One day in February 2018, a sixty-one-year-old New York City livery driver, Doug Schifter, parked in front of City Hall and shot himself in the face with a shotgun. A few hours earlier Schifter had posted a long essay on Facebook explaining his reasons. He said that he had once made a good living driving a limo in New York, earning enough to buy a house outside the city, in the Poconos. But then came the onslaught of new drivers working for services like Uber and Lyft, and rates plummeted for everyone, so low that nobody could make a living as a driver anymore. Schifter was putting in seventeen-hour days, sometimes earning as little as $4 an hour. He fell into debt. He missed a mortgage payment and was in danger of losing his home. “I have been financially ruined,” he wrote. “I will not be a slave working for chump change. I would rather be dead.”
Silicon Valley promotes the gig economy as an innovative new industry that is creating jobs for millions of people. But the jobs being created are mostly bad ones. Meanwhile, gig-economy companies threaten established industries. Airbnb steals business from hotels. Uber and Lyft have hurt business at car-rental companies like Hertz and Avis, and have utterly decimated the taxi and livery business. Pundits like to talk about “creative destruction” as if it were an abstract concept, but the sight of a driver parked in front of City Hall with his head blown off served as a reminder that all this change and so-called progress is coming at a very high cost to actual human beings. As the New York Times reported, Schifter “was not a participant in the gig economy; he was a casualty of it.”
There are many others. In New York, cabbies and limo drivers are going bankrupt, losing their homes or being evicted from apartments. From 2013 to 2016, the average New York cabbie’s annual bookings dropped 22 percent, and the value of a New York taxi medallion plunged 85 percent from more than $1 million to less than $200,000, according to the New York Times.
Within months of Schifter’s suicide, four more drivers killed themselves in New York. Their union held a protest, placing four coffins outside City Hall and begging the city to regulate the ride-sharing operators. “We are sick and tired of burying our brothers,” the union president said.
Twenty years ago, pundits believed the Internet was going to make the world better in all sorts of ways, from perfecting democracy to saving the planet. Best of all would be the financial impact. During the heady days of the first dotcom boom, when stocks were soaring and people were mooning over the magical powers of the web, Wired founding editor Kevin Kelly declared the Internet would usher in decades of “ultraprosperity,” with “full employment…and improving living standards.” We were entering “the roaring zeroes,” as he called it, while declaring, “The good news is, you’ll be a millionaire soon. The bad news is, so will everybody else.” Bill Gates would become a trillionaire, Kelly predicted, perhaps as soon as 2005. By 2020, average U.S. household income would be $150,000. Regular people would have personal chefs and take six-month sabbaticals.
A more accurate prediction came from curmudgeonly business guru Tom Peters, who fretted, “I’m concerned that this global economy will in fact be garbage at the speed of light.” Peters was right. Even people who helped build the Internet economy, and have benefited from it, now fear they created a monster. Chris Hughes, a Facebook co-founder, says the new economy “is going to continue to destroy work,” and in a 2018 book, Fair Shot, he argues for providing universal basic income—essentially handouts to unemployed adults—paid for by taxing the top 1 percent.
The first of the four factors boils down to this: twenty-five years after the dawn of the Internet, we haven’t all become millionaires. In fact, quite the opposite. Almost everyone is doing worse than they were a quarter century ago.
Income inequality in the United States has reached a level not seen since 1929, just before the Great Depression. Technology may not be entirely to blame for that widening gap between haves and have-nots, but it certainly has played a crucial role. If nothing else, the Internet sped up anti-worker practices that were already in place, acting like a turbocharger for bad behavior, becoming “the greatest legal facilitator of inequality in human history,” Silicon Valley venture capitalist Bill Davidow wrote in a 2014 essay for The Atlantic.
Real wages (adjusted for inflation) have been flat or down for decades. Millennials earn 20 percent less than their parents did at the same stage of their lives, according to a 2017 study by Young Invincibles, an advocacy group. The economy has been growing, but almost all of the benefits of that growth go to the highest-income Americans, leaving the rest of us with scraps. In 1970, middle-income households reaped 62 percent of aggregate household income in the United States. By 2014, their share had fallen to 43 percent. The share going to upper-income households grew to 49 percent from 29 percent over the same period, according to a 2015 Pew Research Center report. From 2000 to 2014, the median income of middle-income households actually declined by 4 percent. Their wealth (assets minus debts) dropped 28 percent from 2001 to 2013. As a result, the middle class itself is shrinking—from 61 percent of Americans in 1971 to 50 percent in 2015, according to Pew.
