Obama needed a visual to show that, no, really, truly, jobs really are being created somewhere in America for yet another one of his exercises in trying to pretend that he’s on the side of ordinary Americans. But it’s hard finding any really good success stories in an economy with 12.2 million counted as unemployed and over 28 million as “disemployed” which is the number of people out of work relative to normal labor force participation rates when the economy is in good shape. So Obama chose as his backdrop an American success story, Amazon, which is opening a new a warehouse in Chattanooga and hiring 7,000 people.
But Obama in trying to tout this as a success story revealed either that he’s completely out of touch or that he’s conditioning American to regard a state of peonage as middle class. Not all that long ago, “middle class” meant you could after a few years of work and savings, buy a house in the suburbs, afford to have children and have a reasonably comfortable family life, and send those kids to college. “Middle class” also generally meant college educated, white collar employment plus the higher-skilled, better paid blue collar jobs.
If you had any doubts that that vision of middle class life was on its way to extinction, the Obama speech made it official. Amazon has been repeatedly cited here and abroad for abusive conditions in its warehouses. The Los Angeles Times reported in 2011:
Over the past few months, interviews with 20 current and former warehouse workers provided a glimpse of what it’s like to work at the facility near Allentown.
Workers said they were forced to endure brutal heat inside the sprawling warehouse and were pushed to work at a pace many could not sustain. Employees were frequently reprimanded regarding their productivity and threatened with termination, workers said. The consequences of not meeting work expectations were regularly on display, as employees lost their jobs and got escorted out of the warehouse.
During summer heat waves, Amazon arranged to have paramedics parked in ambulances outside, ready to treat workers.
In a better economy, not as many people would line up for jobs that pay $11 or $12 an hour in a hot warehouse. But Amazon and Integrity Staffing Solutions, the temporary employment firm that is hiring workers for Amazon, have found eager applicants.
Amazon was embarrassed into installing air conditioners in many of its warehouses. But otherwise, the picture hasn’t changed much. From the Lehigh Valley Morning Call, one of the papers in the Allentown area, on Monday:
The Seattle company announced Monday that it is hiring a total of 5,000 warehouse workers at 17 fulfillment centers, including the Lehigh Valley. It is also hiring 2,000 customer service representatives in North Dakota, Washington, West Virginia and Kentucky…
Pay for warehouse positions in Upper Macungie is $12 per hour, according to Amazon’s website. The median pay for similar jobs in the region is $14 per hour, according to data from the Bureau of Labor Statistics.
The jobs come with a benefits package, company stock awards and bonuses, the company said.
So notice, first, that those 7,000 jobs aren’t in Chattanooga, but all over the US. Second, Amazon’s cash comp is markedly below local averages. And although it offers a “benefits package,” it’s not clear that it’s better than what other area employers offer. The article doesn’t add that some of these 7,000 jobs are part time and/or seasonal.
A quick look at a Chattanooga job site shows the hourly for a comparable job at $9 an hour for someone with a minimum of six months recent experience. That’s just above the living wage for a single person in that city of $8.92. Given Amazon’s record in Allentown, there isn’t good reason to expect it to be paying over the prevailing rate in the local market.
The message from Obama is clear: Americans are now expected to celebrate when companies are willing to pay at or not much above a living wage. As long as you pay enough that the workers don’t wind up having to seek public assistance in the form of food stamps or emergency rooms for medical care, you’ll now be promoted as creating better conditions for Americans. That’s true as long as you remember that the Americans that benefit from this grinding down of ordinary citizens are Obama’s backers and other members of the elite.
And how does that take place? As Wolf Richter explains below, Amazon is a net job destroyer. So the enlargement of the pool of unemployed gives Amazon the sort of leverage over workers that it has used to grid down book sellers and other merchants.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
Amazon’s promotion machine par excellence shifted into high gear to tout President Obama’s visit on Tuesday to one of its warehouses – “fulfillment center” is the newfangled term – where he unveiled his “better bargain“ for “middle class jobs.” That visit was artfully synced with Amazon’s announcement on Monday that it would create 7,000 jobs. Out of nothing. One of the ongoing lies in America’s jobs crisis – and the President stepped right into it.
He was at the Amazon warehouse, a 1-million sq. ft. facility in Chattanooga, Tenn., to talk about “a good job in a durable growing industry.” The durable growing industry he was referring to was retail, specifically online retail, and more specifically Amazon’s online retail empire. And the jobs he was referring to were warehouse jobs – many of them part-time or seasonal.
Of the jobs Amazon announced it would create, 5,000 would be in its “fulfillment network,” so warehouse jobs – picking, packing, checking, and shipping customer orders. These jobs would be spread over more than a dozen of its warehouses across the country, including the one in Chattanooga, which already employs about 1,800 full-time and 700 part-time workers. And 2,000 jobs would be in customer service spread over five locations or might involve work at home. A portion of these jobs would be part-time or seasonal.
“What the president wants to do is to highlight Amazon and the Chattanooga facility as an example of a company that is spurring job growth and keeping our country competitive,” explained White House deputy press secretary Amy Brundage.
Alas, there is another side of the ledger of our job-creation hero. Amazon has been a juggernaut. I’m not complaining: I’m both a customer and an author with two books, and I’m happy with the company in both areas. But much of the retail industry, particularly booksellers, have seen their livelihood trampled.
Borders went bankrupt in 2011, eventually liquidating over 500 stores. Nearly 20,000 jobs went up in smoke. Barnes & Noble announced in early February, after a crummy holiday season, that it would shutter about a third of its nearly 700 stores. Thousands of jobs would get axed. The B&N down the street from us closed after Christmas a couple of years ago.
The battlefield of the booksellers is littered with memories of thousands of smaller shops. Ask the owner or manager of your local bookshop how they feel about Amazon, assuming that there still is a local bookshop in your neck of the woods. I made that mistake only once, mentioning the A-word in a conversation with the manager. His face turned red, his lips formed a thin line, and when they opened again, it was to utter “Amazon” as a pejorative.
