Amazon and the Widening Wealth Gap
Source: Digital Trends
Amid the unrest brought on by COVID-19, including a weak economy and housing crisis, came the announcement that Jeff Bezos, CEO of Amazon, could soon become the world’s first trillionaire. While some received this news as an American success story, others have expressed frustration at the capitalistic economy that allows for one person to rise so far above fellow citizens in wealth and power. Bezos’ growing wealth has prompted country-wide discussions on the way big corporations perpetuate unequal distribution of wealth. According to the Washington Center for Equitable Growth, in America, “wealth is distributed in a highly unequal fashion, with the wealthiest 1% of families in the United States holding about 40% of all wealth and the bottom 90% of families holding less than one-quarter of all wealth.”
Amazon is currently the world’s most valuable brand, controlling nearly half of all online sales in the United States. On July 29, Jeff Bezos represented Amazon in front of the US Congress during an antitrust law Congressional hearing. The CEOs of Facebook, Google, and Apple were also present and all four were questioned about their competitive tactics and monopolies in their industries in order to determine whether they abuse their corporate power. Bezos specifically was questioned about Amazon’s third party sellers and how big Amazon’s cut of third party sales is. 60% of Amazon’s retail sales now come as a result of third party sellers which reduces the company’s work and allows for easy profit return. This means that it is easy for the company to take advantage of product outlets that are too small to compete with Amazon and do not have the means to sell their products anywhere else. The hearing was not conclusive and did not offer strong evidence that third party sellers were being mistreated. However when asked about a policy that prohibits the use of third-party seller data to Amazon’s benefit, Bezos responded “I can't guarantee you that policy has never been violated.”
Although the hearing focussed on competition, it is difficult to address this because of the huge disparity between Amazon and its smaller competitors. Instead, it is useful to examine the internal structures that allow for a company to build such power. During the Congressional hearing Bezos fielded many questions about third party sellers, but what about the workers that Amazon directly employs? Amazon has a monopoly in online retail as highlighted by the antitrust hearing but because of its size and power, it also has a monopoly over low-income communities which guarantees them a supply of workers who have no other employment option.
According to the most recent survey by the US Census Bureau, in 2018, there were 38.1 million Americans living in poverty. In a country with this many people in need, job security is crucial. Many supporters of big corporations argue that Amazon is beneficial because it creates jobs for Americans who would otherwise have no source of income. However, too often the existence of big corporations guarantees extreme wealth and extreme poverty and widens the wage gap as the company grows in dollar figures and power. Amazon accomplishes this by attracting large amounts of workers from low income communities with good pay. However it then requires long shifts in difficult working conditions with few benefits and the constant threat of termination.
In 2012, Amazon opened a distribution center in San Bernardino, California, a city that had been hit hard by the recession. While the employment rate went up after the center was opened, the share of people living in poverty also increased from 23.4% in 2011, to 28.1% in 2016. Rising poverty rates around Amazon distribution centers has seemingly become a trend. According to a report by Policy Matters Ohio, one in 10 Amazon employees in the state require the help of food stamps. Amazon is also able to dismiss workers at a high rate if they cannot keep up with the required speed of production and packaging which is made possible by the high number of unemployed individuals who can fill the empty positions. While the attitude of disposable labor maintains efficiency in production it also dehumanizes the workers and places them under even more financial strain. Amazon purposely hires from communities bordering on desperation because these people often have no choice but to work in bad conditions. As one Amazon employee from San Bernardino told the Atlantic, “It’s either Amazon or nothing.” As Amazon hires more and more people, it sinks their employees further into poverty while themselves benefitting, thus widening the wealth gap.
This issue is especially relevant now. The sudden panic that COVID-19 imposed on the economy has brought many questions to light about the power that big corporations have over their employees, specifically among the working class. The last few months have highlighted the gap between the rich and poor in terms of healthcare, food security, and housing. Many people have been forced to risk their health in order to support their families or afford rent. Blue collar workers have been let go without assistance after companies began functioning online, while CEOs retained the same pay. As people return to working face-to-face, the frustration and helplessness that many Americans felt at the onset of the pandemic is likely to remain as the working class continues to precipitate success for companies like Amazon without receiving their portion of the wealth.