It took the election of Donald Trump to really wake people up. In January 2017, a few months after the election but before Trump actually took office, elites at the annual World Economic Forum in Davos were all talking about income inequality. The WEF itself cited widening income inequality as a threat to the global economy. Some saw the election of Trump as a warning that the victims of the Information Age were lashing out. “People around the world have become aware they are part of the bottom class, and they’re angry. Trump could be just the beginning,” British economist Guy Standing declared. Standing uses the term precariat to describe a new class of people who lack secure employment or predictable income, and suffer psychologically as a result.
While economists and government ministers wring their hands, some billionaires and tech leaders have taken matters into their own. But instead of trying to fix the situation, they are making plans to escape whatever calamity might arise from the forces Trump has unleashed—civil war, a proletariat uprising, a collapse of the power grid, an economic meltdown. According to a 2017 article in the New Yorker by Evan Osnos titled “Doomsday Prep for the Super Rich,” the loaded have taken to stockpiling guns and food, gold bars and Bitcoin. Others have been building “boltholes”—armed compounds in places like faraway New Zealand, where they can ride out a catastrophe. Tech oligarch Peter Thiel owns a hideaway there and has even obtained Kiwi citizenship. “Saying you’re ‘buying a house in New Zealand’ is kind of a wink, wink, say no more. Once you’ve done the Masonic handshake, they’ll be, like, ‘Oh, you know, I have a broker who sells old ICBM silos, and they’re nuclear-hardened, and they kind of look like they would be interesting to live in,” billionaire VC Reid Hoffman told Osnos. Hoffman estimated that “fifty-plus percent” of Valley billionaires had built some kind of doomsday hideout. In Kansas, an entrepreneur converted an old underground missile silo into a survival bunker. He put apartments on the market priced at $3 million each. They sold out in a heartbeat.
The $2 Trillion Swindle
Nick Hanauer was born rich, thanks to a family-owned business in Seattle, and then he made an even greater fortune in tech. In 1997 he founded a company called aQuantive which he sold a decade later to Microsoft for $6 billion. But an even greater part of his wealth comes from a single investment that might turn out to have been the single smartest bet of the last hundred years. In the early 1990s, Hanauer met a nerdy young guy named Jeff Bezos and became the first person to put money into Amazon.
Instead of normal billionaire hobbies—starting a space exploration company, purchasing a private island—Hanauer became an unlikely advocate for the working class. He says he had a kind of epiphany one day in 2008 when he was poring over Internal Revenue Service data (how’s that for a hobby?) showing how the share of gross income had been shifting over time. In 1980, the top 1 percent of earners raked in 8.5 percent of all income. By 2008 that figure had climbed to 21 percent. Over the same period the share going to the bottom half of earners dropped from 17 percent to 12 percent.
For Hanauer, that was a wake-up call. “All I did was take that data and put it into a spreadsheet and assumed that the current trends would continue for another thirty years,” he told me. “It does not take a genius to see that this is unsustainable and that the country would come apart if it did.”
He urged his fellow one-percenters not to ignore the problem or run away from it, but instead to try to fix it. That was only fair, since they had created it. Hanauer started writing books and essays, giving speeches, and lobbying politicians to enact policies—like raising the minimum wage—that could reverse the widening gap between haves and have-nots. In a blistering 2014 essay, titled “The Pitchforks Are Coming for Us Plutocrats,” Hanauer warned that if we continued on the same path, eventually millions of people in the precariat would launch a revolution. “You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples,” he wrote.
What’s more, Hanauer believes the people rising up would be completely justified, for they have been the victims of one of the greatest swindles of all time. They have been robbed of $2 trillion a year that should be flowing to working people and instead has been siphoned off by the rich, he says.
Here’s how he does the math. First, companies managed to slash wages paid to workers and keep that money for themselves. Forty years ago, wages represented 52 percent of the gross domestic product. Today, wages represent only 46 percent, according to the U.S. Bureau of Economic Analysis. With the U.S. GDP now at $17 trillion, that 6 percent swing represents $1 trillion a year that has been stolen from workers.
