. Now, it would be fair to compare the work environment, salary and benefits structure of Amazon fulfillment centers. If media does believe that some of the fulfillment centers make worker beyond the limits, we need to have productivity laws like Europe where workers in fulfillment cannot pick at a rate higher than predetermined number. And this law should be applicable to all retailers in the country. 

Now, that would be fair for everyone, Amazon, Workers and other retailers.. Anything else is just hype created by media on behalf of competitors. 





sprecherbox
sprecherbox

For the record pay at Amazon has been standardized. They have pay scales based on different levels the most common level is level 1 (the lowest one will get paid) and they make $12 starting off and get raises every 6 months until it maxes out over 3 years to $15 an hour. The second most common level 3 starts off at $13.25 and with the same incremental raises maxes out at $18 an hr after 3 years. Healthcare benefits are inexpensive no more than $60 a month with options for as low as $20 a month. They also give new hires a few free stocks as well as a monthly bonus of 3 - 10%. Now maybe after 3 years of employment they pay 30% more than other retailers but it doesn't start that way. However clearly Obama picked Amazon because for a job that the average Joe or Sue might get (like the BestBuys. McDonalds, etc) Amazon not only pays well beyond minimum wage of 7.25 it also provides its employees with reasonably priced healthcare options and the opportunity to earn more over time without being stuck at the same salary year after year.

chokingkojak
chokingkojak

It's already been a bumpy ride, "sport"  -- am referring to you, Matthews.

If global businesses under-regulated by the U.S. government (or some coalition of governments) continue to reduce western people to working-poverty, the logical political outcome -- to me -- is a (likely, novel) form of fascism.  

Unsurprisingly, in such a climate, the writers' of "arm's-length," "kiss d-ck," analytical pieces such as this may come to find that they've earned new jobs --  as forced-labor at  "Fulfillment-Center" work-camps (Duration: Life).

RekkaRiley
RekkaRiley

A big part of the problem is the continued obsession with "boom and bust" business strategies.

Yes, you do want to make a continued profit...but, do you want insanely big profits for a few quarters before it blows up in your face, or do you want a steady, reliable rate of profit increase that won't fail completely when one small detail goes wrong?

We need to focus more on sustainable business practices, and I'm not talking about environmental sustainability (though that is important too).  I'm talking about business practices that will allow that business to thrive for decades, instead of increasing profits in ways that alienate both employees and customers, devestate the resources necessary for producing their products, etc.

We shouldn't focus just on "what will make us the most money."

We should focus on "What will make us the most money, in a manner that we can maintain for the next hundred years rather then just a few short quarters?"

"Increased profits every single quarter by any means necessary" can't be sustained for more than a few years, and ends up dragging the entire industry down with it by forcing other companies to adopt the same "standard."  

We need to go back to thinking long-term, not short-term.

CharlesEdwardBrown
CharlesEdwardBrown

Why do it then? Why stick with Globalization and this new world order, if it is destroying America's middle class? We should raise tariffs on imported goods. Go after companies that ship jobs overseas and  change the game. The only people getting rich from this status quo are the top 1 percent. Lets change the game in favor of building the middle class. We have been watching this happen for almost 15 years now. We should try to elect people who want to change this status quo and not pander to special interest groups.

SmoothEdward1
SmoothEdward1

We have an economy that runs on an entirely new standard, driven by every-increasing profit expectations dictated by Wall Street.  That means there is a relentless drive reduce costs no matter how profitable a company already may be. Investors certainly deserve a good return on their investment, but define good? We cannot look at the financial life of our nation and pretend it can act as some kind of separate amoral institution, that can only act in one way. That's giving our system too much of a free ride from self-reflection about the moral consequences of its actions. We frequently hear from the Objectivists about moral standing of government to do what it does, but the same question about our economic system, and the assumptions under which it operates could also use a little mirror time. We frequently hear complaints about income redistribution from the conservative side, but isn't dragging everyone's income down to compete with wages in overseas labor markets effectively the same thing? I have always believed capitalism to be the best system for increasing the wealth of more people, quicker than any government program could, and it still can, but not if continues operating the way it has over the past several decades.

HungryChuckBisquits
HungryChuckBisquits

Over the past thirty years Americans have been convinced that unions are evil, the EPA has prevented industry expansion, access to health care is an infringement on freedom, public schools are responsible for most social ills, free trade agreements create jobs in America, ...

When will we wake up?!  When will we stop enabling our own demise as working class people?!

Never mind...  American Idol or a ball game is coming on. 

Realworldnonfantasyland
Realworldnonfantasyland

What does Poverty mean?  Poverty to me is people in Africa who have no food, no water.  Poverty in America means a 32 inch TV instead of a 42 inch tv.  No HD box for cable.  Means you might actually have to by Peanut butter for lunch instead of spending $5.00 at Wendy's every day.  The poverty line in America is a joke

Realworldnonfantasyland
Realworldnonfantasyland

I saw a guy begging for money this week talking on a cell phone.  We are in horrible shape as a society. 

allklier
allklier

Well reasoned story. 