The jobs that were lost in these stores were often held by people who liked books, knew books, read books, could help you find books, and could recommend books. Often times, these people were at once sales reps, merchandisers, customer service reps, cashiers, inventory clerks, computer technicians, and what not. They’ve been replaced largely by a website – and by some warehouse jobs.
“What is woefully underreported is the number of jobs its practices have cost the economy,” wrote Oren Teicher, CEO of the American Booksellers Association, in a letter to the President to protest his appearance at the Amazon warehouse. The letter put a figure on those jobs lost in the wake of Amazon’s success:
All told, according to the Institute for Local Self-Reliance, every $10 million in spending that shifts from Main Street retailers to Amazon results in a net loss of 33 retail jobs. That would mean for 2012 alone – using Amazon’s own numbers about its increase in sales – Amazon cost the US economy more than 42,000 jobs just last year!
This would be in all brick-and-mortar retail operations combined, not just bookstores, but nevertheless. “Small businesses are the engines of the economy,” the letter said. “When a small business fails and closes its doors, this has a ripple effect at both a local and a national level.” And so the CEO and the board of the ABA told the President that they were “disheartened to see Amazon touted as a ‘jobs creator’ and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true.”
Life without online retail is hard to imagine these days, and Amazon has been on the forefront with countless innovations. Online retail sales this year are expected to reach $262 billion in the US – of which over a quarter is likely to go to Amazon.
Amazon has an advantage over small stores: it has the Fed. The Fed’s money-printing and bond-buying binge has produced the largest credit bubble in history and another stock market bubble. Both of them are the most magnificent corporate giveaways ever. Amazon benefits enormously: it can lose money, no problem, and yield-hungry investors are still willing to buy its bonds that yields so little it’s ludicrous; and it can use its inflated stock as currency, of which it can always print more, to compensate its employees and executives and buy other companies. Smaller retail businesses can’t do any of that.
What President Obama conveniently overlooked when he used Amazon as a platform to tout his “better bargain” was the subsidy Amazon received from the Fed and the negative net effect on jobs that that subsidy had.
People in the upper income categories, those who don’t have to worry about the price of toilet paper, have seen their incomes rise over the years. The rest are in a downward spiral. The lower end got hit the hardest. For these folks, tissue makers have a special strategy: desheeting. Read…. The Exquisite Art Of Marketing To Pauperized Consumers.
Update: A Bloomberg video yesterday reported that a survey by Glassdoor found that the average Amazon warehouse “associate” salary $11.69 an hour, and got bonuses, so that average pay was $23,800. Pulling out my calculator and assuming 250 work days at 8 hours a day, that’s $11.90 an hour all in. And report quickly skips over that Glassdoor reports that job satisfaction is lower than average.
The company’s temp agency is now the target of a suit for making warehouse workers go through a security line at the end of their shift (which can take up to 25 minutes) but refusing to pay them for the time.
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Let’s not forget what it takes to get these jobs created:
from an alternative paper in Nashville:
Amid that debate, though, people seem to have lost track of a basic truth: The Internet monolith is in the Volunteer State because local and state governments essentially bribed it, using a potpourri of tax breaks, incentives and land giveaways that add up to some $40 million.
In November, Chattanooga’s city council voted unanimously to give Amazon a $30 million incentives package that ensures the company rebates to offset city property taxes until 2022. Amazon got an 80-acre site for free, and the state spent a reported $4 million for preparation and grading.
This was the list price for what Amazon said at the time would be 1,476 full-time jobs and some 2,400 seasonal positions. But when Amazon announced on Monday it would begin hiring for the two facilities, the figure for full-time workers had dropped to 1,200 and the seasonal spots to 2,000.
Through $4,500 tax credits for each new worker hired, a break on school taxes worth a reported $12.7 million over the 11-year term of the deal, and various other measures, Chattanooga is buying full-time jobs at a rate of about $25,000 a pop. Add in the seasonals, and that figure drops to about $13,600.
We can see where this vaguely defined jobs plan is heading.
I knew Obama was out of touch, but I’m still astounded that he chose an Amazon warehouse to tout a jobs program. It does, however, seem an entirely appropriate venue to announce the desire to cut corporate income tax rates.
I think the likelyhood is the President is a psychopath and hears only what he wants to. I also think he feels he no longer has to pretend so much to be a normal human, as it seems more and more of his real thinking has bled through over the last seven months.
Yes, that too.
I just filled out an employment packet for a new job. Several forms in the kit (approx. 20-25% of them) were specifically to see if my hire qualifies my new employer for a tax reduction under several programs. Was I a veteran, a youth, a person whose family had been on WIC or Snap, a felon and so forth. Besides the threat of random drug testing and proof of citizenship/employment status, somehow, I felt degraded by the whole thing.
For the children of the working class, looking for work is degrading. You’re basically going to rich powerful people and saying, “Please like me well enough so that I can buy food.”
The only thing worse than being exploited by capitalism is not being exploited by it.
Well, that’s a judgement call.
Texas did the same kind of thing, giving Amazon a million dollars in tax breaks for every minimum-wage jobe created, and in exchange, $25 million Texans get to pay sales taxes on Amazon purchases.
It’s interesting that this happened AFTER Barnes and Noble and Best Buy closed in our neighborhood.
Over here our Chancellor is learning to drive a fork-lift truck (what does he know we don’t)?
Amazon is no less unpopular in the UK, as detailed in a recent report in the FT:
Unpacking Amazon
A friend of mine worked in an Amazon warehouse for a while, he said it was by far the worst job he’d ever had.
About 90% of the staff were foreign, and of the Brits, most were getting benefits of some sort because they weren’t earning enough.
+ 1
Recommended reading.
The thing that bugs me is, they (Amazon) have a good proposition and business model. They don’t need to screw over labor to make it pay. There’s enough gravy for everyone. I can’t come up with a better explanation than plain, wanton, nastiness.