Over that same time period, corporate profits rose by 6 percent, to 12 percent of GDP today from 6 percent of GDP in 1980. Basically, companies vacuumed up 6 percent of the economy that used to go to workers and moved it to their bottom lines.
That’s only the first trillion. Another trillion vanished because not only did the portion of the pie that goes to wages decrease but regular workers also now get less of that smaller portion. Four decades ago, regular workers (meaning the bottom 99 percent of wage earners) collected 92 percent of all wages. Today, regular workers get only 78 percent. That 14 percent drop represents another trillion dollars per year.
Where did that money go? The top 1 percent of wage earners now reap 22 percent of all wages, up from 8 percent four decades ago.
“If you add it up, it is $2 trillion a year that used to go to normal people and now goes to rich people,” Hanauer says.
That $2 trillion, if divvied up among the 125 million full-time workers in the United States, would amount to $16,000. For the average full-time employee, who earns $44,000 a year, an extra $16,000 would represent a 36 percent raise. For minimum-wage workers, the windfall would more than double their pay. It’s a big deal.
This amounts to a robbery in broad daylight. But it all happened slowly, and so most of us missed it. But most Americans do know that it’s harder to pay the bills and harder to get by. Some chalk it up to individual luck and career decisions. But it turns out their misfortune is systemic. And that is making people angry. “We are in a cycle of immiseration,” Hanauer says. “People are pissed, and they have a right to be pissed.”
How did companies get away with such an outrageous smash-and-grab looting of American workers? The story begins nearly a half century ago, in 1970, when the economist Milton Friedman published an essay in the New York Times magazine titled “The Social Responsibility of Business Is to Increase Its Profits.”
That’s a pretty boring title. But few documents have inflicted so much harm on so many people.
Milton Friedman Stole Your Pension
Friedman was an economics professor at the University of Chicago and probably the most influential economist of the late twentieth century. He was a libertarian and free-marketeer, and he admired the ideas of Ayn Rand, the nutty novelist who wrote The Fountainhead and Atlas Shrugged. He served as an adviser to President Ronald Reagan, as well as other world leaders. In 1976 he was awarded a Nobel prize. He trained generations of economists who spread his ideas to other universities and business schools.
In his famous essay in the New York Times magazine, Friedman argued that people who manage companies should have only one goal, which is to make as much money as possible for their investors. CEOs should not worry about “providing employment, eliminating discrimination, [or] avoiding pollution,” Friedman wrote. The top executives of a corporation were not free to do whatever they wanted. Those executives were employees of the shareholders. If they wanted to do charity work in their spare time, with their own money, that was fine. But at work they were duty-bound to do nothing but generate the biggest possible return for investors.
By then Friedman was already famous, because in 1962 he had published Capitalism and Freedom, a global bestseller in which he argued that governments should stay out of the way and let the free market work things out for itself. Now, with his essay in 1970, Friedman was taking things a step further. Not only should governments leave corporations alone, but corporations should not feel bound to do anything good for society.
In truth, companies have multiple stakeholders—customers, employees, and society. The opposite of shareholder capitalism is stakeholder capitalism, which argues that companies should serve all of those constituents, not just investors. In a 2014 essay, Robert Reich, the former U.S. secretary of labor, points out that in the era before Friedman, stakeholder capitalism had been seen as a good thing. “Johnson & Johnson publicly stated its ‘first responsibility’ was to patients, doctors, and nurses, not to investors,” Reich wrote. Reich cites Frank Abrams, the chairman of Standard Oil of New Jersey, who in 1951 declared that “The job of management is to maintain an equitable and working balance among the claims of the various directly interested groups…stockholders, employees, customers and the public at large.” But here was the legendary Milton Friedman, soon-to-be Nobel laureate, saying CEOs need no longer worry about employees or the community. Those who did were “preaching pure and unadulterated socialism,” he wrote. Socialism! Gasp! The horror! Friedman’s doctrine quickly became accepted as the correct way to run a business. Indoctrinated with this ideology, a new generation of MBA students roared into the corporate world and became foot soldiers in the junk bond, leveraged buyout, hostile takeover craze of the 1980s.
