FIRST READ THIS:
What this report finds: When Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries. See the 40-page full research report with sources below.
SECOND READ THIS:
Then read this 2nd critical analysis for the real cost of hosting an Amazon warehouse. E.G. 21 warehouses in LA region, averaging 1/5 the size of Churchill, bring 21,500 diesel trucks daily. By those averages, Churchill can expect 2,000 trucks daily.
What Is not compensated is public costs for noise, road wear, accidents, and harmful emissions.
https://economicrt.org/publication/too-big-to-govern/
THIRD READ THIS:
Amazon in Pennsylvania collects state tax but not local tax, so local communities do not receive the tax a local business would collect for them. Full report and all reference sources below. Or go direct.
https://fortune.com/2020/08/23/amazon-coronavirus-taxes-local-governments/
Why are local governments paying Amazon to destroy Main Street?
BY PAT GAROFALO August 23, 2020 8:00 AM EDT
A warehouse associate checks boxes at an Amazon fulfillment center on March 19, 2019, in Thornton, Colo. Local governments entice Amazon with tax breaks to open facilities, but the company is hurting those very economies, writes Pat Garofalo. HELEN H. RICHARDSON—MEDIA NEWS GROUP/THE DENVER POST/GETTY IMAGES
The coronavirus pandemic has brought new scrutiny to the way in which Amazon treats its warehouse workers, whose exhausting, precarious positions now come with a decent chance they’ll be exposed to a deadly virus. And yet, Amazon is going gangbusters to expand its network, opening new facilities all across the country with the aid of compliant cities and states and little recognition of Amazon’s devastating impact on local economies.
In North Andover, Mass., for instance, Amazon recently received $27 million in public funding to build a new warehouse. In Windsor, Conn., it was $8.8 million. The property taxes for a new Amazon distribution center in Glenwillow, Ohio, will be reduced by nearly half for 15 years. And the e-commerce giant is receiving taxpayer dollars for distribution facilities in Whiteland, Ind., and Arlington Heights, Ill., too. Overall, Amazon has received nearly $3 billion in subsidies from state and local governments. There are surely other handouts in the works.
Officials justify these monetary favors as necessary for bringing jobs and investment to a local area. But in truth, policymakers are funding the demise of Main Streets across America and further entrenching Amazon as a gatekeeper across wide swathes of the economy. Federal and state officials are looking anew at Amazon’s power, most prominently through Congress’ big tech hearing in late July and state-level antitrust investigations. Local officials need to pay attention to Amazon’s power, too.
Amazon’s distribution network promotes at least two significant interests for the company: accessing customers and using that access to force other sellers into coercive arrangements that promote Amazon’s other lines of business. As Good Jobs First has found, Amazon strategically places warehouses where there is a concentration of disposable income, Amazon Prime subscribers, and easy access to highways and airports. That makes sense, since Amazon’s aim is to get stuff to people who are likely to buy things from it faster, regardless of any sort of tax incentive or other regulatory favor.
But Amazon also leverages its warehouses to extract funds from other businesses by giving Prime Eligibility and the coveted “Buy Box” to sellers who pay Amazon to handle their storage and distribution through Fulfillment by Amazon, or FBA. Because buyers are far more likely to buy items that are Prime eligible, Amazon can coerce businesses into paying Amazon to handle their warehousing, even if it would be cheaper and faster to use alternative methods.
Don’t use Amazon’s fulfillment system, and loads of customers simply never see your product. During last month’s congressional hearing, Amazon CEO Jeff Bezos admitted to employing this tactic.
This sort of arrangement also allows the company to continue to bolster its shipping operation. Last year, Amazon delivered nearly 50% of its own packages, compared to less than 15% in 2017. Dominance in one area of commerce—online shopping—is being used by Amazon to make inroads into others, with the eventual aim of toppling FedEx and UPS.
Amazon pushes sellers into using its logistics system even when doing so slows down deliveries. As Ron Knox and Shaoul Sussman of the Institute for Local Self-Reliance recently explained, Amazon could have reopened its shuttered Seller Fulfilled Prime program when orders spiked during the pandemic, granting Prime eligibility to sellers who handle their own logistics. It didn’t, and the subsequent backlog kept critical orders from reaching their destination quickly.
To Amazon, it was simply more important to keep funneling orders into its own storage and delivery system. Most companies in the fulfillment space think Amazon is well on its way to monopolizing the business.
Despite all this, many local officials are still keen on subsidizing Amazon’s expansion because they believe it will bring jobs and revenue to struggling cities and towns, especially during a pandemic that has devastated local businesses and government budgets. But according to the Economic Policy Institute, new warehouses don’t bring wider employment growth to a local economy. They either blunt other economic activity or have too small of an overall impact to even measure.
Amazon also decimates local budgets through its effect on traditional retail. A 2015 analysis found that Amazon sales displaced retail outlets that would have paid $528 million in property taxes. And that’s before getting into the specific tax benefits given to Amazon, which usually come in the form of property tax reductions.