That’s what is known in economics as “rational self-interest.” See, it doesn’t sound so bad when you say it like that!
Clive Sir,
I think the word you are looking for is “GREED”.
Labor compensation is determined by supply and demand. Its not more complicated that that. Arguments about sharing are inane because they miss that point. Certainly, there are minimums. Chattel slavery wasn’t economical in the North East in Colonial America because slaves are crummy laborers and aren’t going to move rocky soil or produce innovations. No one is going to pay more for good work when the going rate is X. Henry Ford paid reasonable wages because he needed a fair degree of competence and had to worry about those employees moving west or sabotaging his plants. He needed his employees to stay in the Great Lakes region, so he could cut back on transport costs by using the lakes. This is why the autoworkers made decent livings, not grace from on high.
If you want incomes to go up, you have to raise incomes or increase the number of jobs available to a point where people are competing for employees and not the other way around. This can only be done through government action and unionizing, not appeals to sham stories of enlightened industrialists.
When you go to a restaurant, what do you tip? Their hourly wage is abysmal. Would you say your tip is average or close to average? Its the same problem. Enlightened souls come along from time to time, and certain small businesses are owned by people who love the business not the money and pay their employees more like a partnership. Still, the real problem is still supply and demand. If Amazon didn’t have people lining up to work, they would have to pay people more. Its that simple.
Good comment, NotTimothy. Aside from a few business, most are in it to squeeze out as much money for shareholders and execs as possible. There are two possible solutions: 1) reduce the excess supply of labor by directly creating more jobs and 2) legislate a minimum wage. Number one actually stands to both help customers and help Amazon (more people with money equals more customers).
AJ,
There used to be a 3rd way — organize (aka Unions).
But forming an enterprise to act in the free market is un-American in 2013.
There are many solutions:
-Fixing healthcare so people can feel free to leave jobs or attempt a small business.
-Tax increases to reduce the need for parasitism from the wealth extractors. Much of executive compensation is a measuring contest. I’m admitting a word for the spam filter. Many people will turn to employee morale and compensation if they can’t get the money. Look at baseball compensation. Verlander is near the end of his best years, and he is going to make $100 million on his new contract. I don’t think it makes any sense from a Wins above Replacement position, but its partially due to baseball unions demanding and winning a certain amount of money. With growing revenues from better tv deals, there is money to throw at players who aren’t worth it in my opinion as a baseball fan. Many athletes are overcompensated, but five years ago, Verlander was worth his contract. When the incentive to steal is gone, there is still the measuring stick incentive, and the money will go somewhere beyond wealth accumulation to demonstrate worth and status.
-paying people to go to school; lets end free school ideas and just pay people to go.
There are a number of options, but relying on the charity of our better is just an absurd fantasy.
When you go to a restaurant, what do you tip?
20% minimum. How about you?
I think you missed the point by turning it back at me and trying to imply I’m cheap. The point is 20% enough to go along with a slave wage. The answer is no, and its 20% in the North East but declines as you move South. Do you buy alcohol which is where the restaurants make money from their markup or do you fill up on free re-fills?
The level of the tip isn’t determined because of wise decision making about helping people to earn a living. Its probably what we learned from society around us. When many waiters were kids or people just looking to bring in extra cash with spare time, it worked better than it does today.
30 years ago when wages were better were you tipping 20%? Have you increased the tip percentage to reflect the declining wage? Or are you just doing what is the going rate which is largely the socially acceptable minimum? Oh sure, you might feel good by rounding up from 18 to 20%, but in the end its the same behavior as Amazon. The only way to fix it is not through feeling good because you tipped the most at the table and made a production so everyone can be impressed. Increasing the wages through fantasy about wise father Henry Ford isn’t going to actually work. Henry Ford paid real wages because he was geographically limited to the Great Lakes region and still had to deal with people moving west and enough nativism to keep out immigrants. I would bet you tip 20% not out of thinking of what would be nice considering their slave hourly wages, but 20% is just what you’ve always done.
20% is pretty common among native New Englanders. Nice try!
“They don’t need to screw over labor to make it pay. There’s enough gravy for everyone.”
I understand the general point, but ironically, the specifics of Amazon don’t cooperate.
The company basically sells its products at cost. There isn’t extra gravy lying around – it would have to be squeezed from someone else (dictating more favorable terms to suppliers, raising prices to end customers, receiving government subsidies, etc.).
http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsOther
It all depends on what you mean by “at cost.” Amazone dosn’t make any of its own products mind you, it’s just a distributor. This changes the formula signifcently.
Agreed. Some specifics behind what I’m thinking: Amazon has about 97,000 employees.
Sure, they could give everybody a $200 Christmas bonus, but to do something meaningful on a more systemic basis, say, raise annual compensation by an average of $10K per worker, would require more than $1 billion*.
I’d argue this is the inherent challenge in Amazon’s business model. Sort of like how car dealerships don’t add much value to the car buying process, there isn’t that much of a natural market where online shopping adds value over traditional retail stores. The only way they can become/sustain a major operation is by squeezing the suppliers, workers, customers, and/or taxpayers. Car dealerships do it by having active government protection from market competition (in particular, by making it illegal to buy a car direct from the manufacturer) – and even then, they also have to treat employees badly in order to make money (low wages, high stress, no autonomy, high turnover, etc.).
Amazon’s challenge is to create a similar ‘hook’. Until then, IMO, they’re more a social experiment (and ego trip for Jeff Bezos) than a profitable business. They help illustrate quite well the tension between ‘there is no inflation’ and ‘prices are too high’. If wages are low even at massive companies, then what, exactly, is driving prices higher…
*More broadly, this shows why public policy is the problem. No individual retailer can unilaterally increase wages in a meaningful fashion – customers will instantly flock to other stores. That has to come from federal policy that makes everyone play by the same rules (universal unemployment insurance, universal health insurance, higher minimum wage, mandatory paid time off, strong whistle blower protections, strong collective bargaining protections, etc.).