Naturally, Wall Street loved the Friedman doctrine, since according to Friedman they were the only ones who mattered. For CEOs the Friedman doctrine also made life simpler. All they had to worry about was hitting quarterly targets and boosting the stock price. What’s more, CEOs quickly figured out how they could benefit from this arrangement. All they had to do was tie their compensation to the stock price, and then find ways to goose the stock.
There were many ways to do that. Many, unfortunately, involved screwing workers. You could raid the pension fund, depriving people of money they had planned to live on in retirement. You could slash benefits, shift employees to cheaper health insurance, and force them to pay a greater share of the monthly premium. You could lay off American workers and outsource their jobs to India and China.
Another tactic was simply to slash pay. Since 1970, the year Friedman published his essay, hourly wages for the average worker have grown only 0.2 percent per year, according to the Harvard Business Review. Normally, you’d expect wages to rise in lockstep with productivity. That’s what happened in the United States from the end of the Second World War until Friedman declared his doctrine. Since, productivity has grown 75 percent, but wages have grown only 9 percent, according to the Economic Policy Institute. Middle-wage workers have seen even less of a bump, gaining only 6 percent. Hardest hit have been low-wage workers, whose wages have declined 5 percent, even as productivity has been soaring.
Unions at one time protected wages, but, beginning in the 1980s, unions went into sharp decline, partly because of legislative changes. Today, only 11 percent of U.S. workers belong to unions, about half as many as in the early 1980s. The labor movement was “the institution most responsible for working- and middle-class prosperity,” labor historian Raymond Hogler says. There has been a cultural shift away from the collectivist instinct that fostered the labor movement. In a 2017 Gallup poll nearly half of the people surveyed said they expect unions to become weaker and less influential in coming years.
Then came the Internet, and everything sped up. It was like those scenes in Star Wars when the spaceship makes the jump to light speed. Companies that were already sold on the Friedman doctrine and committed to exploiting labor and pushing down wages now found themselves armed with an incredibly powerful new weapon: outsourcing. By the year 2000, we had speedy global connections, software that enabled free communication, and computers whose power was doubling every eighteen months. Information technology and back-office work shifted to India. Manufacturing moved to China. From 2000 to 2016, India’s GDP quintupled. China’s GDP grew from $1 trillion to $11 trillion. In the United States, over the same sixteen years, GDP grew 33 percent.
As it happens, I got an early glimpse of the outsourcing trend as it was taking off. In 2001, Jeffrey Immelt had just been named the CEO of GE, and Forbes magazine sent me to interview him. In those days, the Web was still in its toddlerhood. Websites were ridiculously primitive, and most people relied on sluggish dial-up modems. Yet Immelt could look a few years into the future and see how the Internet would improve, and how that would let him move jobs overseas. He told me with great enthusiasm about his plans to boost GE’s bottom line by shifting most of GE’s IT and back-office operations to India. “The Web is going to let us do a big redeployment of resources,” he told me. “It’s a big deal.” We did not talk about where all of GE’s laid-off workers would go. But over the next fifteen years, GE shed sixty-five thousand U.S. workers. The company seems to have especially targeted union workers, who made up about a third of the jobs cut. Today, GE’s global workforce is almost the same size as it was in 2000, with about three hundred thousand people. But the mix has changed. In 2000, more than half of GE’s employees were Americans, while today Americans make up only one-third.
As I mentioned in Chapter 2, the year 2000 once again marks an important turning point in a lot of ways. The number of people employed by the U.S. Postal Service peaked in 1999, at just under eight hundred thousand. Since then the headcount at the post office has dropped 36 percent, to about five hundred thousand, meaning today the organization is about the same size as in 1967. Manufacturing also took a weird turn after the year 2000. Jobs in manufacturing had been declining since the 1980s, but after 2000 the numbers plunge, with the U.S. shedding five million manufacturing workers, a drop of 30 percent, from 2000 to 2016.
