Amazon’s Promise of Creating 100,000 Jobs Is Good but Rising Cost of Labour Will Hurt

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by Viraj Shah

It appears President Trumps’ ascendency to his office has paid off the unlikeliest of economic dividends. Despite US Bureau’s labor statistics reporting an increase in unit labour costs by 3%, US ecommerce giant, has announced 100,000 new jobs.  The Seattle-based company’s announcement on Thursday appears to end the duel between President Trump and CEO, Jeff Bezos on social media.
The new openings are expected to be part of the newly announced category expansions such as – hardware, video, groceries and fashion, cloud services as well.
It is interesting to note that the company has created only 150,000 jobs in last past five years. The company is also responsible for killing traditional retail and jobs in the sector. The online business model and subsidy-funded warehousing has led to an increase in only wage-based low paying jobs, comment research analysts. Most of these jobs are temporary and do not account for significant economic contribution.
There has been significant rise in usage of robots which has also affected employment along with job losses.

Duel of words
Interestingly, at the height of the election campaigning, the battle of words and actions between the CEO of the ecommerce company and the President were never short of imagination. Bezos had jokingly offered to send President Trump on a space journey on the rockets his other business manufactures.  In quick repartee Trump accused Amazon of antitrust issues. Further, Trump claimed that Amazon was using its other subsidiary business holding, the Washington Post to urge politicians not to tax Amazon. The duel appears to have come to an end with the election of the President.
However, Amazon’s hiring spree brings to light, the latest hiring announcements by a host of big-budget companies such as Ford, Alibaba and IBM. The announcements came on the back of meetings between technology industry leaders and President Trump. The meeting held in December focused on immigration, jobs and China, leading to an increase in number of hiring in many of these companies.
Overhauling Traditional jobs
Though, the economic implications of the new hires are yet to be ascertained, it can be said that Amazon is redefining traditional hiring policies. Its platforms such as Marketplace as well as Amazon Flex offer jobs that are flexible, allowing many to explore entrepreneurial opportunities and set growth plan.
The timing of the new hiring spree, in the first year and half of Trump’s Presidency is expected to have significant impact and have ‘positive, political’ impact, according to analyst at Tigress Financial Partners LLC’s Ivan Feinseth. It makes “Trump looks good” he concludes, setting the framework for the rest of the President’s term in office.
The qualifications for the latest slew of hires are – Americans with education, experience and the skill levels. These jobs include entry-level jobs and are backed by on-the-job training.  The latest jobs will also support advanced technology categories such as machine learning, cloud technology as well as logistics, according to the Amazon announcement.
Though the company has announced creation of jobs it would need to be taken with a pinch of salt. The use of robotics and automation by the company along with outsourcing increased outsourcing needs to be keenly watched.

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