Thursday, August 08, 2013

Have You Heard The One About Middle-Class Jobs?

President Obama does great stand-up.  At the 2012 White House correspondents dinner, he demonstrated picture-perfect timing to accompany the jokes provided him. Jay Leno, David Letterman, et al. should be so humorous.  Of the gambling mogul who vowed to spend whatever it would take to defeat him in the 2012 election, he quipped

Did you know that Sheldon Adelson spent $100 million of his own money last year on negative ads? You’ve got to really dislike me to spend that kind of money. I mean, that’s Oprah money. … Sheldon would have been better off offering me $100 million to drop out of the race.

Of the Senate Minority Leader who has vowed to do legislatively whatever it would take to deny him a second term, he joked "Some folks still don’t think I spend enough time with Congress. ‘Why don’t you get a drink with Mitch McConnell?’ they ask,” Obama said. “Really? Why don’t you get a drink with Mitch McConnell?"

The President vowed to go on a charm offensive, Politico reported at the time, which would Obama said would include“"a Texas barbecue with Ted Cruz, a Kentucky bluegrass concert with Rand Paul and a book burning with Michele Bachmann.”  And noting how the presidency has aged him, Obama commented "I look in the mirror and say, ‘I’m not the strapping young Muslim socialist that I used to be,’”

And he finished off the evening with this howler:"I came to Chattanooga today to talk about the first and most important cornerstone of middle-class security, and that's a good job in a durable, growing industry."

No, no. That wasn't Washington, D.C. in April of 2012 but Chattanooga, Tennessee on Jul 29, 2013. Still, remarking "that’s why I’m visiting cities and towns like this -– to lay out my ideas for how we can build on the cornerstone of what it means to be middle class in America. A good job with good wages" is a howler worthy of his performance at the correspondents' dinner.

The National Employment Law Project recently reported that in the recession which ended in early 2010, "losses occurred throughout the economy, but were concentrated in mid-wage occupations.  By contrast, during the recovery (2010 Q1 to 2012 Q1), employment gains have been concentrated in lower-wage occupations, which grew 2.7 times as fast as mid-wage and higher-wage occupations."   But there was the President in Chattanooga touting the 7.2 million new jobs created over the last 40 months and boasting "this year, we’re off to our best private-sector jobs growth since 1999."

The President delivered his speech (transcript, here) at an Amazon warehouse, the company having announced the day before creation of 5,00 new jobs. San Francisco based executive, entrepreneur, start up specialist, and author Wolf Richter explains

... 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.

These new employees the President touted, the Guardian's Helene Olen notes, "will almost certainly be working alongside temps- that is, people doing almost the exact same job, but for less in the way of benefits, hours, and stability."  Heck of a way to promote espirit de corps and build worker satisfaction, which may be one reason Amazon does not crack Fortune's list of the 100 Best Companies to Work For.

Another reason(s) may be, as The New York Times has found, "Many of Amazon's jobs pay only $11 an hour, and the pace of the work in these warehouses has been described as exhausting."  Richter noted a video by Bloomberg News which referred to a survey by Glassdoor, which found that the average Amazon warehouse “associate” salary is paid $11.69 an hour plus bonuses, resulting in an average pay of $23,000, given $11.90 per hour and assuming 250 work days at 8 hours a day.  The current poverty line for a family of four is $23,330.

A brutal labor model and paying wages inadequate for a middle-class existence are not the only reasons for Amazon's success. Richter explains

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.

Amazon apparently has been raising prices on a range of items, especially scholarly and small press books, perhaps not coincidentally now that Borders is gone, Barnes and Nobles is on the ropes and many independent booksellers have been muscled out of existence.  The impact of recent price increases and whatever impact it may have on independent sellers and/or brick and mortar stores does not command the attention of a President who promotes companies and policies commanding the rise of the servant economy that he is proud to have a hand in.

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