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Robert Reich: The True Cost of Online Deals

By    |   Thursday, 05 December 2013 07:27 AM

Shoppers are getting great deals online. But they may be paying a hidden price.

More online purchases mean fewer retail jobs and lower pay for American workers, Robert Reich, a University of California, Berkeley professor and former labor secretary under President Clinton.

"To put it another way, American consumers getting great shopping deals are also American workers on the losing end of those same deals," Reich writes on his blog.

Editor’s Note:
Obama Donor Banned This Message (Shocking)

At its current pace, online retailing will surpass traditional sales as brick-and-mortar stores scramble to compete against Amazon, the main online portal, predicts Reich.

Target and other stores plan to spend more on technology next year than on building and upgrading new stores. Already, online sales are up 20 percent this year, and almost half of Americans are now doing their holiday shopping online.

Retail has been the fastest-growing job category since the end of the recession. That job growth, Reich notes, can't possibly continue given the growth of online sales.

New jobs that online retailers create won't come close to replacing the jobs they destroy, he argues. Amazon said it would add 5,000 new jobs to the 20,000 it already has, but it's already eliminated hundreds of thousands of retail jobs and will wipe out hundreds of thousands more.

Plus, much of the holiday merchandise being sold both online and offline is made overseas, he says. "This means even lower prices and better deals. But it also means fewer jobs and lower pay for many Americans."

Consumers are desperate to find bargains because they're more strapped than ever. Median household income adjusted for inflation is dropping because most of the new jobs created since the recession are in low-wage occupations, Reich explains.

Unfortunately, the United States lacks a national strategy for creating good jobs, he says. "Until we do, more and more Americans will be chasing great deals that come largely at their own expense."

Forbes contributor Tim Worstall takes aim at Amazon critics like Reich. Replacing labor with machines and more efficient processes will free excess for other jobs and make everyone richer over time, Worstall writes.

"This is the whole point of technological advance: to destroy jobs. The invention of the combine harvester destroyed millions of jobs harvesting the wheat with a sickle," he notes.

Those mechanized out of the fields, he says, eventually entered manufacturing and other fields to make everyone better off.

"We will be richer as a whole by being able to access whatever else it is that they produce rather than retail services."

Editor’s Note: Obama Donor Banned This Message (Shocking)

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Shoppers are getting great deals online. But they may be paying a hidden price.
Thursday, 05 December 2013 07:27 AM
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