Obama's Sadly Appropriate Amazon Speech

Obama's speech venue highlights the problem of a low-wage led recovery.

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President Barack Obama reacts to a reporters question about the Palestinian and Israeli peace talks as he walks to board Marine One on the South Lawn of the White House in Washington, Tuesday, July 30, 2013, before boarding the Marine One helicopter for Andrews Air Force Base, Md., prior to traveling to Chattanooga, Tenn. to speak about middle class policy speech at a Amazon fulfillment center.

President Obama will be visiting an Amazon warehouse in Chattanooga, Tenn., today, where he plans to deliver a speech unveiling his latest job creation proposal: reform of the corporate tax code (a major GOP goal) in exchange for new jobs programs, including infrastructure investments and more funding for higher education. Obama, as of late, has been talking a lot about "middle out" economics, the notion that economic prosperity starts with a strong middle class, and the speech is meant to build on that idea. But his choice of venue seems to be at odds with his sentiment.

While it's true that Amazon, the online retailing giant, has been a very successful company – and just announced the creation of some 7,000 new jobs – a large part of its success comes from the toil of underpaid, overworked temporary employees who work in distribution centers, often for contractors looking to squeeze every last penny of productivity out of them. (Read, for instance, the Allentown Morning Call's investigation into one warehouse, where ambulances were quite literally kept on standby to treat employees who were pushed too hard during the hot summer months.)

[See a collection of political cartoons on the economy.]

Amazon certainly does have some positions that can help a family achieve middle-class status, but warehouse jobs won't do the trick. Quartz's Tim Fernholz put it well, noting, "These warehouse jobs are better than unemployment, [the Taiwanese manufacturer] Pegatron, and perhaps mining, but they're no replacement for the kinds of higher-paying factory jobs that used to form the backbone of the American middle class."

Amazon's contractors also have a disturbing penchant for trying to deny unemployment benefits to their former workers as a way to drive down costs. And then there's the fact that Amazon's investment in Tennessee is the result of a deal under which it gets a fat tax break from the state that is unavailable to traditional retailers.

But an Amazon warehouse staffed with low-wage workers is also a sadly appropriate place for Obama to speak, as the limping economic recovery has been led, in large part, by the creation of low-wage jobs. As the National Employment Law Project has found, detailed in the chart below, low-wage jobs made up 21 percent of the losses in the recession, but have made up 58 percent of job growth during the recovery. Mid-wage jobs, meanwhile, were 60 percent of the losses but just 22 percent of subsequent growth.

http://www.usnews.com/dbimages/master/45306/WideModern_JobsRecessionChart_073013.jpg

These jobs have been concentrated in food services and retail, not industries usually associated with helping build a vibrant middle class. This dynamic, in turn, makes the United States' already out-of-control income inequality even worse.

[Read the U.S. News debate: Should States Be Able to Collect Sales Tax on Goods Sold Online?]

To be clear, Obama is not solely (or even mostly) responsible for the fact that the recovery has been, in large part, paced by low-wage jobs. Many of his job-creation plans have been stymied by a Republican House uninterested in solving the unemployment problem, and the 30-year decline of labor and manufacturing, which squeezed workers while corporate profits were skyrocketing, is a problem Obama didn't cause.

But during an interview with the New York Times recently, Obama lamented that upward mobility – the ability of children to exceed the economic circumstances of their parents – has "been eroding over the last 20, 30 years, well before the financial crisis." Putting a company front-and-center like Amazon that perpetuates the low-wage status quo is not really consistent with trying to fix that problem.

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