Alec MacGillis on Amazon and the Evolution of Work, Part 2

How Amazon affects cities beyond their employment of the workforce; Amazon affects your work even if you don’t work for Amazon

(This is the second part of an interview I did with reporter Alec MacGillis, author of the book Fulfillment, in the spring about Amazon and the evolution of mostly blue-collar work across the United States; see here for the first part of the interview.)

Tim Carmody: I wanted to ask about the relationship between Amazon and its workers and politics and politicians, whether it’s local or national politicians. I know that a complex relationship between politicians and a big employer and its workforce is nothing new. But despite a few high profile blow ups, like in New York City with HQ2, Amazon has been very savvy in terms of how they’ve courted local politicians, and the kinds of appeals they’ve offered.

Alec MacGillis: It starts with jobs and job turnover. Amazon does offer a lot of entry-level jobs, especially at the warehouses, even if it’s often for a short period of time, and often for a younger, blue-collar, blacker part of the workforce. And there’s a strong sense of, well, at least it’s something. That’s why area officials are so eager to get them in there, and often just shower them with tax credits, just being so incredibly obsequious in their overtures.

One of the things that most kind of astonished me in my reporting was that I put all sorts of FOIAs and public information requests to get the emails between the company and local officials who were courting them for both the warehouses and data centers. Local officials were so obsequious on the point of not just showering them with subsidies, but also in promising Amazon secrecy. They would promise to withhold as much they possibly could from the local media. At one point, one official in Ohio was even apologizing for having said something to a local reporter, saying “don’t worry, I didn’t agree to be interviewed by him; he just accosted me in a parking lot, and I just said something completely banal. But I didn’t agree to an interview and I’ll never speak to him again.”

Another moment that I saw firsthand was the first Amazon warehouse in Baltimore at the site of a former GM plant, where people have been making 30 bucks an hour just a few years earlier making Astro minivans. They had a grand opening ceremony there for Amazon, and the mayor of Baltimore and a local Congressman, both Democrats and both certainly pro-labor, people throwing themselves at Amazon’s feet in gratitude, saying things like, “I love you, Amazon, you are the one who brings me my deodorant on time,” said the Congressman,” “I love you, Amazon, you’re the one who gets me my skin lotion on time,” said the mayor. So to see our elected officials in that example, not only having become sort of desperate for the jobs, but also having adopted the exact kind of consumer mindset, that so many of us have for excusing anything, in return for that “convenience.”

Tim Carmody: One of the sections of your book, you talk about this community meeting in El Paso, where, if I understand it correctly, the city is using Amazon like a procurement center where the city can buy things through the Amazon site. City retailers or manufacturers are listed as preferred, but the city can actually buy from anywhere. And in the middle of the meeting, the Amazon officials and politicians are talking about “don’t you love Amazon?” They’re playing on the popularity of their retail service in order to justify this big other thing that’s happening to change government services and who they’re buying from.

Alec MacGillis: Yeah. They’re so blind about it; that’s what strikes you. They’re so completely confident now in the supremacy of their triumph, that there’s very little self-consciousness or self-awareness about how they might sound. There really seems to be an actual assumption that they are, in fact, loved by us all, because look at the numbers, right? I mean, all the numbers are through the roof. And they were through the roof this year. There’s just no notion that anyone would have a problem with it.

So, that’s what this scene in El Paso was, where I slipped into this meeting where they were pressuring these local office supply dealers to join the Marketplace and even if it meant losing a hefty commission to Amazon. It was just this assumption that “of course, you want to be a part of us; we are everything, everyone loves us, we are where it’s at.” So why wouldn’t you?

(Here is a short excerpt from the relevant chapter of Fulfillment. Mario Marin is a former Los Angeles government official who was then heading all U.S. government sales for Amazon Business. )

A hand went up. It was Julian Grubbs, from Express Office Products. “City customers used to buy from my website, and then we transitioned to the city website. Are we transitioning to Amazon and it’s going to replace the city website?”