By continually funding the expansion of Amazon’s fulfillment network, cities and states are ensuring that their own brick-and-mortar stores fall ever further behind, and that Amazon’s monopoly power extends from online shopping to logistics, shipping, and beyond, making the emergence of a competitor in any of those areas ever more unlikely. They’re guaranteeing that local businesses hoping to expand will be forced to pay tolls to access Amazon’s customer base, above and beyond the usual fees Amazon extracts from users of its platform.
Since Amazon needs its distribution network, it is perfectly willing to open new facilities without taxpayer largesse—as it reportedly did in Danbury, Conn., and Fort Bend County, Texas. Rather than subsidizing Amazon, local officials must close the spigot, and focus their limited resources on providing key services and promoting small, local businesses that are threatened by the COVID-19 pandemic.
Pat Garofalo is director of state and local policy at the American Economic Liberties Project and author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs.
https://www.chicagotribune.com/business/ct-biz-amazon-warehouse-jobs-0311-story.html
Tax incentives are good for Amazon. What about the local economy?
CHICAGO TRIBUNE |
MAR 08, 2018 AT 1:20 PM
Kevin Daly, economic development director in Monee talks about the Amazon fulfillment center in Monee. (Zbigniew Bzdak/Chicago Tribune).
Amazon’s most visible presence in Illinois in 2015 was the stream of brown boxes it shipped to customers’ doorsteps.
Three years later, the company has 10,000 full-time Illinois employees, a corporate office and bookstore in Chicago, and 17 distribution facilities across the state, including nine distribution centers with a collective footprint bigger than all 110 floors at Willis Tower.
In exchange, Amazon received state tax incentive deals potentially worth millions of dollars linked to the openings of distribution centers in Aurora, Joliet and Monee.
Skeptics urge agencies offering incentives to carefully weigh the costs and benefits due to the uncertainty over how much fulfillment centers really boost the local economy — or whether incentives are truly needed, given Amazon’s push to build out its distribution network and shorten delivery times. That advice holds true for another Amazon project likely to draw offers of much larger sums: the company’s planned second headquarters, which 20 cities and regions — including the Chicago area — are competing to land.
But economic development officials in towns Amazon now calls home say the warehouses lining Illinois highways deserve more credit for adding jobs, bringing in development and boosting entry-level wages — even if Amazon is only the most visible piece of the broader transportation, distribution and logistics industry driving the growth.
Kevin Daly, economic development director in Monee, said that’s the case in his Will County community, where Amazon opened a 850,000-square-foot fulfillment center in August. It’s the first in Illinois that uses robots to fetch racks of items picked up and packed by human workers.
“(Amazon) made other businesses feel more comfortable to do business here, to know that we met the criteria Amazon will look for and know the village has been able to facilitate it and see it through in a timely fashion,” Daly said. “It makes my job easier.”
Kevin Daly, economic development director in Monee talks about the Amazon fulfillment center and other business ventures in Monee on Monday, March 5, 2018. (Zbigniew Bzdak / Chicago Tribune)
But researchers at the Economic Policy Institute, a left-leaning Washington, D.C-based think tank, say there’s little evidence the e-commerce giant’s fulfillment centers contribute to overall job growth in the counties where they open.
To study the impact on local job growth, researchers looked at whether employment in 34 U.S. counties where Amazon opened fulfillment centers rose relative to counties without them. While employment in a county’s transportation and warehousing sector grew substantially in the two years after an Amazon fulfillment center opened, researchers didn’t find clear evidence showing that translated into overall private-sector employment growth, according to the institute’s report.
The results don’t indicate why that’s the case. Amazon could be filling its ranks with workers who would have found employment elsewhere, said Janelle Jones, an economic analyst at the institute. Another possibility is that the gains could be offset by job losses in other industries, or they could be too small to move the needle on countywide job figures, Jones said.
Researchers also did not see signs Amazon fulfillment centers boosted average wages for warehouse workers in the surrounding county.
Jones argues the lack of concrete evidence showing fulfillment centers promote broad-based job growth suggests government agencies should be cautious about offering incentives to lure those projects.
“Our first step for local economic development can’t be giving out millions to national employers,” she said.
Only some of Amazon’s Illinois sites got state tax incentives. Amazon has incentive agreements through the state’s Economic Development for a Growing Economy program for fulfillment centers in Aurora, Monee and Joliet, but not for those in Waukegan, Romeoville and Edwardsville.
Collectively, the deals require Amazon to create 7,200 new jobs at those three sites, and they grant the company tax credits worth an estimated $82.7 million over a 10-year period if it continues to meet the agreement’s requirements, according to the Illinois Department of Commerce and Economic Opportunity.
Amazon has so far received $1.88 million in tax credits for the 2016 tax year for 3,788 jobs in Joliet.
Some Amazon projects received assistance at the local level.
Monee set up a tax increment financing district, which uses property taxes generated from new development to fund certain site and infrastructure work. In Edwardsville, near St. Louis, Amazon is in an enterprise zone that offers incentives including property tax abatement and sales tax exemptions on locally purchased building materials to encourage development. In both cases, local officials said Amazon was treated like any developer proposing a project of similar scale.