You Lost Your Job—Here’s a Gig Instead
Where did all those laid-off factory workers and clerical workers and middle managers and postal workers go? Some went into service-sector jobs, where employment grew 17 percent, from 108 million in 2000 to 127 million in 2017, according to the Bureau of Labor Statistics. But lately many have ended up in the gig economy, driving for Uber or running errands via TaskRabbit. The gig economy is the second way in which Silicon Valley has helped drive down wages. Instead of hiring employees, companies use the Internet to assemble a workforce of contract employees. The shift to gig work was helped along by the Great Recession, which put 8.7 million people out of work between 2007 and 2010—just as companies like Uber and Airbnb were being formed. The problem is that the jobs people lost had provided them with health insurance and some kind of retirement plan. Gig work pays almost nothing and provides no benefits. Apps like Uber might feel like magic for consumers, but the gig economy is not so magical for the people trying to make a living in it.
Nevertheless, gig-economy jobs represented 34 percent of the U.S. economy in 2017 and will hit 43 percent by 2020, according to software company Intuit, maker of TurboTax. Consulting firm McKinsey estimates there are sixty-eight million gig-economy “freelancers” in the United States, and that twenty million of them, or roughly 30 percent, have resorted to gig-economy work not because they find it appealing, but in desperation, as a last resort, because they can’t find real jobs with better pay.
The gig-economy model is coming for white-collar workers, too. Gig-economy lawyers get hired on short-term contracts or by the project. WorkMarket, a New York start-up, runs online “on-demand labor clouds” of graphic designers, copywriters, editors, and computer technicians who get hired as contractors to work for big companies like Walgreens and are paid by the gig. Presto! These companies save money by carrying fewer full-time employees.
WorkMarket drives wages down by forcing workers to compete with each other for each gig; it’s like a real-life version of The Hunger Games. There is huge appetite for this. More than two thousand companies hire contract employees through WorkMarket. The company has enlisted several hundred thousand workers and is growing at an 80 percent annual clip.
WorkMarket CEO Stephen DeWitt says his service helps companies operate more efficiently. “There will be a huge purging of old-model inefficiencies,” he said in a 2016 interview. Who will suffer? “A lot of people. It’s carnage,” DeWitt conceded. But that’s just how things are going to be. “If philosophically this scares you, I’m sorry,” he said.
That does scare me. What some people think of as “inefficiencies” are known as paychecks and health insurance to workers. Just because the Internet makes it easier to replace full-time workers with piecemeal contractors does not mean we should do it.
The Retail Apocalypse
A few chapters earlier I invoked the crisis in retailing, citing the demise of Toys “R” Us. It’s hard to believe this now, but in the late 1980s and early 1990s, Toys “R” Us so completely dominated the toy-selling business that it was considered a “category killer,” a retailer with such depth and breadth, and such overwhelming market power, that no new upstart could enter its market and compete. Toys “R” Us was a corporate Godzilla, smashing through local markets, putting little toy shops out of business, and bullying toy manufacturers into withholding products from its rivals, according to a 1997 ruling by a Federal Trade Commission judge.
But Walmart and Target started chipping away market share, and then came Amazon, a company that nobody seems able to compete against. By 2013 Toys “R” Us was losing money. In 2017 the company filed for bankruptcy protection, apparently hoping to restructure and carry on. Six months later management announced the company would shut down its remaining seven hundred locations in the United States—and put thirty-three thousand people out of work.
This is what analysts call the “retail apocalypse.” The first wave of Internet destruction targeted companies like Blockbuster (DVD rentals), Tower Records (music CDs), and Borders Books, as well as the media business, as readers ditched print newspapers and magazines for online publications. But that wave was nothing compared to the typhoon that hit the retail industry, starting in about 2010.
The thousands of workers who lost jobs at Toys “R” Us come on top of ten thousand workers who got cut from Macy’s, and sixteen thousand who lost jobs when Sports Authority went bust. All told, more than one hundred thousand retail workers lost jobs in 2017, as chains closed more than eight thousand locations, according to Business Insider.
As bad as that is, things soon might get even worse. “If today is considered a retail apocalypse, then what’s coming next could truly be scary,” Bloomberg reported in November 2017, predicting that by the time the storm ends as many as eight million people, most of them low-income workers, could be put out of work.
Where are those eight million laid-off retail workers going to go? People in Silicon Valley like to talk about “creative destruction,” a term popularized by economist Joseph Schumpeter. In the happy-face version of how this works, technology kills old jobs, but it also creates new and better ones. Factory workers lose their jobs to robots, but then go to work at the company that makes the robots.