The question cut through the fog of Lee’s pitch. With Amazon now approved as a channel for city government purchasing, would city employees simply be buying straight from the site? Left unmentioned was the clear subtext: if they were doing so, what was to keep them from buying from the countless other suppliers on the site, not just El Paso businesses?

Bruce Collins jumped up to dismiss Grubbs’s insinuation. Yes, he said, buyers could now go through Amazon directly. But, “as part of the synergy with the city, it’ll be coded” that an El Paso supplier is local, and thus preferable to use.

Daniel Lee offered more consolation. Amazon Business gave sellers a window where they could describe themselves, where El Paso businesses could tout their roots. “You can tell your story,” he said.

But Grubbs wasn’t satisfied. A few moments later, he raised his hand again and cut even closer to the main point. “What’s the tradeoff when they order from me directly and [from] me from Amazon?” he asked.

Lee acted as if he did not understand what Grubbs was getting at. “Tradeoff for you, sir?” he said.

“Tradeoff for me and the customers,” said Grubbs.

Marin jumped in and started talking again about Amazon guiding El Paso buyers to El Paso sellers. Grubbs wasn’t having it, and pushed even harder for candor. “My question is, I’m on the city’s website for a ream of paper for ten dollars. They go through the city website to purchase from me. When they go through Amazon, they’ve added another tradeoff, whether price, service, or convenience. What is the tradeoff?” He was practically begging now.

But the avoidance continued, from each of the three men.

“Global distribution,” said Bruce Collins. “When you go to Amazon Marketplace, you’re now a global supplier.”

“We’re not trying to replace your current business,” said Daniel Lee. “It’s not El Paso. It’s the Stanfords and GEs of the world that you get to sell to, in a pretty turnkey solution.”

“We take on the responsibility of negotiations” when it comes to overdue payments and other hassles, said Mario Marin. “It’s a phenomenal channel to think about.”

This was the Amazon vision in its essence, of commerce at its freest and most frictionless, a small business on the Mexican border able to sell its goods to any buyer in the world, without even having to worry about packing and shipping: What was not to like about that?

Grubbs couldn’t take it anymore. He had tried not to be too blunt. How could one be so crass as to inquire about price if the seller was acting as if there wasn’t even a pitch going on, that this was all about helping El Paso businesses grow? They had left him no choice.

“That’s great and sounds great to me,” Grubbs said. “I haven’t seen what it’s going to cost me for this convenience.”

And finally, with that, nearly forty minutes into the pitch, Lee told his audience that for the privilege of selling on Amazon, they would pay a $39.99 monthly fee. “And,” he continued, “there’s a referral fee that spans from six to fifteen percent depending on product category.”

It was vague, and Grubbs called him on it. “Those categories go from six to fifteen percent. How do I, as a businessperson, identify my product category?”

“That’s something we’ll walk through with you,” said Lee.

“That’s something we’ll come to terms with before we come to terms?”

“Kinda sorta,” said Lee.

With the real terms of the deal finally on the table, there was little left to be said. A while later, Mario Marin wrapped things up, neatly as he could. “You heard two stories,” he said. “One is, there’s a play on suppliers on the sell side, onboarding, recruiting, helping you sell on this marketplace. And then you heard my story, on how we’re teaching, showing, demonstrating how you can use this site, you can buy and mirror your procurement processes in such a way that you can help fulfill your socioeconomic goals.”

“That’s it,” he said. “That’s our story.”

Tim Carmody: The marketplace is just another example where even if you’re not directly working for Amazon, Amazon has this outside effect on other businesses, which in turn affects companies and their labor practices. You find yourself in a position where you are this local or regional business and now you are in effect working for Amazon, you’re making their sales your sales through the Amazon Marketplace, subject to their terms, selling at their rates. Could you talk about that sort of umbrella/waterfall effect that Amazon’s dominance has on these other companies?