Amazon issued a statement in response to the Economic Policy Institute study that noted its 200,000 U.S. employees. The company also said counties where it invested saw their unemployment rate drop by an average of 4.8 percentage points over the past five years, though unemployment was also falling nationwide over that period. Fulfillment center positions are “good jobs that offer competitive pay and comprehensive benefits,” Amazon said.
The company also said that because institute researchers only looked at employment figures through 2015, the data “are not demonstrative of our current network, community impact, and both the direct and indirect job creation near fulfillment centers.”
In recent years, Amazon has been opening fulfillment centers at a faster pace, spokeswoman Shevaun Brown said. A bigger network means faster deliveries and better service, which can drive more customer orders and increase the need for warehouse workers, she said.
Because Amazon’s first fulfillment center in Illinois opened in late 2015, the report doesn’t fully capture how employment in the surrounding counties changed after the centers arrived.
Economic development officials near Amazon warehouses in Will County and Edwardsville, a city of roughly 25,000 about 20 miles from St. Louis, said they were happy to have Amazon’s warehouses but agreed they were only a piece of broader growth.
Will County had a sizable transportation and distribution industry years before Amazon’s arrival, and it has seen growth in other sectors too, said John Greuling, CEO and president of the Will County Center for Economic Development.
“There are a lot of good-paying jobs not at all related to Amazon,” Greuling said.
In Edwardsville, too, Amazon was “just following the trend,” said City Administrator Tim Harr, who estimated a new warehouse of at least 1 million square feet had been built in the city each of the last 10 years. He credited warehouse construction with helping to occupy the construction industry when homebuilding took a hit during the Great Recession and said distribution center jobs may have helped replace lost industrial jobs.
But even if Amazon was part of a wider trend, Greuling said the company’s rapid ramp-up in Illinois made its impact more visible, particularly in Will County, where its five distribution facilities quickly made it the county’s biggest employer.
Other distribution centers, retailers and companies in the hospitality industry expressed concerns about competition for workers, he said, and he credited Amazon with forcing up entry-level wages. Job ads for full-time workers in Amazon’s Waukegan warehouse posted wages of $12.25 to $12.75 an hour, compared with $13 to $14 an hour in Joliet.
Some growth in wages should be expected since for years pay for distribution center workers hadn’t been keeping up with inflation, said Brian Devine, senior vice president at staffing firm EmployBridge.
Daly, the Monee official, said he thinks Amazon may have a bigger impact on the village that might be obscured by countywide statistics. Monee had warehouses before Amazon, but the industry seemed to grow faster in nearby Joliet, Romeoville and Bolingbrook.
Both Monee and Joliet, the site of Amazon’s first Illinois fulfillment center, are in Will County. But Monee is much smaller, with about 5,500 residents to Joliet’s 148,000.
Amazon’s incentive agreement with the state says it must create 2,500 jobs in Monee to qualify for tax credits, a head count that would double the bedroom community’s daytime population and exceed its working-age population, Daly said.
“For a community like this, it was really shocking,” he said. “There were certainly growing pains, learning to adapt to the increased traffic volume and demands on infrastructure, but they’re what we like to call good problems.”
The two-lane road outside the entrance to Amazon was widened to add turn lanes, and two stoplights were added at intersections residents on the sprawling properties near Amazon’s facility used to breeze through. The sheriff’s department helped direct traffic early on, and suburban transit service Pace created a bus route that connects the Harvey Transportation Center and Amazon’s parking lot.
In the wake of Amazon’s arrival, third-party logistics company Kenco announced plans to fill a Monee warehouse that had been vacant for about five years and is advertising warehouse associate wages of $16.75 per hour. Monee’s village board also recently approved plans to redevelop an 890,000-square-foot warehouse.
Retail options are thin in the area around Amazon, so it’s unlikely its employees have been a major new source of spending in the community. But Daly said he hopes to use their presence to help bring in retailers that would otherwise dismiss the town as too small, like the grocery store residents have been hankering for. Monee doesn’t currently have one, and the nearest supermarket is a Walmart about 6 miles away in Richton Park.
It’s hard to draw conclusions about how much local economies gain from fulfillment centers and whether incentives are warranted from the experience of individual towns or counties, said Tim Bartik, senior economist at the Michigan-based W.E. Upjohn Institute for Employment Research.
Fulfillment centers likely do benefit the surrounding community, but the gains may be modest compared with other types of economic development projects that could generate more business for local companies, Bartik said. The jobs have modest wages, limiting the amount workers would potentially spend at local retailers, and warehouses generally don’t patronize local suppliers, he said.
Amazon said it has created jobs outside the company, including an estimated 7,000 in Illinois, and supports business owners who use its services to sell products. The company did not provide detailed information on those outside jobs.
There’s also the question of whether states and communities need to offer incentives to get Amazon to come, given its desire to put fulfillment centers close to major population centers to shorten delivery windows, Bartik said.
That’s not an issue when it comes to a different Amazon project generating incentives talk: HQ2, Amazon’s planned second headquarters. The company sought proposals in September, and there has been fierce competition among the 238 cities and regions vying to land HQ2. The field of contenders has been winnowed to 20, with Chicago still in the running.