We seem to have a new version of “Upstairs, Downstairs”, now appearing as supply chain consumers, supply chain service providers.
These are called “fulfillment centers”. So, the workers are fulfilled, the orders are filled, and the buyers too are fulfilled. Management and stockholders too! Ah, another word to put in the Lexicon of the Great Deterioration. The Lexicon which they, of course, own and manage.
Someone sure is making a lot of ca-ching running that Bullshit Generator.
Me, I think I’m gonna call these wearandtearhouses.
Fighting commercial revolution, bookseller vs. Amazon, is doomed to fail and in the long run for good reasons. Everything else involved in the Obama/Amazon instance we deplore and oppose.
Workers should be paid living wages. Modern slavery in the form of the ridiculously low minimum wages contradicts the country’s interests and human rights. Huge subsidies to rich companies by the morally bankrupt Obama administration takes tax money from the middle class and the never mentioned poor and showered it on the ultra-rich. That’s grand larceny.
Obama, clearly, represents his Wall Street supporters and not the American people. Quite astonishingly, his high standing defies a presidential Trojan Horse that describes him quite well.
until amazon has a union, there’s no reason to refer to it as anything other than a sweatshop.
Yves wrote:
That MIT “living wage” calculator is a bunch of BS. The New Party calculated a living wage for my area in the early 2000s. It was around $11/hour. That would be enough to cover life essentials, health care/insurance, and have a little left over for saving at the end of the month (not much though).
The whole idea behind the “living wage” is that it’s supposed to give us an idea as to what someone needs to maintain a decent standard of living without public assistance or living pay-check-to-three-days-before-paycheck. MIT is doing a disservice by low-balling their “living wage” numbers.
MIT shows the living wage for a single individual in my county as being $8.05/hour. This is insane. No one can live a comfortable (as in not being constantly stressed about money) life on $322 per week…before taxes. Note that they provide a “budget” of sorts, only it leaves out things like utilities (I guess you just huddle together for warmth in the winter if your living on an MIT “living wage”) and it severely underestimates the cost of childcare. While they show a single child costing $542/month, my sister pays around $1000/month for her childcare, which is about normal.
Only someone who hasn’t had to live on $9/hour could possibly consider it a “living wage.” If that phrase is going to mean anything, anything at all, someone needs to do a much better job of calculating. As it stands, MIT’s living wage calculator just shows how out-of-touch they are with reality. Of course, it probably makes the administrators feel good to know that the $8.28/hour they’re paying the janitor is, officially, a living wage (so what’s he got to complain about?).
I’m from the Allentown area so I was especially disgusted by this.
A friend of mine did a stint in the Amazon warehouse here and he said he felt like he was in central america surrounded by (likely undocumented) southern mexicans, hondurans, guatemalans, ect…
Instead of wasting 30+ billion more “securing the border” these employers (Amazon apparently is one) who are breaking the law hiring illegals should be throw in prison, fined, and their property seized.
The media just won’t report on this crappy economy — that is until we get a Republican president.
At the risk of getting 100% flamed, let me offer another perspective on Amazon warehouses – from their hometown.
The warehouses I have been in are fully staffed with plenty of amenities and an obsession on making sure that everything is as well put together as the Head Office. There is a huge emphasis on safety and accountability inside the facility. Comfort levels were always well within standards – even during the busy season. The culture of Amazon as I’ve seen it up close includes a great deal of input from the personnel, almost to a fault. As a contractor working in their facilities, I can tell you that if one employee complains about something, no matter how minor, everything stops or slows down until this is addressed.
Yes, it is a warehouse job – many of the people are young and energetic. However, I have met many people on second careers who have gone on from the floor to the Head Office to jobs of greater responsibility.
I’ve maintained to co workers that Amazon doesn’t want any bad press in their hometown, so perhaps that is why these jobs appear to be good jobs, and this may be the case. Stricter labor laws in Washington state may also come into play for the working conditions.
I won’t deny being both an Amazon customer and occasional hater….but I think to characterize the whole company as the “WalMart of Warehouses” is a little unfair. The rate of growth in a company like Amazon is almost hard to believe, and I think that may lead to problems in their operation. However, it has been my experience that they WANT to fix problems….unlike many other retailers, who just don’t seem to care.
Okay, there’s a lot of very valid and fair points made PQS. And the good thing about NC is that we tend to get a debate, not necessarily hagiography or endless tales of woes without solutions.
On one level, the arguments made are:
1) A Job is better than No Job; and
2) You can always work your way up
Both of which are, to me, narrowly true BUT they do miss the bigger picture.
Which is… these jobs a minimum wage and not living wage (or barely living wage at best). They are also explicitly subsidised by local government and welfare top-ups. And Amazon has got plenty of prior convictions for tax avoidance so it doesn’t pay it’s way in utilising it’s reliance on national infrastructure either.
Also, while it might be possible to “work your way up”, what proportion if the workforce can do that at these facilities ? If it’s a true pyramid, with a healthy set of numbers at each “tier” then that’s one thing. But that isn’t what the documented evidence shows for the warehousing operation.
Labor unions have complained that Amazon fails to offer opportunities to escape low wages — not just in the US facilities — this is a model they repeat world wide. This comes from the Hate Mail so make the usual allowances, but this is actually a pretty fair assessment of what this kind of employment brings to the party — and what it doesn’t:
http://www.dailymail.co.uk/news/article-560113/Online-retailer-Amazon-opens-largest-warehouse-Britain–size-football-pitches.html
The best summing up comes at the end from the union representative:
“It comes as a huge boost to the local economy which has been hit over the decades by the decline of the area’s traditional heavy industries coal mining and ship building.
But manufacturing union Unite warned yesterday on relying too heavily on service sector jobs.
A spokesman said: “These jobs do not provide the foundations for young people to flourish and play a full and constructive role within their communities.”
(Clive again) … no, these jobs certainly don’t do any of that.
