Amazon and the Squeezing of the Middle Class

Huffpo reporter Dave Jamieson wondered why so many of his Amazon Prime packages were being delivered not by UPS or Fedex, but by "independent" courier drivers. The answer says a lot about the dark side of our delivery-dependent future.

Amazon wants to be the future of the retail business. It will accomplish that by not only competing with Wal-Mart and Target on price, but also on convenience. If Amazon wants to compete, it must not only squeeze the costs out of its supply chain as ruthlessly as Wal-Mart has; it must also squeeze the costs out of its delivery system. As Jamieson discovered, Amazon is doing that in part by moving away from normal delivery services like UPS—which provide "jobs" to "employees"—in favor of smaller delivery services that use "independent contractors." This is what corporations call "efficiency." It also amounts to a massive, ongoing process of lowering the wages of working Americans by shifting many of the traditional costs of employment from the company and onto the shoulders of the individual worker.

For example, Jamieson interviewed employees of LaserShip, a delivery service that often drops off his Amazon packages. The drivers are "independent contractors." They pay for their own gas. They pay for their own car repairs. They even pay the company for their insurance, paperwork, and equipment rental. On top of that, since they aren't employees, they have a hard time unionizing, they get slammed on their taxes, and they don't get benefits. All of these costs—which have traditionally been borne by employers—take a serious toll on worker earnings:

A driver like Ballard can gross $60,000 a year if he's willing to work 80-hour weeks, but expenses will drive that haul down closer to $40,000. Then he takes a big tax hit come springtime, having had no withholdings throughout the year. He also gets no health coverage or paid time off through the job, and his pay fluctuates from week to week.

Despite his two decades in the field, Ballard said he now earns significantly less than he used to in a previous job with UPS.

This is not an isolated case. This is a broad trend in American labor. And, quite simply, it is not healthy. Companies have discovered that they can wring extra points of profit by soaking workers for a significant part of their earnings, paying a portion of that to middlemen contractors, and pocketing the rest. It's not a sustainable system.

Why is the middle class dying? Because of practices just like this. (And if you think this is bad, just wait until they perfect the delivery drones!)

[Photo: AP]