But eight million displaced retail workers are not going to get absorbed into Amazon. The online retailer employs five hundred thousand people, which sounds like a lot but is actually remarkably lean. Amazon generates about half as much revenue as Walmart, but does it with only a quarter as many people—which means Amazon generates roughly twice as much revenue per employee as Walmart does.
Even if newly unemployed retail workers could get jobs in Amazon shipping centers, they might not want them. You might imagine that since Amazon makes so much money with (relatively) few employees, the company probably pays those workers exceedingly well. Especially since Jeff Bezos, Amazon’s founder and CEO, is the world’s richest man, worth $140 billion. Can you imagine the kind of holiday bonus you must get when you work for the world’s richest man?
Bah, humbug. Bezos is a modern-day Ebenezer Scrooge.
Amazon, the Silicon Sociopath
Amazon’s warehouse workers earn on average about 15 percent less than other warehouse workers, according to a study by the Institute for Local Self-Reliance, a Washington, DC, advocacy group. In Ohio, seven hundred Amazon workers are so poorly paid that they are receiving food stamps, according to Policy Matters Ohio, an advocacy group.
Bezos is not just frugal, or cheap, or a tightwad. He runs what many have called modern-day sweatshops, where human beings are pushed beyond their limits in ways that make Frederick Taylor and his stopwatch seem like Mother Teresa. Bezos loves data, but when it comes to actual human beings, he seems indifferent at best.
In 2011, a Pennsylvania newspaper reported that workers at the local Amazon warehouse were toiling in a building that lacked air conditioning, in temperatures that climbed above one hundred degrees. Amazon stationed ambulances outside, with paramedics to treat workers who keeled over. In June 2018, an investigation by a trade union in Britain found there had been six hundred ambulance calls to Amazon’s UK warehouses in the past three years. One site alone, in Rugeley, received 115 ambulance calls, making it “one of the most dangerous places to work in Britain,” a union officer said. “Amazon should be absolutely ashamed of themselves.” The union said pregnant women had been forced to stand for ten hours a day and do physically demanding work, and that one woman suffered a miscarriage while working. Amazon insisted it was “not correct to suggest that we have unsafe working conditions,” Business Insider reported.
Amazon employs various stratagems to drive down labor costs, like hiring through subcontractors and forcing workers to be “permatemps,” rather than actual employees. The company also has squeezed down the cost of deliveries. It did this by adopting the gig-economy model, signing up part-time drivers who use their own cars and pay their own costs, just like Uber drivers. Amazon drivers get paid based on how many packages they deliver.
Amazon skins its white-collar workers at headquarters, too. Most tech companies grant workers options (or, if the company is already public, restricted stock units) and dole them out over a four-year period, so workers get 25 percent each year. But as journalist Brad Stone reports in his book The Everything Store, Amazon back-loads the grant so that workers get 5 percent after year 1, 15 percent at the end of year 2, and then 20 percent every six months for the next two years. You might say Amazon back-loads the stock grants to create an incentive for employees to stay at the company. The other explanation is that Amazon knows most people can’t survive for long in its brutal culture, and back-loading means the company will pay out less. In 2013, Amazon had the second-highest turnover rate of any company in the Fortune 500, with the average employee lasting only one year, according to a study by PayScale, a company that tracks compensation trends.
As bad as the warehouse wages are, the conditions are reportedly even worse. Bathroom breaks are monitored and limited. Flat-screen TVs display images of workers who have been caught stealing or breaking rules, with TERMINATED or ARRESTED next to their silhouettes—“a weird way to go about scaring people,” one worker told Bloomberg. “It’s just letting people know that you’re being watched,” another said. Workers are surveilled and pushed to reach such high quotas that some resort to peeing in bottles to save time. In 2015 a British labor union complained that constant stress was making Amazon employees physically and mentally ill. Workers were pressured to be “above-average Amazon robots” and were “chewed up and spat out by a brutal culture,” a union rep told the London Times.
Some Amazon workers in Britain were so badly paid that they resorted to living in tents beside a highway. One day in December 2016, just before Christmas, Craig Smith, a newspaper reporter in Scotland, was driving his Honda Civic on the A90 motorway when he noticed a few tents in a field, about a half mile from a big Amazon facility in Dunfermline. Who would go camping in December, Smith wondered, when temperatures dropped below freezing, and in such a weird place?
