February 2018, Week 1


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Material of Interest to People on the Left 



 Marshall Auerback 
 January 26, 2018

	* [https://portside.org/node/16454/printable/print]

 _ Amazon's high-tech sheen hides its abusive labor practices. _ 

 Robert Scoble / Flickr Creative Commons , 


When Amazon announced plans to locate a $5 billion, 50,000-employee
complex as its second headquarters somewhere in North America, state
governments and municipalities fell over themselves offering billions
of dollars in tax abatements and corporate subsidies to secure the
prize. It might behoove the remaining 20 cities that have made the
final cut to heed the warning from Virgil’s Aeneid: “I fear the
Greeks, even when they are bearing gifts.” Especially when the gifts
come in the form of a modern-day digital chain gang.

Amazon likes to see itself as a cutting-edge, 21st-century growth
company, always working to expedite delivery to its customers, whether
by means of a drone, or eliminating queueing and bagging at its newly
acquired Whole Foods stores with a new smartphone app. Beneath this
high-tech sheen, however, the online retailer and tech giant engages
in labor practices that provoke comparisons to a 19th-century
sweatshop. The company routinely pays wages barely above the poverty
line, while using intrusive surveillance systems to monitor the
workforce, fence them in with elaborate rules, set target times for
their warehouse journeys, and then measure whether targets were met.
All of this information is made available to management in real
time, and if Amazon’s “employee-athletes” fall behind schedule,
they receive a Big Brother-like text message pushing them to reach
their targets or suffer the consequences. Failure to do so is met
with a “three strikes and release” discipline system—being a
euphemism for getting sacked.   

In essence, you’ve got a $550-billion-plus global conglomerate with
virtually unchecked market power and no sign that its legally
advantageous position will be challenged anytime soon via vigorous
anti-trust enforcement—and certainly no encouragement of
unionization to combat its abusive and intrusive work practices.
Companies like Amazon have been aided and abetted by a sequence of
"pro-business" governments that for decades introduced harsh
industrial relations legislation to reduce the trade unions’ ability
to achieve wage gains for their members, while lavishing billions in
tax cuts and subsidies, which deprives the region of vitally needed
revenue for the provision of essential public services.

Even before this latest municipal beauty competition, Amazon has
received almost $123 million from the state of Ohio in cumulative tax
breaks, plus $2.9 million in cash grants. That has been a great deal
for the company, but what about the people of Ohio? A new study by
Policy Matters Ohio
found that more than 700 Amazon employees receive food stamps, or more
than 10 percent of the tech giant’s 6,000-strong workforce in the
state. That’s because the jobs provided by Amazon in exchange for
these tax breaks barely pay above the $26,208 poverty line
So much for the much-vaunted “multiplier effect” supposedly
created by this panoply of government largesse.

Or consider the state of New Jersey, where Chris Christie’s last
move as governor was his effort to pass legislation authorizing up to
$5 billion in tax credits to Amazon, should it choose to move its
second headquarters to the state. There’s a perverse symmetry to
Christie’s actions, considering that one of his very first measures
when he commenced his governorship was rejecting a desperately needed
commuter rail tunnel that, in his view, threatened cost overruns in
the range of $2-5 billion, something deemed "unacceptable” by the
former governor
Ironically, Amazon listed viable public transport as a key criterion
for its proposed second headquarters; one wonders whether its
management team has kept abreast of the litany of commuting challenges
that have arisen as a result of the rising shortfalls in funding
infrastructure upgrades for the NY/NJ public transport system.  

In reality, the main effect of these economic development incentives
is to create a zero-sum game. They pit communities against one another
as they pony up the subsidies, while correspondingly starving the
regions of needed funds for essential public services. Bloomberg
reported last October that emergency responders visit the Amazon
warehouse in Licking County, Ohio, at least once a day to attend to an
injured worker. Local residents have to fund those forays because
Amazon pays no property tax in Licking County under its subsidy deal,
forcing voters to offset this subsidy by approving a $6.5 million
property tax levy
last November to keep the fire department operational.

Then there are the actual working conditions at Amazon itself, which
were discussed by author Simon Head in his book _Mindless: Why Smarter
Machines Are Making Dumber Humans_
Head describes Amazon’s modern-day use of the “functional
foreman,” a figure first introduced by Frederick Winslow Taylor
(the pioneer of “Scientific Management”) into the workshops of the
Pennsylvania machine-tool industry in the 1890s. In the modern-day
Amazon version, Head writes:

“The functional foreman would record how often the packers went to
the bathroom and, if they had not gone to the bathroom nearest the
line, why not. The student packer also noticed how, in the manner of
Jeremy Bentham’s nineteenth-century panopticon, the architecture of
the depot was geared to make surveillance easier, with a bridge
positioned at the end of the workstation where an overseer could
stand and look down on his wards. However, the task of the depot
managers and supervisors was not simply to fight time theft and keep
the line moving but also to find ways of making it move still faster.
Sometimes this was done using the classic methods of Scientific
Management, but at other times higher targets for output were simply
proclaimed by management, in the manner of the Soviet workplace
during the Stalin era.”

