01:12 - Source: CNN
Amazon fires back after Ocasio-Cortez slams Bezos
Washington CNN —  

During an interview with ABC News, New York Rep. Alexandria Ocasio-Cortez dodged the question of whether Amazon CEO Jeff Bezos would still be a billionaire under her political prescriptions. Instead she attacked how Amazon treats its employees, claiming the e-commerce giant’s practices of paying “starvation wages and stripping them of their ability to access health care,” contribute to Jeff Bezos’s personal wealth.

Amazon shot back, saying that Ocasio-Cortez is “just wrong” and that Amazon is “a leader on pay” starting at $15 an hour. “We also lobby to raise federal min wage,” the company said.

So, who’s right?

Facts First: While $15 an hour does not meet the threshold of a “livable wage” for the average American, and Amazon paid zero federal taxes in 2017 and 2018, those are not the sole reasons for Bezos’ massive fortune. Ocasio-Cortez’s insinuation that Amazon does not provide health coverage for its employees is incorrect, or at least incomplete, since it does provide health benefits for full-time employees, though not for many contractors.

In its annual report, Amazon said it increased the minimum hourly rate for all workers to $15 an hour in 2017.

But that’s not a living wage for a family of four, according to MIT, which estimates the hourly rate would have to be $16.14 per hour on average nationwide to meet the standard.

Amazon has resisted unionization efforts that would give employees more say over their wages and working conditions. It’s also unclear that Amazon is “a leader on pay” as the company claims. For context on wages – non-supervisory workers in Transportation and Warehousing make $22.64 on average across the industry, which has fallen behind non-supervisory workers economy-wide, according to government data.

Labor advocates on the Hill say Amazon has been lobbying for a higher minimum wage, but it’s unclear how hard the company is pressing the issue. Legislation has paused in the House and is going nowhere in the Senate.

Amazon does provide health coverage for full-time workers and will help pay for higher education for its staff in fields of study that are in “high-wage, in-demand occupations.” Amazon will provide “up to $3,000 per year in tuition, textbooks and associated fees for up to four years.” They do not, as Ocasio-Cortez wants, pay for the college tuition of an Amazon employee’s child.

With her remark suggesting Amazon doesn’t provide health care to employees, Ocasio-Cortez could have been referring to the many contractors that run last-mile deliveries and aren’t be eligible for its health care coverage.

While Ocasio-Cortez seems to be referring to Bezos’ personal tax bill, a debate has been raging about Amazon’s corporate tax bill.

Amazon didn’t pay federal taxes in 2018, The New York Times reported in April.

The company responded by saying it “paid $2.6B in corporate taxes since 2016. We pay every penny we owe. Congress designed tax laws to encourage companies to reinvest in the American economy. We have.”

According to the left leaning Institute on Taxation and Economic Policy, Amazon got a $129 million refund on its $11.2 billion in profits in 2018 because of various tax credits. Taking out state taxes, the last time the company paid federal taxes was in 2016, according to the group’s analysis of regulatory filings.

Amazon is by no means alone in its lack of federal tax liability. Corporations ranging from Delta Airlines to Duke Energy also received rebates in 2018 – a list that grew longer due to the 2017 tax overhaul, which cut the corporate tax rate from 35% to 21%.

Also, it’s up to Congress to change tax laws so that companies pay more. Amazon – or any other public company – would be letting down its shareholders if it agreed to pay more than it had to.

According to Bloomberg estimates, Bezos is worth about $118 billion, making him the richest man alive. His 16% stake in Amazon accounts for the bulk of that wealth. (Bloomberg backs out a portion of his holdings because it’s part of a divorce settlement with his ex-wife.)

When Amazon’s stock rises, so does Bezos’ fortune. The opposite happens when the stock falls.

Bottom line, Bezos is so wealthy because public stock investors are willing to value Amazon stock richly for its growth and earnings potential.

One could argue Bezos would not have been able to build and grow the company without the help of low-wage workers, but suggesting that this wealth is directly tied to cheap labor is misleading.

CNN’s Lydia DePillis contributed to this report.