Furthermore, the article I linked to above was 2008 vintage. See how sentiment has changed in 5 years:
http://www.dailymail.co.uk/news/article-2286227/Amazons-human-robots-Is-future-British-workplace.html
Welcome to Obama’s new dynasty ….lip service, at your service.
“…Political tyranny was wiped out at Philadelphia on July 4, 1776.
“Since that struggle, however, man’s inventive genius released new forces in our land which reordered the lives of our people. The age of machinery, of railroads; of steam and electricity; the telegraph and the radio; mass production, mass distribution – all of these combined to bring forward a new civilization and with it a new problem for those who sought to remain free.
For out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital – all undreamed of by the Fathers – the whole structure of modern life was impressed into this royal service.””
http://www.austincc.edu/lpatrick/his2341/fdr36acceptancespeech.htm
Hopefully, the President’s daughters will end up working at an Amazon warehouse. Then he will see first hand how “great” those jobs are. Unfortunately, life never works out like that.
Theyre going to have as good opportunities, if not even better, than Chelsea Clinton had. Theyre going to want for very little, or at the very least they will never be working for less than a living wage, much less work at a minimum wage.
Heck, the Obama girls are going to be the “golden ticket” for whatever college accepts them: listed as African-American [so check that box], but able to pay full tuition.
“Winning” for the college.
Meanwhile, a deserving middle class, lower middle class, or poverty level student is shoved aside for each of them.
Fed Should Target Full-Time Jobs, Not Unemployment
http://behavioraleconomy.gallup.com/2013/07/fed-should-target-full-time-jobs-not.html
Gallup’s P2P, at 44.6% in late July, shows essentially no change in full-time jobs compared with June. It also reflects a slight drop from recent years, including the 45.0% of July 2012 and the 44.9% of July 2011. While this lack of job improvement over the past couple of years may not be much of an endorsement of the Fed’s efforts to stimulate job growth by aggressively flooding the economy with liquidity, it seems fully consistent with the slow-growth economy most Americans have been experiencing.
The current government job measures leave a lot to be desired in terms of face-validity. For example, Bernanke noted in his testimony to Congress that the Fed’s unemployment target may need to be adjusted, depending on the labor participation rate. A declining participation rate can artificially lower the unemployment rate as job seekers give up looking for work, while an increasing participation rate can do the reverse.
Similarly, the establishment survey can be distorted by a surge in part-time jobs — a factor that may need to be considered when one evaluates Friday’s report. Part-time jobs not only count as new jobs for this survey, but if an American having one part-time job adds an additional part-time job, it counts the same as the creation of a new full-time job.
As a result of these and other distortions, the job numbers in Friday’s government report are likely to be “spun” to align with Wall Street sentiments — but not necessarily provide a real insight into whether the job situation is actually getting better or worse for millions of Americans. By providing leadership — discounting Friday’s numbers and instead revising its target to full-time jobs — the Fed can go a long way toward fixing this situation. If the Fed shifts focus, Wall Street as well as the political pundits are likely to simply follow the Fed’s lead to a better jobs measure.
I worked 10 years for West Marine, a big boating supplies retailer. It once was a decent company, founded on excellent customer service and providing good value and a skilled sales staff that knew the products because they were boaters themselves.
The Whiz Kids that the founder brought in to take the company “to the next level” looked over the P&L and decided it would be wise to move the “distribution center” for the eastern US across a state line, NC to SC, maybe 90 miles. In addition to huge amounts of bad management in planning, organizing and completing the move, the profit-maximizing dorks also planned to chop the wages of the new hires who would be doing the “distribution.” So for months, there was a “fulfillment” problem: The new people, even the ones trained by the people they replaced, knew nothing about the equipment and supplies they were “distributing,” they had trouble reading labels and scanning UPCs and stuff so they sent the wrong bits to the stores, driving the store staff and managers, who live in that space between the face of the hammer and the head of the nail, crazy, and pissing off the customer base to the point of losing lots of sales. And to make up the difference between the pittance they were paid and a living wage, the fulfillment associates” just backed their pickups into the loading docks and stole all the high-value stuff they could reach — radars, chartplotters, outboards, you name it. There followed big bitching and redirecting of blame by the Wizards of Watsonville, West’s corporate HQ, and a full-court press to try and sort things out quickly because The Street at the time valued retail stocks based on “fulfillment percentages” and these corporate shits had arranged to take a big part of their “compensation” (aka “booty”) in the form of options.
Are you guys familiar with “the Beer Game,” which is supposed to be just a simulation that teaches something about the real-world structure and problems of “the supply chain?” I think it illustrates a whole lot more: Even people going into the Game, who know that it always works out the same way, with greed and dishonesty ensuring a fake boom and real bust in the simulated making and selling of beer, even though the failure modes that produce the instabilities and idiocies that cause the failures are plain and pointed out before the Game begins, the result is always the same.
It’s not just the “supply chain” that this set of unprinciples works its magic in — it’s the whole effing growth-and-consumption-and-marketing structure.
But because of the way the structure works, with what’s rewarded and punished, because, if you will, of “human nature,” and what is taught in B-school and grade school, there’s only one likely outcome, ever. And I pray for my grandchildren, that they may figure out or find some “intentional community” where the operation of the notion of the Commons, and the Golden Rule, are the drivers and regulators of behavior.
Why blame Obama, Demos, or Repub….most all are responsible and by blaming one group or another we fail to do what is needed…..to start and support a new party that represents the people.
