Wednesday, October 3, 2018

Bezos' Decision To Raise Wages Is Largely A Machiavellian Distraction

For the many low wage Amazon workers - both full time and temporary - set to receive a raise thanks to the just announced boost in minimum pay to $15/hour, the news is certainly a big plus. It should also be noted that had Amazon not been subject to intense scrutiny and criticism from the likes of Bernie Sanders and others, Jeff Bezos never would have responded with such an aggressive move. That said, if you think a little beyond the surface level about why he’s doing this now and what his real motives are, it becomes clear nobody should take this move at face value.
Stacy Mitchell, co-director at the Institute for Local Self-Reliance, is someone whose work on Amazon I’ve cited on various occasions. She tweeted out an important thread this morning that helps you take a step back and not miss the forest for the trees.
1. It’s nice to see Amazon workers get a raise today, and not just the regular hires, but the temps too.  What led to this?  Five things...
  • 2. First, it’s a very tight labor market and Amazon needs a bunch of people in its warehouses right now for the 4th quarter.
  • 3. Second, advocacy by @SenSanders & @RoKhanna, & groups like @jwjnational & @ilsr, compelled Amazon to act. Amazon almost never responds to critics. But Sanders and Khanna unnerved Amazon deeply, as I pointed out in an earlier thread:
  • 4. Third, Amazon is run by the world’s richest man  (net worth = $160 billion) and his recent attempt to make this unconscionable disparity seem okay with a $2B charity pledge just didn’t cut it. Bezos is the face of inequality. That’s still true after today.
  • 5. Fourth, Amazon has another way to cut labor costs: automation. It needs fewer workers today to sell & ship $100M worth of stuff than it did just a few years ago. That trend is only accelerating. Some e-commerce warehouses in China have a staff of 4 people. They fix the robots.
  • 6. Finally, and this is the big reason: Amazon fears an antitrust case to break it up. They’re right to be nervous. In the last week: @SenWarren called for it. The EU's @vestager opened an antitrust probe. A former Amazon exec said competition depended on splitting Amazon in two.
7. To keep its grip, Amazon is going to try to buy off constituencies, one by one.
8. Workers getting a raise is a good thing. But what we need is so much bigger. No company should have this much power. Inevitably, it means that Amazon gets to set the rules, economically & politically. And those rules will always privilege Amazon's interest over the public’s.
Bezos is naturally attempting to portray this as a come to Jesus moment, but you shouldn’t buy his spin for a second. Based on what we know of his business practices, the guy’s built the behemoth that is Amazon by operating in a Machiavellian fashion (see my recent post: Amazon is Far More Dangerous and Powerful Than You Want to Admit).

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