One point I would take issue with is that pointing out that a salary of $23K is below the poverty line. The age of the single earner household is in the past, and the average size of the American household according to the 2010 census is 2.58. Both of those facts are other elements of the global change. It doesn't make the $11/hr look any better, but we need to stick to the facts when we argue this topic.

this_guy
this_guy

@jtmboy978 I work for amazon and it is defiantly not the best company I've worked for. The pay is ok for what you do and is very average pay for this type of job. They will even tell you when pay evaluation comes around that their goal is to pay the exact average of this type of job. The top out rate for a standard employee is a meager $14.50 after FIVE years of service. This pay scale is terrible compared to other warehouse jobs doing very similar work. As for the overtime, that depends on where you work. Here you cannot work overtime all year round, only when they they allow it, and its never been more then 55 hours a week, most of the time 50. Overall amazon is a bad company to work for. The differences of policies between buildings is shocking. Favoritism is a huge problem in most buildings. Getting a higher tier job is very difficult unless you know people with influence. Most all people I've talked to, from 4 different buildings, hate working here as do I. Most of us are stuck here because of an abundance of workers in the market. The turnover rate (rate at which people quit) for our temps is 80%. That is one week after a group of temps comes in 80% will have quit, many on the first night. Yes you have to come in as a temp as hiring "off the street" is rare and only when they are in dire need of employees quick. My only advice to anyone considering working for amazon is, don't. It should only be a last resort to work here. It use to be a good company to work for 5+ years ago, they had much better treatment, policies, and benefit and over the years they have slowly whittled away at those.

fknbobble
fknbobble

@sprecherbox @sprecherbox A bit of correction.  After 2 years its an annual raise, which does max out at $15/hr eventually for a Tier level 1.  Tier level 3 requiring a BA degree and not very common nor easy.  There is no Tier 2 level.  Health options for a single person no more than $60 a month and script co-pays generally are $20 each, and med range co pays.  New hires get reserved stock which doesn't mean anything unless you put in 2 or more years you don't own it and therefore is useless if you cant keep up till then.  The stock awards are fewer than previous years probably to balance out the worth of each going up.  The "bonus" which is actually called something else is ruffly $30-$60 a month based on facility performance and has also been greatly reduced by recent new policy.  Most people can't work as hard as the required "RATE" and I know many that left after the first 6 hours unless your in very physically fit... or let go after the holiday season is over.  Not even Mc Donalds workers work that hard!  There is no such salary.  Most jobs don't pay as much yes, but most jobs will not work there people into the degree of exhaustion and dehydration that is why more than 50% of the people that work there are under 30 years old.  (Not counting the desk jobs)  Good thing they have a mock of an urgent care in the facility.  Its excellent they employ so many people though.  One question I hear ..... If the founders worth is over 25 BILLION why are all the people working UNDER the poverty level and maxing out at $15/hr?  Doesn't a manager at Wendy's get paid that much?  

cee
cee

@Realworldnonfantasyland i actually really agree with you.  and i say this as someone who has been eating PB&J for two weeks now.  i don't have cable, keep the AC in my house set to 76, etc.  but i live within my means and make due with what i have. 

JimB210
JimB210

@Realworldnonfantasyland Poverty in America also means a family of six people living in a two room apartment, with one bathroom and one bedroom. Poverty in America also means not seeing a doctor until things are really bad, then you go to the Emergency room and wait and wait. Poverty in America means not owning a car, and needing to take 3 hours and two buses each way to get to a job that pays $8.50 an hour. Poverty in America means not being able to buy new shoes for your second kid, so they wear the shoes outgrown by the older child, no matter how worn they are. Poverty in America means getting SNAP, and hearing and reading about how bad that makes you, but your kids have to eat. Poverty in America means listening to people (like you) who have no idea what its like pontificate about how everyone could be just like you if only they worked (without your thinking about how your parents supported you, how your schools trained you, and how your fortunes too turn so much on circumstances beyond your control). Despite what you want to believe, you didn't build all that -- roads, schools, clean water, safe streets - and you should support providing that for the next generation.

Realworldnonfantasyland
Realworldnonfantasyland

Poverty in America is politicians telling its poor citizens that you need them to survive. 

RekkaRiley
RekkaRiley

@Realworldnonfantasyland Most jobs require that you have a working phone number in order to apply for a position.

There are actually programs in my city that offer lower-cost or free cell phones to people who are seeking employment.

They are usually older, used models that can't do anything more than receive or send out calls.  No texting, no apps, sometimes not even an answering machine.

