Don’t Trust Jeff Bezos’s Preschool Philanthropy Scheme

Originally published in In These Times on September 19, 2018.
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The CEO of Amazon and the world’s richest man declared this month that he’ll be wading into the waters of philanthropy. In a high-profile announcement, Jeff Bezos described his vision for a “Day One Fund”—a $2 billion investment in organizations that provide homelessness assistance, and a new network of nonprofit preschools in low-income communities. This charitable gift will amount to just 1.2 percent of his net worth.

Bezos joins fellow tech billionaires Mark Zuckerberg, Bill Gates and Reed Hastings in championing corporate-style reform of American education. “We’ll use the same set of principles that have driven Amazon,” Bezos said of his future preschool chain. “Most important among those will be genuine, intense customer obsession. The child will be the customer.”

Preschool is a particularly appealing area for those who like conceptualizing problems in terms of market potential. Several years ago, a U.S. Chamber of Commerce affiliate reported that every dollar invested in high-quality early childhood education yields savings “from $2.50 to as much as $17 in the years ahead.” University of Chicago economist and Nobel Prize winner James Heckman published research in 2009 finding high-quality preschool can yield a 7-to-10 percent annual return.

Preschool is also one of the most popular target-areas for champions of “Pay for Success”—a branch of so-called impact investing which took off under the Obama administration. Under Pay for Success, private funders front money for social programs, and the government pays the investors back with interest if certain predetermined goals are met. Chicago launched a Pay for Success preschool program in 2014, funded by Goldman Sachs, Northern Trust and the J.B. and M.K. Pritzker Family Foundation. These private groups aim to roughly double their investment over the next 18 years.

It’s not clear at this point how Bezos’s Day One Fund will be structured; whether it will be a traditional family foundation like the Gates Foundation, some sort of limited-liability company like the Chan Zuckerberg Initiative, or perhaps one of the increasingly controversial “donor-advised funds” that other tech titans have embraced. CNBC reports that between thirty to fifty percent of Bezos’s gift could be tax-deductible.

It’s also not clear why exactly he chose this month to announce his plans, but it’s possible that Bezos is trying to improve his image, which has taken a public beating over the past year. This past June, the Seattle City Council rolled back its so-called “Amazon tax” which councilmembers had passed unanimously four weeks earlier. The tax, meant to generate new revenue to address the region’s growing homeless crisis, would have required Amazon to pay about $12 million per year in new taxes. The company helped fund an aggressive, unpopular, and ultimately successful campaign to repeal it.

Vermont Sen. Bernie Sanders has also been targeting Bezos, specifically on the gulf between the CEO’s ever-increasing wealth and the low-wages of Amazon’s many thousands of employees, who rely on all sorts of government aid to supplement their income. This month, just days before Bezos made his philanthropic announcement, Sen. Sanders and California Rep. Ro Khanna introduced new federal legislation to force large companies to help shoulder the cost of social services for low-paid staff. More than anything, though, the bill is understood as a vehicle to spotlight the issue of inequality between rich owners and their workers. It’s unsubtly named the Stop Bad Employers by Zeroing Out Subsidies Act, or “Stop BEZOS” for short.

While he’s offered little detail as to how he’d treat the educators in his forthcoming preschool network, Bezos’s other businesses offer some hints. The median compensation of Amazon’s more than 566,000 global employees at the end of 2017 was $28,446. Thousands of Amazon workers in Europe launched a strike this past summer to protest their working conditions, following an exposé of a journalist who had toiled undercover at an Amazon warehouse. Workers in Minnesota also demanded safer Amazon conditions this past summer, alleging dehydration, injuries and exhaustion on the job. A spokesperson for the company dismissed the employees’ complaints, calling theirs a “positive and accommodating” workplace.

The national median income for preschool teachers in 2016 was $28,570. While a growing number of education policy experts have called for increasing salaries as a way to attract and retain better teaching talent, there’s no guarantee that Bezos’s “customer” focused-model will prioritize competitive wages.

And to put Bezos’s gift in perspective, Head Start, the federal government’s high-quality early-childhood education program which serves nearly one million low-income children every year, runs on a strained budget of more than $9 billion annually. Bezos’s Day One Fund, meanwhile, is $2 billion, to be divided amongst both pre-K and homelessness.

Let’s be clear about the scale of the problem. In 2016, just 42 percent of 3-year-olds and 66 percent of 4-year-olds in the United States were enrolled in preschool programs, and these figures were not measurably different from the percentages enrolled in 2000. Demand for early childhood education far exceeds existing capacity in this country, and the cost to change that will require significantly more than what Bezos has so far offered to contribute.

The world’s richest man may sincerely view his new philanthropic project as a way to positively impact the world, but what we know is that Bezos has built up his company and personal fortune by aggressively avoiding taxes for years. In 2017 alone, Amazon paid literally nothing in federal income tax, while reporting $5.6 billion in U.S. profits.

Instead of creating his own new private network, which might run in direct competition with Head Start and other existing state programs, Bezos could help the government expand its proven models: A combination of higher taxes and philanthropy could help early childhood educators cover the cost of school supplies, help program providers extend their school days, construct and refurbish school buildings, supplement teacher salaries, and improve teacher training programs. There are even Montessori-inspired Head Start programs, the progressive pedagogical model Bezos seems most interested in expanding on his own.

Giving more kids access to good schools can be an uncomfortable thing to criticize. But we have to be able to recognize when something even seemingly generous is nowhere near enough. Last year Bezos said he wants his philanthropy to help “people in the here and now.” This month he said he wants to ensure our great-grandchildren have “lives better than ours.” Whether he means it or not, it’s on all of us to push for more.

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