Smith pulled over and tramped down into the woods. “I turned up first thing in the morning, and basically ‘knocked’ on the side of the tent to see if anyone was home,” he told me. The occupant told Smith that he worked in the nearby Amazon shipping center. He was camping out because he lived thirty miles away, and although Amazon provided transportation, the company also charged workers to ride the bus. The fare took such a bite out of his paycheck that he had decided to rough it instead.
“Obviously he wanted to hold down the job, and you can’t blame him, though the harsh conditions would have stopped me,” Smith told me.
Smith’s front-page article in the Courier about the Amazon worker who lived in a tent quickly spread around the world, and sparked outrage in the UK. One Scottish politician calculated that after charging for transportation and imposing unpaid lunch breaks, Amazon was paying sixty pence below the minimum wage. “Amazon should be ashamed,” he said. Smith’s article quoted an Amazon spokesperson saying the company had created thousands of jobs and was paying “competitive wages.”
Amazon could easily do better. In 2017 the company booked $3 billion in profit on sales of nearly $180 billion. The company can afford to pay warehouse workers enough money to live a middle-class lifestyle and enjoy a financially secure retirement. But it doesn’t.
Amazon is not a scrappy, struggling start-up that has not yet turned a profit. Nor is it a fly-by-night tech sensation whose founder hopes to cash out quickly and scoot away with the loot. Amazon is twenty-four years old, and Bezos seems intent on building for the long term. The company is already one of the most important companies of the century, with boundless ambitions for gobbling up new markets.
Maybe Bezos reckons that eventually Amazon will operate without human beings, at least in its warehouses, so there is no sense in treating them well today. Still, there’s something chilling about his relentless push to drive down labor costs, and his apparent lack of regard for human dignity.
When Amazon announced plans in 2017 to build a second headquarters, Bezos did not ask where he could do the most good or how he could help the most people. Instead, he invited American cities to compete for his business, asking who would do the most for him. More than two hundred cities, among them some of the poorest in the United States—Detroit, Cleveland, Cincinnati, Milwaukee—submitted plans. Hoping to land Amazon in the benighted city of Newark, the state of New Jersey offered $7 billion in tax incentives.
And so we were treated to a hideous spectacle: here were some of the poorest people in the United States offering to pay the world’s richest man so that he might bless them with an office complex.
Waiting for the End of the World
Hanauer, the billionaire-turned-activist, was at one time close to Bezos. I asked him if he had ever talked to his old friend about paying workers better and treating them more humanely. “I took a crack at getting him to care about it,” Hanauer said. Apparently Bezos wasn’t persuaded. In recent years, “I have lost touch with Jeff,” Hanauer said. He was reluctant to say more.
For years Hanauer has been trying to convince legislators to raise the minimum wage to $15 an hour, more than double the current minimum wage of $7.25. Even that $15 wage would not be enough to make things square, but it would at least be a start.
“If the minimum wage had tracked the growth of productivity since 1968, it would now be $22,” Hanauer says. “If it tracked the top 1 percent, it would be $29.”
The reason to give back the money, he says, would be so that the one percent can save their own skins. As Hanauer sees it, the election of Donald Trump might be only the first step toward something much worse. “People were hurting, and they lashed out—by voting for the guy who was lashing out, too.”
If we don’t shift wealth back toward workers and just keep carrying on the way we are now, Hanauer predicts we will end up in a real-life Mad Max movie: “If you don’t give it back, things are not going to get better. Oh, dude, we are in for a bumpy ride. This is going to get way worse before it gets better. I think the country is in trouble. The West is in trouble. We have institutionalized a set of dynamics which benefit the few and immiserate the many.
“People are not going to get less pissed. People’s lives are going to get worse. People are going to be even more angry and more polarized. The talk will get even crazier. Plan on violence. Plan on it. People do stupid shit when they’re angry. It’s not going to be good. I think we’re going to have a lot of civil unrest. Hopefully we will avoid a civil war. The last time the country was in crisis like this was 1968. Remember that? We had hundreds of bombings. We had riots. Well, it’s been fifty years. We’re right on cycle.”