If Taylor’s “Scientific Management” was Amazon’s progenitor,
it is one built on a lie. Taylor typically would spend a few days
watching people work, his stopwatch and slide rule in hand.
Afterwards, he would issue a report telling the laborers how to do
their work faster, and then submit a huge bill to the company for his
services [https://www.newyorker.com/magazine/2009/10/12/not-so-fast].
But as a recent book by former management consultant Matthew Stewart
illustrated (_The Management Myth: Why the Experts Keep Getting It
Taylor fudged his data and inflated his record of success. The
resultant exploitation of the increasingly stressed employees had an
unpleasant byproduct for most of the employers who paid for Taylor’s
bogus services: it engendered profound mistrust between management and
employees, as well as catalyzing a movement toward increased

Luckily for Amazon (not its workers), there has been no increased
evidence of unionization at many of its plants in the U.S. or U.K.,
and hence, no independent employee voice to contest management’s
demands for increased output unmatched by increases in real wages.
This occurs against a backdrop whereby each region is more than happy
to filch jobs from another with the promise of yet more new tax

Amazon masks its work practices with euphemisms that would make George
Orwell blush. It calls its employees “athletes” with an emphasis
on endurance and speed (what CEO Jeff Bezos terms “bias for
action”). Collective performance is measured with a goal to defy
limits. Amazon’s Allentown, Pennsylvania, plant was the subject of a
series in the local newspaper, “The Morning Call
[https://www.mcall.com/news/local/amazon/],” which revealed the
lengths to which Amazon was prepared to go to keep costs down and
output high:

“Workers said they were forced to endure brutal heat inside the
sprawling warehouse and were pushed to work at a pace many could not
sustain. Employees were frequently reprimanded regarding their
productivity and threatened with termination, workers said. The
consequences of not meeting work expectations were regularly on
display, as employees lost their jobs and got escorted out of the
warehouse. Such sights encouraged some workers to conceal pain and
push through injury lest they get fired as well, workers said.”

The paper also revealed that ambulances were stationed on hot days at
the Amazon center to take employees suffering from heat stroke to
the hospital. 

In response to the adverse publicity, Amazon has since installed an
air-conditioning system in the plant, but the broader work culture has
remained the same. As recently as January 2018, Guardian journalist
Donna Ferguson recorded the experiences of one particular worker,
Aaron Callaway

"I work four nights a week in an Amazon
[https://www.theguardian.com/technology/amazon] warehouse near my home
in Southend-on-Sea. It’s quite a cold place to work and, apart from
two half-hour meal breaks, I’m on my feet for 10 and a half hours. I
scan the items the trucks bring in from distributors and place them
into the right cart for the robots to take to the correct place in the

"I have to put away each item in 15 seconds or less, and get through
250 in an hour, or I’ll be given a warning by a manager. Stepping
away from my station to, say, get a drink of water can have a big
impact on my performance.

"During my half-hour breaks I rush downstairs to have something to
eat. It’s stressful – and it definitely affects my health,
standing up for hours on end. I worry I may pass out if I don’t rest
during my meal breaks. I’ve lost a lot of weight since I started."

Silicon Valley enthusiasts have long argued that IT liberates the
workforce, helping to bring self-managed work teams and decentralized
decision making. But the Amazon workplace experience suggests that the
very opposite has happened. And the harsh and often unstable work
regime of re-engineering also undermines the security of employees and
weakens their bargaining power in the workplace.

All of which should encourage governments to consider what kind of a
“gift” they are getting from Amazon’s proposed new investment.

John Atkinson Hobson was an English economist whose work spanned the
latter half of the 19th century through to 1940. Noting today’s
parallels with that period, the labor economist Bill Mitchell recently
remarked that Hobson provided some excellent insights into how rising
income inequality, mass unemployment and increased poverty could
destabilize the economic system through its impacts on lowered
consumer expenditure
[https://bilbo.economicoutlook.net/blog/?p=34668]. Hobson challenged
the prevailing ideology of the day, which considered wage suppression
to be good for business and society.

In the 1920s and '30s, John Maynard Keynes expressed much the same
view, noting that cutting wages may well reduce unit costs (if you
make the generous assumption that the impact on morale doesn’t
undermine productivity growth), but if done on a national scale it
also undermines growth by impairing an important source of demand.
Growth can be sustained for a time via elaborate financial engineering
and private debt accumulation, although the fallout from 2008 should
remind us that this is a profoundly misguided model even as many of
today’s governments continue to embrace it. Ideally, real wages
should grow in proportion to labor productivity for spending levels to
be maintained without undue reliance on credit and savings drawdowns.

The subsistence wage model practiced by Amazon is ultimately
self-sabotaging. Longer term, if the output of each worker (what
economists call “labor productivity”) is rising so strongly but
the ability to purchase (the real wage) is lagging badly behind, how
does economic growth sustain itself? And what benefits accrue to
governments? They offer subsidies, miss out on tax revenue, starve
their citizens of vital social services, and fatten the profits of
these modern-day robber barons, who treat their workers like serfs as
they drive out existing local businesses. The “benefits that Amazon
offers, then, are as illusory as the Greeks' Trojan horse. The 20
remaining cities might do well to look this Amazon gift horse in the

Marshall Auerback is a market analyst and commentator.

	* [https://portside.org/node/16454/printable/print]







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