The HQ2 spillover benefits to other local businesses would likely exceed those of a warehouse because the headquarters project is expected to employ far more people, at higher wages — a stronger argument for incentives, Bartik said. But if most of those jobs go to people moving to the headquarters city specifically for a career with Amazon, a bigger population could put more stress on public services like police and fire protection and public transit, he said. That means any agency offering incentives needs to factor in the potential for new costs as well as new tax revenue, Bartik said.
He advocates states form “nonaggression pacts” to contain costs of incentives that simply shift jobs from one part of the country to another, though he acknowledges those pledges are unlikely to stick.
“The next company comes along, and they decide it’s an exception,” Bartik said. “We haven’t seen one that’s really survived.”
To Jones, at the Economic Policy Institute, Amazon’s HQ2 project points to a different way government agencies can spend cash that would otherwise go to incentives: investing in things that attract companies like Amazon, such as quality infrastructure and a well-educated workforce.
“There are ways cities can invest in economic development without giving away public dollars,” she said.
https://abc7chicago.com/amazon-warehouses-tax-breaks-communities-of-color/7955877/
Amazon quietly building dozens of Chicago-area warehouses, receives $741 million tax dollars from predominantly Black communities , BGA report says
By ABC 7 Chicago Digital Team
Saturday, November 14, 2020
Amazon’s Massive Chicago-Area Expansion Fueled by $741 Million From Taxpayers
As part of a nationwide effort, the online retail giant has commissioned 36 warehouses in the Chicago area since 2015, creating thousands of jobs. Most of the taxpayer assistance comes from Black communities.
By John Lippert and Natalie Moore
Oct 26, 2020 6:00 AM
Construction crews build a new Amazon facility in University Park earlier this month. (Manuel Martinez/WBEZ)
The people behind Project Condor came to University Park village trustees early this year with an intriguing proposal — and an ultimatum.
The Condor pitchman, developer Mark Goode, promised a new, $150 million warehouse that would bring 800 jobs to the cash-strapped, predominantly African American suburb 20 miles south of Chicago.
But there was a catch. Several catches.
First, trustees had to keep the identity of the company behind the project a secret, at least until the deal was sealed. Second, they had to promise more than $100 million in future tax revenues to help pay for it.
And third, they had to ram through a vote on the deal to meet the project’s construction timeline, which put the first shovel in the ground just weeks later on April 1. The demand prompted trustees to bypass their practice to spread such big decisions over three meetings to give the public a chance to have its say.
That is how the largest online retail company in the world — headed by Jeff Bezos, the richest man in the world — came to break ground on one of its newest Chicagoland distribution warehouses.
Exactly what prompted Amazon to name the project after one of the largest species of vultures in the world, company officials won’t say. But to some in University Park, the name is apt.
“You’d think Amazon coming would lift people’s spirits, but we’re still feeling a sense of depression,” said Theo Brooks, the lone University Park trustee to vote against the deal during that 20-minute special meeting on March 13.
“You come home to a majority Black town, and there’s no grocery store, no life in the town center and crumbling streets,” Brooks said in an interview. “Amazon isn’t putting more police officers on the street. Amazon isn’t helping me with my taxes.”
Amazon has been quietly cutting such deals in and around Chicago since 2015, winning tax breaks and public incentives to build 36 warehouses as part of its nationwide effort to expand its own distribution system, cut its dependence on rival shippers like the U.S. Postal Service and bolster its famous promises of next-day delivery.
To help pay for its vast expansion, the company and its developers have won at least $741 million in taxpayer-funded incentives in northeast Illinois alone, according to a Better Government Association/WBEZ investigation.
An examination of public records from more than two dozen municipalities provides new details in Amazon’s six-year effort, revealing a patchwork of nondisclosure agreements, a lack of transparency during negotiations and suburbs pitted against each other to secure the most favorable deal.
The BGA/WBEZ analysis found the company received far more tax breaks from communities of color — like University Park.
Amazon collected less than $100 million in public incentives for the 15 warehouses it built in predominantly white communities but won more than $640 million in taxpayer incentives for the 21 projects built in communities with larger nonwhite populations, the examination found. Many of those communities are either mostly Black, mostly Latinx or have higher concentrations of low-income residents, and with municipal budgets already short on cash.
Records show the three largest incentive packages Amazon received — totaling $512 million — all came from predominantly Black suburbs. By contrast, the company built warehouses in at least seven mostly white communities that reported offering no public incentives at all.
Amazon has been cutting deals in and around Chicago, including one for this facility in University Park. The online retailer has won tax breaks and public incentives to build many of the 36 warehouses it commissioned here as part of its nationwide effort to expand its own distribution system. (Manuel Martinez/WBEZ)
Amazon officials declined repeated requests to be interviewed for this report. But in a series of emailed responses, the company said the expansion has already created 23,000 full- or part-time jobs in Illinois that pay at least $15 per hour.
A company spokeswoman described the government subsidies as “standard practice when a company plans a large investment.”