Alec MacGillis: It was just really kind of heartbreaking to watch these companies in El Paso, who were basically the local Dunder Mifflins — they have 12-15 employees and have just been doing their work there selling to local governments, local schools, local businesses, priding themselves on their customer service, picking up recycling, ink cartridges from their customers, working with them even if they might have bought one or two supplies from Staples, because their customer is on the line saying “oh I’m under the screw, I’m gonna lose my job, can you help me out?” Just this human interaction. And then along comes Amazon and gets a lot of their clients to buy through them, on the argument, “don’t worry, you can still support your local business; you’re just going to be doing it through us now, it’ll be easier, more convenient, it’ll be seamless.

And of course, what’s missing in that is that the local businesses are going to lose a hefty cut to the middleman. And also, it’s not just that: the local businesses understand that there’s something else that’s been lost. It’s going to affect a local tax base, and the local fabric is hurting other ways by having everyone just become sort of a third-party merchant in the Amazon service. In that scene, these are quite high level Amazon people who’ve come in from Seattle and California to make that push. And it took about 40 minutes into this meeting before Amazon just finally got really pressed by this one office supply dealer who was there before they would finally admit what the costs would be.

There’s no reason for this local El Paso company to want to sell to Philadelphia. But now, Amazon is asserting itself into this relationship with the Marketplace.

Tim Carmody: At the consumer level, the reasons for gravitating towards Amazon seem relatively clear. As you say, it’s a heightened convenience at a lower cost. Not always, but the asymptotic trend is for lower and lower costs. But in terms of the politicians or governments or companies who are making deals with Amazon, what are the incentives for them to align themselves so closely with Amazon?

Alec MacGillis: I think it’s the popularity. You get to be part of this cool thing that everyone levels. And even for them, it’s convenience. If you’re that local municipal school system official, and you’re buying everything at home from Amazon, and you can just keep doing that on the job, and not having to go through whatever system your agency or department has set up for procurement, it’s not so different from what you would do at home. So it’s really not so dissimilar in its appeal to the individual consumer.

Tim Carmody: Looking ahead with these labor conditions, where do you think things are trending? What’s it going to be like in two more years, or five more years? (It feels hard to project even further out than that.)

Alec MacGillis: Gosh; I may not be the best person to wager on this, but I would say this partly depends on the outcome in places like Bessemer? It also depends partly on what kinds of advances they can make on the robotics, right? How much can they displace even more of the work that’s still being done now by humans. How much can they teach robots to grab better?

The main thing about the conditions is that they’re going to be even more prevalent, because if they keep growing at anything like this kind of scale, there’s just going to be more and more and more of us doing this. And I don’t think we’re really grasping just how insane the growth of the last year has been — partly because the numbers are so large, and also because we all feel a bit implicated in it.

My book was already basically reporting on their massiveness before this past year. And then we saw a 40% growth in sales, 500,000 or more empoyees hired, not counting the hundreds of thousands of drivers. 50% more warehouse space.

I’m not an absolutist about this; I don’t myself boycott. I use [Amazon] occasionally, if I have to, but the alacrity with which Americans embraced the one-click lifestyle this past year, on all sorts of fronts, but Amazon especially, has been something to behold. It’s almost as if we had been holding back somewhat all along, by some sense of compunction, some sense of stigma. Then this year, we kind of got the go-ahead from above, and we just went for it.

Tim Carmody: I rememember it used to be a big deal if Amazon announced a new fulfillment center or a new warehouse or a new comething, and now it’s like, every week, every couple of hours, there are hundreds of thousands of square feet, in every part of the country and all over the world, places that haven’t even been built yet.

Alec MacGillis: I can’t even keep track of it. The one at Sparrows Point, the steel mill [in Baltimore], they’ve already built and begun operating a second facility there. It’s just been a matter of months. It has this gorgeous view onto the harbor and bridge, but no one sees the view because it’s all windowless. 500 more workers, boom; right there.