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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