While many of the communities may get more jobs, experts interviewed say the lost revenue from taxpayer incentives will strain public resources to rebuild crumbling roads from the truck traffic, mitigate pollution from the exhaust fumes and noise and to pay for other services such as police protection and fire prevention.
“It’s impossible to negotiate on these really important land-use decisions when one side has all the knowledge, all the finances and all the top lawyers, and on the other side you’ve got what are basically small towns that can’t even afford a traffic engineer,” said Jose Holguin-Veras, an engineering professor at Rensselaer Polytechnic Institute.
Brandon Svec, an economist for CoStar Group, a Washington, D.C. market research firm that monitors Amazon’s expansion, agreed.
“There’s no doubt that when they play communities against each other, they’re being less than a good corporate citizen,” Svec said. “These warehouses can only go where the politicians will let them go.”
Source: Chicago Metropolitan Agency For Planning, analyzed by BGA/WBEZ. By: Paula Friedrich, Mary Hall/WBEZ.
The incentives elected officials have approved for the Amazon warehouses run the gamut: property tax abatements, pledges of future tax revenue to help pay construction costs, infrastructure improvements and waivers on sales taxes for building materials, records show. In Cook County, Amazon and its developers have applied for abatements on six warehouses that could be worth tens of millions of dollars more, records show.
Amazon has received $112 million in corporate tax credits through a state program known as EDGE to help build three warehouses in Joliet, Monee and Aurora, state records show. In Markham, the company project got incentives worth $300 million, including a county abatement and promises of future tax receipts over the next 12 years. In Channahon, the village agreed to $12.8 million in road upgrades near an Amazon warehouse. And in Waukegan, the city pledged $40 million for redevelopment costs.
Amazon’s push is part of a worldwide effort to take control of its own distribution as the company reports record profits.
In the U.S. alone, the online behemoth has 225 new warehouses in the works, with plans to reach nearly 1,000 facilities in a few years, said Marc Wulfraat, president of the Montreal-based market research firm MWPVL International, which tracks Amazon’s distribution strategies.
He also said the warehouses are going up closer and closer to Chicago’s center, in neighborhoods such as Goose Island and Bridgeport, to help with next-day deliveries. In total, Amazon has 25.5 million square feet of warehouse space in the city and surrounding suburbs, according to reports from Wulfraat’s research firm.
Amazon spent $10 billion on this nationwide effort last year alone, nearly as much as competitors United Parcel Service, FedEx Corp. and the Postal Service combined, according to a research report Bank of America published for its equity investors.
The report concluded Amazon’s warehouse expansion nationwide could quadruple its U.S. deliveries to 9.7 billion packages by 2025. Company-wide profits could nearly double in just two years, the bank researchers predicted.
Good Jobs First, a Washington, D.C. policy think tank that monitors corporate subsidies, has reported it was able to find close to $3 billion in economic incentives governments gave to Amazon nationwide since 2012, averaging about 20 deals per year.
But the group acknowledges it has been difficult to track Amazon deals across the country because the company tries to keep a low profile during negotiations.
“We have noticed that Amazon has gotten more secretive about its redevelopment incentives, and Illinois is a good example of that where they are using LLCs as the ownership structure and properties owned by others,” said Greg LeRoy, executive director of Good Jobs First.
He said tracking Amazon in Illinois is even more difficult since the state has more local taxing bodies to check than any other state.
Experts said Amazon’s intense and sudden growth is helping contribute to an already dire environmental burden, often in lower-income communities already bearing the brunt of congestion and air pollution. The environmental impact of its warehouses has drawn criticism and protest around the world.
In Will County — where Amazon has or is building 12 warehouses — officials were bracing for a 60% increase in regional and cross-country freight traffic by 2040, even before the pandemic turbocharged e-commerce.
In Cook County — where Amazon has or is building 15 warehouses — the health impacts of the area’s already high soot levels is borne mostly by Black and Latinx residents who live near freeways, according to a Chicago Tribune report in May. Because Chicago is a freight hub, it already has double the level of heavy-duty truck traffic as other major cities, the newspaper reported.
Mayor Lori Lightfoot published Chicago’s first-ever neighborhood air quality report in July. In it, she promised that instead of reviewing new industrial proposals separately from each other, she’d make sure “cumulative burdens” don’t disproportionately affect certain neighborhoods.
Her proposals dovetail with other experts who argue online retailers such as Amazon should be encouraged to build delivery stations in densely populated urban areas instead of far-reaching suburbs that increase travel times. In return, governments need to require more electric vehicles, buffer zones and air filters for nearby homes and increased compensation for schools and hospitals, said Holguin-Veras.
Amazon has touted plans to reduce its carbon footprint by purchasing 100,000 battery-powered delivery vans by 2030.
In a statement to shareholders earlier this year, the company said its initiatives “demonstrate that we are already responsibly managing the environmental impact of our operations on the communities in which we operate, including communities of color.”
While Amazon promises the world’s largest fleet of electric delivery vans, it is also hiring tens of thousands of “Flex” or gig drivers who use their own cars and trucks. Unlike California, Illinois has no requirement that Amazon or anybody else use electric trucks, and the state is not providing subsidies for people who can’t afford them.