So let’s look at how the “American Dream” operates in reality. A. Lincoln was really the one to outline it, and the closely related idea of the “self-made” man. Always the emphasis was on self-improvement and upward mobility; the jobs down in the “mudsill” layer were “temporary,” and due to the nature of the economy in the 1830’s and 1840’s, face to face and very local. Anyone with character, it was said, would soon be a land owner or a small business operator, and the jobs they were escaping from, those of the common laborer (Lincoln was, famously, a “rail splitter”) allowed a thrifty, good character person to save enough to get that entrepreneurial start. This system fell apart by the late 19th century – it no longer was describing the realities of the Gilded Age, but even less today’s; but there is the President in his recent speech, in reality laying out the Lincolnian vision: Middle class, Middle Class, Middle Class, escape the low paying jobs, with just lip service paid to the actual conditions in the vast sea of retail, service. The EPI in Washington recently asserted that 28 million Americans work in this sector, that is the astounding number working for $9.89 per hour or below. Now no one is,except as they might practice communal living, is going to “save” at that rate of pay, and today’s costs. Here’s the link to the Times article at
http://www.nytimes.com/2013/07/28/sunday-review/fighting-back-against-wretched-wages.html?hp&_r=1&
Those 28 million represent 20% of the workforce. That’s why I think a national movement to raise the minimum wage is very important, win lose or draw; its an education in power realities, and realities themselves. I don’t think a minimum of $10.00 cuts it at making any significant change; that’s where Democrats with reforming instincts peg it, dealing only with capturing wages lost to inflation. But add in missing productivity gains over the same time frame, and economist Dean Baker says it ought to be between $16 and $21.00 per hour, methodology open to debate, but he says he used conservative assumptions for each.
When you stop and think about that astounding number – 28 million and what they are earning – and I am one of them – we are not talking about solving this through the narrow stream of upward mobility, American Dream evoked or not: we’re talking about pay and other conditions in these industries and their very nature.
The desire to rise and better oneself will never die, least of all here in the US, and it shouldn’t. But there are times when capitalism has so re-arranged the terms and “opportunities” that great structural interventions into labor markets are necessary, as in the 1930’s. And just over the horizon, not talked about at NC, as far as I can see, are the issues raised by Gar Alperovitz in his “What Then Must We Do?” The debate is tough enough on what the minimum wage should be; Alperovitz is raising the questions of democracy in the workplace and what “economic democracy means.” Obama is not even in the ballpark of what is really going on….
William, excellent comment. Even if there were an endless supply of move-up opportunities I believe people who can’t or don’t want to take that path still deserve a dignified standard of living.
Hot news: Bezos/Amazon and Spacex/Musk compete to buy Pad 39A (Space Shuttle and Apollo home launch pad) from Babbling Barry for pennies:
Yes, folks, new Astronauts/Cosmonauts might be able to take pride in the legions of warehouse workers (and regular taxpayers) sweated and swindled to give “Jeff” the massive profits to bid for this give-away from the taxpayers and Barry’s “guvmint”.
At least Musk does sponsor technical progress, and the jobs to go with it; Bezos is just a typical Texas “Gimme” plutocrat, which makes him the most likely winner of this “contest”.
Ain’t Democrat democracy grand?
“Not all that long ago, “middle class” meant you could after a few years of work and savings, buy a house in the suburbs, afford to have children and have a reasonably comfortable family life, and send those kids to college. “Middle class” also generally meant college educated, white collar employment plus the higher-skilled, better paid blue collar jobs”
I would add that you could do this on one income without incurring a lot of debt beyond reasonable payments for a mortgage and a car.
I think this is a very powerful meme. It is something people can easily relate too. It is the promise that the powers that be can’t duck and run from. So we should bring it up and rub their face in it every chance we can.
It goes to show the late stage kleptocracy we are in that the fictions the rich and elites have used to cover and justify their actions are tearing and fraying, and they no longer even bother to patch them up. Now instead of telling us that the shit sandwich they are feeding us isn’t a shit sandwich, they have moved on to telling us that shit is really good for us.
The crapification of American jobs is both about looting us and controlling us. And the choice they are increasingly giving us is between a shit sandwich and no sandwich at all. Of such choices, revolutions are made.
Hugh,
The change is incredibly apparent when you live in an older neighborhood and talk to people who were “middle class” from 1955 – 1985. Consider my neighbor:
Widowed (my guess – about 80), raised 3 children, never worked outside the home. Owns home free and clear (bought in 1955). Husband was an airline mechanic (as were many in the neighborhood). Had benefits. Had a pension. Kids had access to good schools and reasonably priced higher ed.
That solidly middle class lifestyle is out of reach for all but the top 5% or 10% today.
Yep. My grandfather had a career similar to mine and raised 4 kids in a middle class fashion. After he passed my grandmother lived comfortably for almost 20 years on their investments, pension and insurance – and many years in very nice assisted living facilities. She did work some of the time but it was not out of necessity. My late father in law also worked in jobs similar to mine and raised 6 kids in a middle class fashion. My mother in law is likely to live very comfortably for many years to come – she has never needed to work for money. It’s quite the wake up call when you are raised with expectations that are completely out of touch with the reality of your time on this planet. Charles Hugh Smith once posted a middle class budget that is based on what I call ‘old math’ – it’s a great thing to show young people who are still under the spell.
There comments
A) The loss of retail jobs…unfortunate, but I believe this is a phenomena that always occurs when the increase in demand is exceeded by the productive capacity of the suppliers (this can occur due better productivity or due to excess capacity construction ); workers are replaced and prices may fall if that supplier wants to increase market share
B) however, just because prices fall, is no reason why the 99% who work for Amazon should accept low wages. Nor should we the customers tolerate low wage exploitation
C) How much of Amazon’s success and Producivty gains, are due to access to cheap financing via Wallstreet, the Fed, or local governments? This would be worth quantifying. Amazon killed the competition due to its cheap price, extensive selection and convenient deliverey. Amazon was able to achieve this due to its extensive logistical and IT infrastructure. Was Amazon able to fund its operations AND construct its infrastructure from profits from sales? If yes, then they beat their competition due to superior operations in the market, which is fair. However if there is not sufficient profit , then they could only beat the competition via generous financing via Wallstreet. We can conclude that without Wallstreet , Amazon would have had to raise its prices, which would have weakened its competitve position.
D) do we want a country where access to large quantities of finance is the key determinant to competition in he market place, or would we rather have competition based on operational excellence or product excellence or customer relationships?