Hardly an extravagance.

benjaminbaby
benjaminbaby

@ViableOp there are jobs for the middle class that pay very well, you just need the skills that are in demand, maybe not a degree in liberal arts

JimB210
JimB210

@allklier I wouldn't be too anxious to live in a one-person household on less that $23K a year. I'm not sure that saying most families have two wage earners is a sign of a solution, or even an acceptable alternative. Both of those wage earners should make enough to live well on their own income, by themselves, then if they choose to live together instead, that's better for both of them. However, this does not in any way excuse the increasing trend towards income inequality, with most of the gains concentrated at the very top few percentage of wage earners. The generational reinforcement of this trend by the 'winners' using political power and leverage to strengthen and increase their gains at the expense of the middle and lower wage earners is a very troubling long term problem, and very much within the scope of government to redress, should government not instead be preempted and bought out by the very top few percentage dealing for ever-increasing benefits. In short, the system has been rigged to benefit the few, and there's little prospect of this decreasing despite Obama's rhetoric, until the whole system breaks down in some revolutionary fashion... the aristocrats of the new plutocracy would do well to study the lessons of history for the fate of other oligarchical plutocracies over history... there's no reason for that to suddenly stop, no matter how much surveillance is conducted to benefit the powers that be.

JimB210
JimB210

@CharlesEdwardBrown @SmoothEdward1 As a politician supported and funded by the very upper class, why would I ever support the middle class? Who makes my campaign donations? Who buys those $10,000 tickets to my fundraising breakfasts? Sure is not the middle class. Divide and conquer - we've set up a TV network that makes sure that one bunch of middle class fights the ideas of the other bunch of middle class, while we at the top buy out the government to make our gravy train even better. Just keep telling the middle class that if they vote for those guys it will mean the end of everything - while we rake off the benefits and bailouts. After all, we deserve the benefits of government, we bought it.

Realworldnonfantasyland
Realworldnonfantasyland

@JimB210 @Realworldnonfantasyland Cheap shoes cost $15.00 and can last a year.  Peanut butter costs $3.00 and can make you 50 sandwhiches and its one of the better things you can eat.  I've been to the convenience stores when its Welfare payday, taking money out of an ATM machine instead of putting said money into a bank account costs you money.  Buying junk food at a convenience store instead of peanut butter costs you money.  Quit making damn excuses all the time.  This is the best time ever to be poor because everything is so damn cheap now.  Its just if you want to make excuses for people saying its alright that you have 6 children so we need to help you more instead of asking what the hell you doing with 6 children if the only job you are able to have takes you 3 hours to bus there and only pays you enough to cover not even your own expenses

Realworldnonfantasyland
Realworldnonfantasyland

@SmoothEdward1 @Realworldnonfantasyland Nope, work my job, pay my bills, take responsibility for my own budget, only expect what I can get.  If I want more than I will find a 2nd job to pay for more.  Last time I asked "where's mine" was at an Easter egg hunt when i was 3. 

JimboSlice
JimboSlice

I assume you meant "can't".  If not disregard.  I did a quick search to see how spoiled we are in America:

http://www.globalissues.org/article/26/poverty-facts-and-stats

"Almost half the world — over three billion people — live on less than $2.50 a day."

"At least 80% of humanity lives on less than $10 a day."

People can survive on $23k and will.  People don't just roll over and die.  We've become spoiled and are just complaining to complain about most issues.

diracproject
diracproject

@Realworldnonfantasyland @JimB210  

He said six people, not six children.  It could be two parents, four children.  It could be two parents, an adult sibling, a grandparent, and two children.  You're assuming a specific example and only using that to attack a wide range of working poor family living situations.

innateliar
innateliar

@SmoothEdward1 I do agree that we should be trying to lift the standard of living for every one. This needs to happen in conjugation with their contribution to the economy. If all we do is offer people money without increasing their productivity, then we would end up creating an unsustainable economy. 

SmoothEdward1
SmoothEdward1

economic system is a failure as it serves to benefit one group at the expense of another. It's income redistribution by the wealthy.

SmoothEdward1
SmoothEdward1

Yes, I did mean "can't." I don't buy this idea that we shouldn't complain because we don't have to live on $10.00 a day. That's a little too convenient for the people stand to gain the most from lowering our standard of living. We should be trying to figure out how to lift people up without impoverishing ourselves to do it. If we can't than our econ

BrianHollander
BrianHollander

@JimboSlice While I agree that we are a bit spoiled in this country, you cannot cite global poverty as a measure of poverty in the US.  While over three billion people do live on less than $2.50 per day, they also live in economies where costs are much lower.  Additionally, it is a somewhat specious argument to posit that we should not care about those in our economy who are poor because there are people elsewhere who are poorer, especially when our economy, and as such, each of our individual fortunes, benefit from a reduction in poverty.