Bloomberg Reporters Ignored Evidence That Complicated Critical Amazon Angle, Economist Says

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Workers prepare orders at the Amazon fulfillment center in Tracy, Calif., November 29, 2015. (Fred Greaves/Reuters)

When Michael Mandel first began studying Amazon in 2016, he says he noticed something striking.

“I was doing some historical research into General Motors and the first 20 years of General Motors — and as you probably know, General Motors has always been held up as this great job-creating machine,” said the chief economic strategist at the Progressive Policy Institute, a center-left think tank. “And I realized that when I plotted Amazon on top of General Motors, Amazon’s job creation over the first 20 years actually almost identically matched GM’s.”

Mandel’s realization led him to formulate the argument that, largely thanks to Amazon, the field of e-commerce is “a job creator, not a job destroyer.”

So far, the company has upheld Mandel’s thesis by generating over 1 million new jobs with wages starting at $15 an hour — “they’re paying in parts of the country where the prevailing wage was pretty low,” he explained. And while other “Big Tech” firms primarily employ white-collar workers, Amazon stands apart. In 2020, the firm has added over 400,000 jobs — primarily in its fulfillment centers, where the vast majority of jobs can be filled by high-school-educated employees.

“They’re cognitive physical jobs: They’re technical, they’re a mix of cognitive skills and physical skills, but they’re not office jobs,” Mandel said of the majority of Amazon’s workforce. “The question is, are these going to be acceptable sorts of jobs today? They’re not easy jobs; I’m not saying that they’re easy jobs. But the question is what do we consider to be good job these days.”

A December Bloomberg article, titled “Amazon Has Turned a Middle-Class Warehouse Career Into a McJob” offered an apparently decisive answer.

“Amazon’s object is to persuade potential recruits that there’s no better place to work. The reality is less rosy,” reporters Matt Day and Spencer Soper explained. “Many Amazon warehouse employees struggle to pay the bills, and more than 4,000 employees are on food stamps in nine states,” 70 percent of which are full-time. The article cites Supplemental Nutrition Assistance Program (SNAP) data from the Government Accountability Office, while failing to mention that such a number accounts for 0.35 percent of Amazon’s workforce.

The crux of the Bloomberg article rested on data analysis that showed that “in community after community where Amazon sets up shop, warehouse wages tend to fall.” The data used, average weekly wages from the Quarterly Census of Employment and Wages (QCEW), seems at first glance to support their thesis: Wages fall over six percent over the first two years in counties where Amazon opens new facilities and take five years to return to normal.

But Mandel says such analysis is missing key context — and uses data selectively to try and make a more flashy angle. The tactic apparently worked: Representative Alexandria Ocasio-Cortez (D., N.Y.), who celebrated when Amazon scrapped plans to build its “HQ2” facility in New York City, shared the story on Twitter.

As Mandel explains in a blog post he wrote in response to the Bloomberg article, while the QCEW suggests one conclusion, other data from the Bureau of Labor Statistics shows that, adjusted for inflation, hourly wages for non-managerial warehouse workers have risen by 11.5 percent since 2013, when e-commerce really took off — eclipsing wage growth in industries such as health care, manufacturing, and retail by multiple points.

Prior to Amazon’s founding, the warehouse sector was tiny, often too small to be measured and reported by the Bureau of Labor Statistics. So while the arrival of an Amazon fulfillment center may temporarily depress wages for the small number of existing local warehouse workers, the e-commerce boom has created many more warehouse jobs than previously existed — and many different kinds of warehouse jobs, due to the complexity of an Amazon fulfillment center.

The fulfillment centers “bear the same relationship to ordinary warehouses as jet planes bear to bicycles. Whereas an ordinary retail warehouse is a stopping place for bulk shipments on the way to stores, a fulfillment center dynamically responds to orders from individual customers, integrating many different vendors,” Mandel wrote in a 2017 report.

Mandel says he explained this important piece of context to Bloomberg before the article was written, only for the writers to ignore it in their final draft.

“The reporter for the Bloomberg story actually contacted me, and we talked for a long time about this, and I gave him a fair bit of data,” Mandel revealed. “They didn’t [include it], which I was sort of surprised at.”

Mandel praised the Bloomberg reporters for diving into the Amazon wage data but said their story reflects the challenges of data-driven journalism.

“If there’s alternative sources of data or alternative explanations, they should treat them seriously, because they’re trying to make a real point here,” he said. “And so what I did is I gave some alternative sources of data that told a different story. With the BLS data, I gave him some alternative explanations. And, I was a little bit surprised to see that, because they didn’t have as much balance as I would have hoped for.”

Mandel said Bloomberg’s profiles of disillusioned workers “doesn’t make Amazon a bad company.” He pointed to transformations in manufacturing — where managerial jobs are now increasingly dominated by employees with higher-education levels — as proof that the issue is more nuanced than the reporters made it out to be, and involves foundational changes in the nature of blue-collar work.

“The question when you’re thinking about what the career path looks like for cognitive-physical workers in a technology society is going to be really interesting,” he said. “It’s not a solved problem. But I think that e-commerce is part of the solution and not part of the problem.”

“I can understand why it is that Amazon workers want to improve their working conditions and want to improve their wages — of course they do,” he continued. “Everybody does.”

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