How does Amazon compare with other major web/catalog outlets in terms of warehouse pay? Or how do conditions compare with that other (by lots of folks) company that has a large warehouse/fullfillment operation Wal-Mart (who has a large web presence, that sells large number of items that the stores do not.
Of course the danger is that push very hard and a totally automated set of systems will replace humans, It is doable today, in some warehouses, the goods are brought to the packer, its not to hard to concieve of the goods then being packed by automation. If the costs of labor go up then silicon based employees replace humans.
Lyle,
If the costs of labor go up then silicon based employees replace humans.
OK — then who buys the goods?
Obama’s not doing much more damage to the words “middle class” than has already been done. Basically the American concept of middle class since the second world war, the one accurately described by Yves, is all messed up.
The Brits have got it right, the majority is working class, the real middle class is a minority, who form a defensive buffer between the majority and the 1%, in return for a relatively privileged and insulated life for themselves and their relatives. They are the 10%.
The American middle class dream should be better described as “what the working class majority looks like when it’s getting a fair share”.
Competitiveness, competition, automation, and productivity are all just buzzwords that allow or cover for looting.
We should be asking ourselves what social purpose is accomplished by the Amazons of this world. What is more important to our society, cutting wages or having good jobs? We need to start thinking about jobs in terms of their social value. If we did, we would quickly realize that Wall Street is a desert and Walmart and Amazon diseases.
“Not all that long ago, “middle class” meant you could after a few years of work and savings, buy a house in the suburbs, afford to have children and have a reasonably comfortable family life, and send those kids to college.”
Alas, not all that long ago is now going on two decades…
I think that was one of the bigger picture cultural shifts of the GFC of 2007-2009. Things got bad enough that upper middle class liberals started experiencing personally a little bit of what most people have been dealing with for a long time. Our political process had to at least pretend it was addressing issues of poverty and wages and healthcare and housing and so forth.
The wealth and power in the US is all at the top. There simply aren’t enough crumbs anymore even to fight over.
That MIT living wage calculator is a great example of how educated, upper middle class people are simply out of touch with reality. $8.92 a living wage? $537 for decent housing? $121 for healthcare? $69 for all other expenses?
Right, I’m sure MIT deans and tenured faculty have budgets resembling that.
Talk about $ly Con Valley di$cordant, …. and di$ruptive!!!!!™… What, exactly, would it take for you to be an Unhappy customer, Mr. Richter? a personally devastating experience? versus other’s dehumanizing, crippling, … and ultimately deadly experiences?
Clearly, it wasn’t your intent, but your comment clearly portrays the ghastly and deadly, white gloved slow mo devastation of anything worth staying alive for, ….offer a tasty carrot to those with their shirts still on: …..♪ .. Musical Chairs …♫ ™ [[City of] London Corp.?] . Naked Capitalism indeed.
From Melville House, here:
07/26/13 Stick a fork in it, it’s over: Obama to celebrate Amazon as champion employer, while company announces its umpteenth loss
and here:
07/30/13 The Obama business plan: Be like Amazon
[*] so sorry if I neglected to include that Amazon hyperlink to someone who might be interested in buying your books.
(bolding mine, and what exactly: …no fricking mention of Amazon providing “Cloud Services” to the CIA??????? …in addition to Monopolizing the Book [Human Witnesses] and Retail Goods Market …..I need a fricken drink, ….perhaps a Lobotomy? ….this is all so very, very painful to witness …. especially after yesterday’s UZ $adism, regarding Bradley Manning.)
Dennis Johnson, of Melville House:
(bolding mine)
The comment I just made, on this thread, is showing as having been posted on the main ‘page’, yet it is not showing here. The main ‘page’ showed 39 posts on this thread, yet when I linked to this thread it reveals only 36 of those posts.
It’s kind of funky that when comments show up in the sidebar, sometimes they are not actually viewable, when one hits the hyperlink to the comment.
I’m sure it has nothing to do with my false ’email address’ as I’ve always used a false email address, yet haven’t always had that problem.
This is a caching issue. Caching the page allows display to be faster in most cases, because the page does not need to be built each time, while occasionally (we hope) creating anomalies like this, where the cached (old) page is displayed while the comments block (new) is updated.
The tradeoff is site speed vs. site consistency. What do readers prefer?
NOTE: We can also do nothing for now; the site redesign should also speed up the page and might even help with the inconsistency.
I prefer site consistency to speed, which was never a real issue at least in my experience.
It’s not a gaffe. Not some goofy slip up where the President or VP putt’s his foot in it à la Dan Quayle jester. The Amazon jobs
messagefiasco is carefully calculated to let folks know what the new middle class is shaping up to be.Obama is also reviving Larry Summers who got a bit bruised by HuffPo – of all digital rags – among others. http://thehill.com/blogs/on-the-money/banking-financial-institutions/314693-obama-defends-summers-record-amid-liberal-criticism#ixzz2adr76Tj1
HuffPo, in a revolutionary wave of truthy exuberance reported some facts about Democrats; some of them were pushing back on Obama saying that Summers would be a horrible choice for Fed Chairman, but Obama is using his position as Pres. to twist arms for his boy just like he did for the Public Option. Ahh, no actually not quite like the Public Option. Then like he does for all the liberal promises he has made such as protecting Whistle blowers which you can go see on his web site… Um, no, not that either (and don’t bother looking on his web site – he took the promise off, conveniently, just before Bradley Manning’s verdict). Oh-well, he is using his position to show that when he wants to and not when he doesn’t want to, he can twist arms and use the bully pulpit just like any other President and in the case of Larry Summers becoming the next chairman of the Fed; well you can object to your congress-critter till the cows come home, or till your partner tells you the check is in the mail. Whatever, you can take it to the bank (any bank in Cyprus to be specific)
As far as Obama is concerned, Summers will be the next Fed Chairman if it means water boarding every Democrat in the house… And from the usual Obama-Bittys we’ll continue to hear that Obama is just too polite and nice a guy to e-v-e-r force his wishes upon anyone in congress and that he would rather compromise. Heh, Heh…
Oh frickin loverly, me with cancer (not to mention having (prior to that) been precluded from my ‘profession’ for over and over again refusing to sign off to the thieves who actually call the shots over that ‘profession’), and hating to recently be required to allow scripting in order to post a few words …the lovely ad message that I unavoidably recieve, directly above the Leave a Reply™ box, is:
How exactly might it be known that perhaps I might not be able to work until healthy again and may need to apply for SDI to receive the money I put into it in order to barely put a roof over my head, if that?
