There are more inappropriate venues President Obama could have chosen than Amazon.com’s Chattanooga warehouse for his speech on creating good jobs on Tuesday, but not many.
Amazon is remarkably efficient in terms of employing few people per sales dollar. It employs just 14 employees per $10 million in revenue compared to 47 workers the same amount at an average physical store, based on U.S. Census data.
So while Amazon’s gaining a greater share of retail spending is a boon for its shareholders, it only exacerbates unemployment because jobs added at Amazon yield a net job loss for the country.
To Tout Good Jobs, Visit Main Street, Not Amazon
by Jeff Milchen
http://www.businessweek.com/articles/2013-07-31/to-tout-good-jobs-visit-main-street-not-amazon
Jeff Milchen is a co-director of the American Independent Business Alliance, which supports independent community-based business and local business coalitions around the country.
If Amazon lives up to its recent claim that it will hire 7,000 people in the coming months, the positions will come at the expense of more than 20,000 existing jobs at storefront retailers around the country. This generous assumes that Amazon sells a significant volume of products that never would have been purchased from a physical store.
White House Press Secretary Amy Brundage referred to Amazon as “a perfect example” of creating high-wage jobs, but Amazon’s fulfillment position listings offer an average of just over $11 per hour—on par with most low-end retailers. Amazon spokesperson Kelly Cheeseman says starting employees receive both health-care benefits and restricted stock, boosting compensation by 9 percent annually.
Meanwhile, warehouse working conditions have generated much critical media coverage, including some in the company’s hometown paper.
But direct hiring isn’t all that matters. Amazon’s independent brick-and-mortar competitors typically employ the services of many other local entrepreneurs in their communities, from accountants to graphic designers, creating a multiplier effect. These higher-skilled, higher-paying jobs are essential to building prosperous local economies and seeding future entrepreneurial activity.
Perhaps the most disturbing aspect of Obama’s choice to celebrate Amazon is the federal government’s role in protecting the corporation from competition. While storefront businesses are obliged to collect sales tax in 45 states, Congress and the Supreme Court have allowed online mega-retailers to largely avoid sharing that burden.
Legally, a physical presence such as a warehouse in any state obliges every retailer to collect sales tax. Yet Amazon plays states against each other to get exemptions and additional direct subsidies. Despite operating multiple warehouses in Tennessee, for example, Amazon has yet to collect any tax, even though the corporation has shifted from its all-out fight against online retailers having to collect sales tax to claiming it only wants a “fair system.” The fairness message understandably generates scorn from storefront businesses subject to being showroomed with Amazon’s encouragement.
The Obama administration also injected itself into a complex dispute that benefited Amazon when the U.S. Department of Justice sued several book publishers and Apple (AAPL) for conspiring to set a minimum price for e-books. The government’s successful lawsuit will dramatically increase the power and market share of a corporation already believed to control more than 60 percent of all e-book sales and an even greater share of physical books sold online.
All this benefits a corporation the IRS is pursuing for $1.5 billion in taxes it avoided through tax-shifting schemes across the globe, Reuters reports.
Independent business owners have a further big reason to resent Amazon: It’s tough to compete against a business that doesn’t need to turn a profit. The corporation lost billions of dollars—an average of $376 million annually—for its first eight years.
Any private business would be defunct with that record, yet investors continue pumping money into Amazon in anticipation of when the company has effective monopolies in some sectors, giving it the power to raise prices substantially.
While politicians always gravitate toward a photo op at a business that promises loads of new jobs, the sustainable creation of good jobs almost always occurs incrementally. The actions that help nurture real, lasting job creation rarely make headlines.
It seems that every politician masters the statistics about small business being the engine of job creation, but delivers the goods to corporations that wield significant political power. The president should consider a different venue for future jobs talks. He could visit business incubators, SCORE offices, community banks, and meetings with local business groups. The support offered by these entities will help create far more jobs than any of the corporate tax cuts Obama promotes. The concerns and ideas he’d hear would be a world away from the mammoth corporations plying the White House and Congress.
Bookseller Reaction to President’s Amazon Visit Receives Widespread Media Attention
by Rosemary Hawkins
http://www.bookweb.org/news/bookseller-reaction-president’s-amazon-visit-receives-widespread-media-attention
By now, there’s probably no one in the book industry who is unaware of President Obama’s visit to an Amazon warehouse facility in Tennessee on Tuesday to deliver an address on job creation. Reaction to the visit, which coincided with a price war between Amazon and Overstock.com on a wide range of bestselling titles, was swift.
On Monday, in a letter to the President, the American Booksellers Association’s Board of Directors and CEO Oren Teicher said the decision to use an Amazon warehouse as a platform to promote job creation was misguided.
“While Amazon may make news by touting the creation of some 7,000 new warehouse jobs (many of which are seasonal), what is woefully underreported is the number of jobs its practices have cost the economy,” ABA said. “For you to highlight Amazon as a job creator strikes us as greatly misguided. As you’ve noted so often, small businesses are the engines of the economy. When a small business fails and closes its doors, this has a ripple effect at both a local and a national level. Jobs are lost, workers lose healthcare and seek unemployment insurance, and purchasing decreases.”
