Why is Obama giving his economy speech at an Amazon warehouse?July 30, 2013: 11:29 AM ET
The White House says Amazon's warehouses provide "high-wage" jobs. Not quite.
FORTUNE -- Amazon's announcement that it is planning to create thousands of new jobs in warehouses across the country is good news. Thousands more Americans will be working, paying taxes, and shopping. It will pull some families out of poverty and keep some others from falling into it.
But the very fact that the announcement is being heralded as a big deal -- and coordinated (at least in the media) with a speech on the economy by President Obama -- is actually bad news. Amazon's (AMZN) warehouse jobs do not in any way represent even a hint of a resurrection of the American economy. They represent only the continued slow, weak recovery from the latest recession. Structurally and in the long term, things still look grim. Nevertheless, Obama has chosen an Amazon facility as the site of his speech Tuesday, one of a series of speeches he's giving to promote his efforts to spur the economy.
Amazon is opening new warehouses in a bunch of states across the country, creating 5,000 full-time warehouse jobs and 2,000 customer-service positions in both existing and new facilities. The company boasts that the jobs pay on average 30% more than retail jobs. Yes, 30% better than not great is good. But it's far from great. The jobs pay between $11 and $13 an hour. That amounts to about $23,000 to $27,000 a year -- just a little above the official federal poverty line for a family of four. It's hard to know how many of the people taking the jobs will be supporting families solely on that income, but no matter what, it's clear the jobs don't represent the kind that are needed to put the country on a sound, sustainable economic footing. They are not middle-class jobs, or they shouldn't be. It's arguable whether they're adequate as working-class jobs.
Amazon is doing nothing wrong here, of course, but it's also not doing much to help rebuild the economy. The jobs are comparatively fairly decent. They include health benefits and stock grants to full-time employees that the company says average about 9% of workers' wages. The positions are a net gain for the economy at least in the short term, but they are also a symbol of its underlying weakness. As our manufacturing base continues to erode, jobs like this, while welcome, fail to serve as a panacea.
So why is Obama using an Amazon warehouse as a stage setting for his speech on jobs? Amy Brundage, a deputy White House press secretary, said this to the Chattanooga Times Free Press: "The Amazon facility in Chattanooga is a perfect example of the company that is investing in American workers and creating good, high-wage jobs." And: "What the president wants to do is to highlight Amazon and the Chattanooga facility as an example of a company that is spurring job growth and keeping our country competitive."
As the Times Free Press' Mike Pare notes, the median household income in Chattanooga is about $37,000. The median for Tennessee as a whole is $44,000, or just short of double the lower end of Amazon's pay rate for warehouse jobs.