I’m sure everyone else’s creepy online Ad messages differ, according to their woes in life…..
Anywho, as I was about to post, before that ,feature not a bug, endearing message, from the Clouds!!!:
Dennis Johnson, of Melville House:
I might add, you haven’t a clue, if you mean that about “Happy Customer of Amazon”, Mr. Richter, what it really feels like to know you just ran out of toilet paper and realize others are buying your toilet paper when they can’t even afford a one bedroom apartment, despite working forty hours and then some at demaining and dehumanizing jawbz, despite degrees from Notre Dame, etcetera, etcetera, etcetera.
(Regarding that venal (as in, MENTALLY VIOLATING), under the ‘skirts’ ad message I was subjected to with no solicitation on my part:
I should add that I received that creepy (as in, MENTALLY VIOLATING) ad, despite: using supposedly privacy conscious search sites (and I doubt duck duck is any better than ixquick, which I generally use, though I despise their clearly Ayn Randian Ethic), not using email for daily correspondence (never using it regarding personal issues), generally not allowing scripting (except to post or (very, very rarely) read comments), never ever buying, or applying for, anything online, always deleting temporary files, not allowing ‘cookies’, never even visiting FaceFiend pages, no Twitter account, certainly no creepy Linked In account.
Okay, one fake name and email addy, one time use, Gawker account re a comment on Nolan’s now discontinued (despite the fact that the underclass is still growing): Hello From the Underclass™ …and two other, DemRat (one which was entirely swept from the web by it’s DemRat? Founder), ‘ancient,’ not used for at least 6 years, accounts where I stupidly provided my email addy.
Why is there no “boycott Amazon” movement?
I think there is one with respect to WalMart, and there’s even an app that tells you what products are manufactured by Koch Bros., so you can avoid them.
The stories that are beginning to appear about “this is how much more you’d have to pay at WalMart/McD’s/Burger King if they paid their workers a living wage” hopefully will have some effect.
Folks should be urged to support their local bookseller rather than saving $2. Of course there are a couple of problems:
a) now that Amazon sells EVERYTHING, there are a bunch of other merchants you’re going to have to patronize;
b) when you live on an island, as I do, and there’s only ONE bookstore that’s 1-1/2 hours away, Amazon seems mighty tempting; and
c) I do everything I can to avoid the WalMart here, but there’s slim other pickings: no Target, no Best Buy, no Trader Joe’s. You name it: other than K-Mart and WalMart, they’re not here.
You can start small with boycotting Amazon. Begin with books. I’ve started buying books from Powell’s and Abe’s. Every time I recommend a book to a friend or acquaintance I recommend the same shopping pattern, with a one-sentence description of why (the Amazon sweatshop issue).
To a man and woman, people have been instantly receptive and then gone to buy books at Powell’s or Abe’s.
Agreed, though. A mass action is called for. Perhaps it is starting with the movements to unionize “distribution warehouse” labor.
Aristotle would have classified those Amazon workers as slaves.
Glen Ford, re the Chatanooga, Amazon (Wear House -no really, sustainable, austere living! wear your only affordable shelter, the shirt on your back) speech and the Tax word:
07/31/13 Obama and GOP Speak Same Language: Corporate Tax Cuts = Jobs
Remember how sick you felt everytime you saw or heard Bush?
Same thing happens now with Obama.
Yep:) Is there a new political party on the horizon….
Ugh. I’ve actually worked in a catalog warehouse, of a major retailer. It’s slavery all right… and that was nearly 20 years ago, worse now. As soon as the tax incentives aged out, they moved most of their labor to another state (rinse repeat). Anyone who dares call catalog warehouse jobs middle class, or even good jobs, should be slapped. Demeaning, physically debilitating, calculated to squeeze the most hours out of you with the least pay (if you juggle overtime hours correctly you can drop below effective minimum wage). and with impossible goals and work conditions. Promise you x amount of hours, never quite give them to you, and in such an uneven schedule you cannot work anywhere else.
Treatment of vendors is no better; Small Biz A creates a trinket, Creepy Catalog Co buys it, buys all their stock (and demands ever steeper discounts for it), then has it copied by another company who will make it cheaper, and goes back to company A for yet another price drop..which, since Creepy Catalog Co is now 70-90% of their sales, can’t say no.
I’m quite certain Amazon does all the same, and more.
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Excuse me. I just stumbled on this site, looked at the list of topics, and saw that Education is not one of them….?!?
If there’s one thing that is going to kill capitalism, America, and Western Civilization In general, it’s our stupid schools.
Here’s my big thesis. There is not one idea in our public schools that works. Nor is there one idea that was intended to work as promised. It’s a house of scam.
Conversely, what we should be doing is pushing every kid to whatever limit that kid has.
John Dewey hated individualism and he hated capitalism. At this date he is winning his battle against both.
Without question, the biggest issue in education is literacy. The so-called experts have used fake methods for more than 75 years. Making children memorize sight-words is an almost perfect formula for illiteracy or at best semi-literacy.
Now, if this site or anyone reading this would like aggressive articles on saving our schools, please get in touch. Tell me what your frame of reference is or your point of interest. In general I have more than 300 articles on Internet and I’m always working on new ones.
PS. Here is a new video about reading that will tell you more in four minutes than the average book on the subject: “Reading Is Easy” — http://www.youtube.com/watch?v=-JV0tPGn-Ws