Stressing that Amazon’s practices are detrimental to the nation’s economy, ABA pointed to statistics from the Institute for Local Self-Reliance that indicate for every $10 million in spending that shifts from Main Street retailers to Amazon there is a net loss of 33 retail jobs. Read ABA’s letter in full here and the Institute for Local Self-Reliance’s explanation, in five succinct points, of why Amazon’s business practices are bad for the economy here.
Media coverage of the president’s visit was widespread, and so was the reporting of book industry reactions.
“Mr. Obama’s appearance here also raised the hackles of independent booksellers, who blame Amazon, with its deep discounting and massive selection, for putting bookstores out of business,” the New York Times reported, noting that ABA told the president, “We are 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.”
CBS News reported: “One group that disagrees with the idea that Amazon is ‘spurring job growth’ is the American Booksellers Association, which is upset with the president’s visit to Chattanooga. The CEO and board of directors of the association, which represents independent booksellers, called Mr. Obama’s trip ‘greatly misguided’ and accused Amazon of driving bookstores out of business and killing jobs.”
Similar reports appeared in the Washington Post; Deseret News; Salon; The Week; the Los Angeles Times; USA Today; and Business Insider, among other print publications, and on the NPR blog.
Writing in Bloomberg BusinessWeek, Jeff Milchen, a co-director of the American Independent Business Alliance, said, “There are more inappropriate venues President Obama could have chosen than Amazon.com’s Chattanooga warehouse for his speech on creating good jobs on Tuesday, but not many.” Milchen explains the reasoning behind his statement here.
And in an opinion piece in today’s Wall Street Journal, author and Tennessee bookstore owner Ann Patchett said, “Thanks to the Amazon warehouse, there are about 7,000 new jobs in Chattanooga, many of them seasonal. But to celebrate Amazon as an employer is to ignore all the jobs that have been squeezed out of the economy as independent bookstores and other small businesses have been forced to close their doors, unable to compete with the undercut pricing the online retail giant offers. And with those shuttered bookstores go a big part of our community.”
Noting that Amazon has sold a lot of her books, Patchett acknowledged that she was biting the hand that feeds her, but she said, “Authors need a good bookstore: It’s a place to give a reading … and a place where customers can browse, picking a book up because of the title or the cover or the staff-recommendation signs that paper the shelves. Our goal is to promote writers, writing, culture and community, which, I like to think, is aiming a little higher than free two-day shipping.”
The executive directors of the regional booksellers associations also wrote to President Obama on behalf of their members. Below is a sampling from their letters:
The New England Independent Booksellers Association questioned the thinking behind President Obama’s visit and said, “Amazon is the very embodiment of so much that is wrong with our economy. The often-substandard working conditions at their warehouses around the world have been well documented. Their business model is based on fighting those states that have required them to collect and remit sales tax while driving Main Street brick-and-mortar stores out of business through predatory pricing.”
The Northern California Independent Booksellers Association told the president: “Your appearance at the Amazon warehouse in Chattanooga sends a clear signal to small independent businesses that our value as job creators and community linchpins is not as important as an arrogant chain behemoth’s contributions to states’ monetary shortfalls and creation of thousands more minimum wage, benefit-poor jobs…. We are disappointed that you feel Amazon deserves your attention and endorsement (even if implied). We hope you will carefully consider the message you are sending with such an appearance and perhaps re-think that message in the future.”
Noting that the president’s speech scolded corporations who stash money oversees to avoid paying taxes, the Midwest Independent Booksellers Association wrote: “‘That’s not fair,’ you said, while the very company you visited does a sophisticated dance to avoid paying sales tax. Amazon has fired hundreds of affiliates in states that passed the Main Street Fairness Act rather than pay their fair share of taxes, funneling billions of dollars directly out of our communities nationwide.”
The New Atlantic Independent Booksellers Association told the president: “As we write, [Amazon is] slashing prices of bestselling books in yet another price war where independent and brick-and-mortar businesses will be collateral damage…. We would hope that your administration would be standing with Main Street, and investigating the monopolistic practices of Amazon, rather than either explicitly or tacitly endorsing those practices.”
The Great Lakes Independent Booksellers Association said: “Although Amazon has promised to add 5,000 – 7,000 jobs in the next few years, these warehouse jobs barely pay minimum wage, and usually do not include health care, which is crucial to be able to lift families out of poverty, and would not even come close to elevating them to middle class. Worst of all, Amazon is a company that based their business model on tax avoidance, and spent the last 10 years using predatory pricing to enable them to eliminate competition from locally owned stores.”
Obama’s Amazon visit riles up independent booksellers
by James H. Burnett III
http://www.boston.com/ae/books/2013/08/09/obama-amazon-visit-riles-independent-booksellers/Vk1XoqO06ZqNzZEiDeDg4M/story.html
As U.S. Pres. Barack Obama was at an Amazon.com fulfillment warehouse in Tennessee Tuesday morning, independent booksellers across the country fretted over Obama’s support of the Internet retail giant since it is a direct competitor to locally owned brick-and-mortar bookstores.
In Greater Boston, indie booksellers expressed frustration at the president’s Amazon support too, but said they had what an Amazon could never offer: personal touch.
“…What keeps independent bookstores going and maybe one of the reasons we don’t outright fear an Amazon.com is that there are still lots of customers who like to hold a book in their hands and feel it and smell it,” said Bill Johnson, manager of Commonwealth Books on Spring Lane, in Downtown Crossing. “You can’t do that online. Plus, there’s a difference between a person recommending a book to you, and an algorithm trying to recommend.”