Some experts are calling for increased transparency so that those most affected by the impact of these warehouses have more input into the government actions surrounding them.
“Imagine a system in which residents could opt in to receive email alerts any time there are new development proposals in their wards, instead of hearing about them by chance,” said Kate Lowe, an urban planning professor at the University of Illinois at Chicago. “It’s not a hard thing to set up.”
In the case of the new Amazon warehouse in Bridgeport, developers quietly started negotiations with the neighborhood’s alderman and other city officials a year before the official announcement, said Lowe, who attributed this information to an attorney for the retailer.
“This is how business traditionally operates,” Lowe said. “The deals get made with one big man before there is ever a public-facing event.”
‘The Condor people’
In his annual “State of the City” report in September, long after Amazon had already broken ground on the warehouse he worked quietly to approve six months earlier, University Park Mayor Joseph Roudez made the Amazon project a centerpiece.
“The $150 million Amazon facility under construction has already generated $1 million in village revenue in impact fees, and an additional $952,000 through permit fees,” Roudez told the roughly 200 attendees gathered at the Village Hall parking lot.
Mayor Joseph Roudez, of the village of University Park, poses in front of a new Amazon facility on Oct. 16, 2020. (Manuel Martinez/WBEZ)
Village records show the impact fees will be returned to Amazon’s developer — with interest. They show the developer also will be reimbursed for land and construction costs up to $107 million from University Park’s future tax collections. The village also will make annual interest payments equal to 7% until Amazon’s developer receives the entire amount over 20 years.
Village Manager Ernestine Beck-Fulgham said the secrecy demand from Amazon was typical and the subsidies were awarded because “there was no other way’’ for the village to redevelop industrial property.
“It’s customary now, when mega-Fortune 500 companies come, that they prefer that you not divulge what they’re doing,” she said. “It happens all the time.”
In a recent interview in his office, Roudez said some of his constituents commute 50 miles to O’Hare Airport for $15-per-hour jobs, but now they’ll have a chance to earn the same money 15 minutes from home.
“When Amazon comes to a community, they drive economic development,” Roudez said. “Now we’re getting so many other phone calls asking what’s available.”
Roudez said the project was originally dubbed “bluebird,” but the name changed after Amazon decided to double the size of the warehouse to 1.2 million square feet.
“Condor is a humongous bird,” he said. “This is the largest single commercial development in University Park’s history.”
Roudez and Beck-Fulgham said the future taxes University Park will hand over to Amazon would never have existed if the retailer wasn’t building the warehouse. Critics ask who will pay for the crumbling roads from the increased traffic.
University Park’s roughly 7,000 residents, meanwhile, are grappling with — among other things — municipal water with so much lead that most families are forced to use bottled water.
Village of University Park Board Trustee Theo Brooks poses in front of a field near the site of a newly built Amazon warehouse. (Manuel Martinez/WBEZ)
Brooks, the sole dissenter on the village board, decries how the deal was done so swiftly and without more pressure on Amazon for concessions. He refused to sign a formal nondisclosure agreement, and he has since sued his own board of trustees for failing to provide him the financial records behind this and other aspects of the city’s finances.
During the March 13 meeting, at which Roudez referred to Amazon only as “the Condor people,” he told attendees “it was a decision that had to be made right away to start construction on April 1.”
According to records, trustees didn’t receive a copy of the 23-page agreement they would be asked to approve with Amazon’s developer until less than seven hours before the final vote on the ordinance.
Even though the specifics of the village’s contribution weren’t discussed, they did promise to reimburse Project Condor with future tax revenues from the site for the next 20 years. Goode, the developer of the project, told the trustees his client’s contribution would be significant.
“The actual investment will be well above [$75 million] in terms of the equipment that this user, who we’re calling Condor but everyone now knows who it is, in essence, is making inside the building,” said Goode, a founding principal at Venture One Real Estate. Goode did not respond to requests for an interview.
Government watchdog experts say the concealment of Amazon’s identity at a public meeting violates the spirit of the state’s Open Meetings Act.
“If they’re making an incentive agreement based on who that company is, on their stature or their promise or their business model or whatever, then that’s relevant information that the public needs to know,” said Ben Silver, an attorney for the Citizen Advocacy Center based in Elmhurst.
Economic unfairness
The BGA/WBEZ review found University Park was among the three predominantly Black suburbs where Amazon or its representatives extracted the largest incentive packages.
Brooks said Amazon didn’t consider his town until after Bolingbrook turned it down.
Bolingbrook’s former Mayor Roger Claar said Amazon’s demands were too onerous.
“We were told they didn’t want windows in the building because they don’t want their employees staring out the window,” said Claar, who left office in July. “And $15 an hour is barely minimum wage.”
Claar also decried potential traffic “gridlock.”
In Markham — where four of every five residents is Black — Amazon insisted it would walk away without an incentive package worth $322 million, almost three times the one it got from University Park.
The company demanded changes that would cut its property tax bill by more than 80%, according to Charles Durham, a Chicago attorney who advises the city. For a suburb struggling economically, political leadership felt it had to acquiesce, he said. A quarter of Markham’s residents are below the poverty line.
