Hard-left Senator Bernie Sanders (I-VT) has come out swinging at Amazon.com and its ultra-rich founder Jeff Bezos and populist conservative Fox News host Tucker Carlson is applauding.
Sanders has posted a call to Amazon workers to share their experiences with the company on his official U.S. Senate web page:
Amazon is one of the wealthiest corporations in the world, and its owner, Jeff Bezos, is the richest man on the planet, worth over $155 billion. Despite this, Bezos continues to pay many thousands of his Amazon employees wages that are so low that they are forced to depend on taxpayer-funded programs such as food stamps, Medicaid and subsidized housing to survive.
Carlson agrees this is an issue that demands more attention, and openly wonders why more politicians aren’t speaking up. “This system is indefensible,” Carlson says, pointing out that employees of giant corporations such as Amazon, Walmart, and Uber struggle to get by and often depend on government assistance. He asked why those on the right aren’t raising their voices as well:
“And yet, almost nobody ever complains about it. How come? Well, conservatives like us support the free market and for good reason. The free market works. But there’s nothing free about this market.
“A lot of these companies operate as monopolies. They hate markets. They use government regulation to crush competition. There’s nothing conservative about that. Just as there is nothing conservative about most big corporations. Just the opposite. They are the backbone of the left.”
Bezos is the world’s richest man. But the sheer size of his online shopping goliath has proven to be a hazardous threat to the economic well-being of his workers and the communities they inhabit.
Carys Roberts, writing at the liberal website OpenDemocracy, explains just how this works:
Technology and increased economic and financial integration have enabled capital owners and multinationals to position their operations and investment anywhere in the world, increasing their power over workers and governments. The power of companies to pay very low wages and offer appalling working conditions is also strengthened by what employers call ‘monopsony power’: where a relatively small number of employers account for many job opportunities in an area.
You don’t have to root out a Vietnamese sweatshop to find this scenario in action. It’s happening right here in America, and our local governments are eager to attract the all-powerful labor controllers to their towns.
A National Bureau of Economic Research working paper has found that in the U.S. today “labor market concentration in the average market is high, and higher concentration is associated with significantly lower posted wages.”
The research paper discusses monopsony power, which comes when there is only one buyer for many sellers in a market. This is usually thought of in terms of goods or service. But with huge companies like Amazon, as they become the overwhelmingly dominant purchaser of employee labor in town, worker wages suffer. As the NBER paper states:
While interest in monopsony has grown in recent years… firms’ ability to pay workers less than their marginal productivity is not generally taken into account in antitrust practice. Antitrust enforcement is mainly concerned with consumer welfare, and hence the impacts of a lack of competition on product prices, not wages. Antitrust regulators pay little attention to labor market power despite the labor economics literature finding that firms can have substantial market power in the labor market.
The Economist provides examples of several towns where Amazon has wielded this labor concentration power to bring down wages, including Lexington County, South Carolina, where annual earnings for warehouse workers fell by over 30% after Amazon opened a distribution center there. “Lexington County is not alone,” The Economist states, “Since Amazon opened a warehouse in Chesterfield, Virginia, warehouse wages in the region have fallen by 17%. In Tracy, California, they have dropped by 16%.”
Yet when Amazon announced it was looking for a location to open its second headquarters, with plans to employ 50,000 workers, cities and towns across the United States lined up to woo the company to grant them this golden ticket.
Daniel Kishi, in The American Conservative, points out that Amazon stands to profit handsomely from these cities’ desperate competition to attract such a large jobs-provider, even as the locales fail to consider the full consequences of welcoming such a dominant influence into their labor market.
“Reporters speculate that the winner of the sweepstakes – in no small part to the bidding war format – could be forced to cough up hundreds of millions of dollars in state and local subsidies for the privilege of hosting Amazon’s expansion,” Kishi writes. Meanwhile, along with the shrinking wages, new employees in the “lucky” city that wins the Amazon lottery can look forward to humiliating and robotic working conditions.
Positioned for Dominance
Subsidized by local governments to control its labor supply, Amazon can use its enormous size to dominate retail markets.
Kevin Carty, in an opinion piece for The New York Post, notes:
Amazon today sells 55 percent of all books in the US, 82 percent of all e-books and 99 percent of all audiobooks. Like Google and Apple in music, Amazon uses its monopoly position to drive down the price it pays for books, negotiating steep discounts from publishers and tacking on additional fees.
As Amazon moves to solidify its hold on other retail branches, as seen by its purchase of organic grocer Whole Foods, the same pattern that has proved so wildly successful for the company no doubt will be repeated.
Carty says the glorification of the consumer above all else is to blame for the growth of online giants like Amazon. “For much of the 20th century, anti-monopoly law aimed to protect the producer, the creator and the worker,” he writes. “But a group of radical thinkers upended this tradition in the 1980s. By arguing that the law should focus exclusively on the ‘welfare’ of the ‘consumer,’ they opened the door to the sort of unfair pricing and business tactics that have been perfected by the tech giants.”
Are convenience and low price really worth throwing away our human productivity?