To secure the deal, Markham supported a Cook County abatement application worth $220 million over 12 years, and promised to refund another $102 million from future tax receipts. Amazon argued the incentives brought Markham closer to tax rates available in nearby Will County.
Amazon expects to open next year a $300 million, five-story, 3.86 million-square-foot behemoth in Markham billed as a robotics showplace.
“It doesn’t matter how much money they have in the bank,” Durham said. “They make rational decisions based on the economics of their business model. Any business would do the same.”
Roger Agpawa, Markham’s mayor, is equally pragmatic.
“You’ve got to start somewhere,” Agpawa said. “The Black or the brown community, or the place where they’re not speaking the language, you change that by what you put there.”
Amazon’s project will be on 140 acres of once-vacant, unincorporated land that until recently was home to chickens and other farm animals roaming freely among abandoned tires and empty lots.
Even with the tax breaks, the warehouse will boost Markham’s annual tax collections by $6 million, Agpawa said. Village residents will have a shot at the 1,000 jobs. And the warehouse had already attracted other developers who wanted to add a gas station, a restaurant and a hotel.
In nearby Matteson, records show Amazon will get a Cook County property tax abatement worth $82 million over 12 years.
As towns like University Park and Markham embrace the new Amazon jobs, critics argue the jobs don’t compare to what unskilled workers could earn in steel mills that dotted the suburbs south of Chicago a generation ago.
Even in the midst of a pandemic, Amazon needs to pay signing bonuses of $500 to quickly hire new workers because of the heavy turnover at the warehouses, said Roberto Clack, an organizer for Warehouse Workers for Justice, a union advocacy group.
“It’s like a casino, and Amazon is the house,” Clack said.
In April, workers at the company’s Western Avenue warehouse in Chicago left their jobs and rallied in the parking lot to protest health risks from COVID-19. After that, Amazon switched more workers to full-time. The company also granted more paid time off to part-time employees and installed additional drinking fountains.
According to the Bureau of Labor Statistics, 341,000 people work full-time in warehouse jobs in the Chicago region.
For them, as for warehouse workers across the U.S., inflation-adjusted wages are lower now than in 2001, according to Beth Gutelius, an urban researcher at the University of Illinois at Chicago. That is partly because new employers like Amazon have stymied unionization so far.
Many more part-time and temporary workers work in warehouses, she said. They are invisible — impossible to count — because they are scattered among the dozens of occupational codes tracked by the government, Gutelius said.
In Chicago’s Pullman neighborhood, Ald. Anthony Beale, 9th Ward, said he is eager to welcome the company to the south end of Chicago. The warehouse is expected to employ up to 200 employees and includes a parking lot to accommodate 800 cars and trucks, the alderman said.
Beale said he agreed to keep Amazon’s identity quiet during negotiations for fear publicity could have caused the company’s real-estate costs to skyrocket. Beale also said the lack of stricter air pollution mandates was acceptable because of the company’s promise to buy electric trucks. The state built an access road to keep truck traffic away from neighborhood streets, he said.
Beale said he is also putting his faith in Amazon because Black and brown and lower-income neighborhoods like Pullman have so few options.
The 21-year alderman rattles off a string of hard-won investments, like a Walmart that meant residents didn’t have to drive for miles to buy food, plus an S.C. Johnson & Son soap factory and an indoor produce farm called Gotham Greens.
He is proudest, perhaps, of a new Culver’s family restaurant. It brings 50 jobs and makes Pullman feel like a more normal place.
“We haven’t had a restaurant where you can actually sit down and have a meal in, I can’t tell you how long,” Beale said. “I’m just ecstatic.”
When asked whether he contacted nearby towns like Markham or University Park to make sure they didn’t undercut each other in talks with Amazon, Beale laughed out loud and then responded in mock protest.
“I’m just a small, local alderman,” he said, “trying to do the best I can for my little, bitty ward.”
See the data
https://docs.google.com/spreadsheets/d/1umM8Q9Zyf511N68rjY8AyYAlWuu6eRf1ktaHlZGlE74/edit#gid=0
https://www.goodjobsfirst.org/news/amazon-received-241m-subsidies-warehouses
Amazon received $241M in subsidies for warehouses
12/14/2016
Corporations have learned to game the tax incentive system
By Chris Tomlinson, Houston Chronicle
Amazon is building warehouses across the United States to develop its own delivery infrastructure to guarantee next-day delivery.
So why have state and local governments given Amazon $241 million to build facilities that they couldn’t build anywhere else? Why did Houston give $7 million for a warehouse that had to be here anyway?
That’s the question taxpayers should be asking, says Greg LeRoy, the executive director of Good Jobs First, a group that opposes corporate welfare and collected the tax incentive data.
I have long opposed elected officials giving tax incentives to individual companies because it encourages bad behavior. Companies like Tesla travel around the country, seeing who will cut the best deal with little regard for the reduction in police, fire and medical services that inevitably comes to pay for the tax cuts.
None of these deals ever produces the economic shot-in-the-arm that proponents promise. But what makes Amazon’s incentives so infuriating is that they follow years of Amazon not collecting local sales taxes. That helped destroy brick-and-mortar retail stores and cripple local governments that have seen sales tax receipts drop.
The mind-boggling question is why would a local official give Amazon anything? It’s not as if Amazon can make next-day deliveries to Houston from Louisiana. These warehouses must be in these communities to provide the service that Amazon is offering.Now that Amazon is getting into the delivery business, it must collect sales tax. So now, Amazon is demanding property tax breaks.
“Some public officials have figured Amazon out,” LeRoy said. “Now it’s time for all of them to say no more deals.”
This is not a liberal position, by the way, but a conservative one. Conservatives believe that government should not interfere in the private market place, or pick winners and losers.
Also, these tax breaks are not free. When local governments cut taxes on a few companies, they are making every other company pay more. If local officials have too much money on their hands, they should cut taxes on all businesses, not just a few.
The best way a community can attract a responsible business is to offer safe housing, educated workers, good roads and public safety. Imagine what our nation would be like if governments concentrated on those priorities rather than seeing who can give away the most money to an individual corporation.
Subsidy Tracker is a company-specific database. It reports economic development subsidy awards, gathered from federal, state and local programs.
Violation Tracker
A database on corporate crime and misconduct from the Corporate Research Project of Good Jobs First.
https://www.modbee.com/news/article207511989.html
How big an impact do Amazon fulfillment centers have on a community? It depends.
BY TIM SHEEHAN MARCH 30, 2018 05:32 PM
Amazon’s new fulfillment center under construction in southwest Fresno will employ 1,500 workers when it opens this year. The company’s decision last summer to locate the center in Fresno came only after the city affirmed a package of economic incentives that will be worth up to $30 million over the next 30 years.
The rebates the company will get on property and sales taxes are among the types of job-growing strategies used by communities across the country to entice Amazon and other companies. But the effectiveness of such incentives is being questioned by a Washington, D.C., think tank’s economic analysis of the employment effects of Amazon’s fulfillment centers.
In the Economic Policy Institute’s report entitled “Unfulfilled Promises,” EPI economist Ben Zipperer and economic analyst Janelle Jones concluded that on average, “Amazon’s fulfillment centers are ineffective at providing net job growth.”
“When Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries,” the report states.
Zipperer told The Fresno Bee that while Amazon certainly generates job growth within the warehousing industry sector when it opens one of its massive order-filling centers in a community, it does not appear to translate into employment gains across the entire local economy.
“It seems to be shifting the composition of employment in some places,” Zipperer said. “You do see more warehousing workers. They are definitely hiring.”
In Stanislaus County, where total employment amounted to about 243,000 workers across all industries in February, the latest month where figures are available, warehouse employment is a relatively small component. According to the state Employment Development Department, warehousing, transportation and utilities collectively employ roughly 7,700 workers in the county.
Patterson’s Amazon distribution center, opened in 2013, employs more than 500 people year-round with hundreds more during the holiday rush periods.
But the EPI researchers suggest that in a community’s overall economy, the effects of an Amazon warehouse coming to town may not be all they’re cracked up to be. The overall number of people employed in a county after Amazon arrives is relatively flat when compared to before the company opened a center.
In the report, the EPI economists offer two possible explanations: “That the jobs created in the warehouse and storage sector are offset by job losses in other industries, or that the employment growth generated by Amazon is too small to meaningfully detect in the data.”
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The report asserts that instead of providing millions in tax rebates and other economic incentives to lure Amazon in hopes of stimulating job growth across a local economy, “state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development.”
“These (economic incentive) strategies sacrifice future tax revenue and hope there is some kind of payoff,” Zipperer said. “They’re taking revenue that we would have had to spend on something else and instead spend it on Amazon in the hope that it will result in more jobs for everybody.
“What we’re finding is, that sacrifice is a very risky bet,” he added. “A lot of the things we know communities want their governments to spend that money on that generate employment – things like education and infrastructure – tend to have much higher job multipliers.”
Said Fresno Mayor Lee Brand: “It’s hard to take any study seriously that only does enough research to get the answers they want, and clearly EPI wanted to try to disprove Amazon’s economic benefit to the communities where they locate. Any Fresno high school student can tell you that the addition of 2,500 jobs starting at $15 an hour with benefits at the full operation of the Amazon fulfillment center will increase employment and reduce poverty in the area.”
Patterson, unlike many communities, did not need to offer tax breaks or other perks to attract Amazon to its industrial park along Insterstate 5.
“There were no incentives provided to Amazon to locate here,” City Manager Ron Irwin said in an email. ” I think our proximity to I-5 helped them make their decision.”
The company also has taken an active role in the community, partnering with the local schools to provide both job training programs and technology for students.
Economist Jeffrey Michael, director of the Center for Business and Policy Research at Stockton’s University of the Pacific, said he generally agrees with EPI’s policy conclusion about communities throwing tax incentives at Amazon. “There isn’t good justification for public subsidies for Amazon fulfillment centers,” he said. “They are going to locate in places that allow them to best serve California population centers regardless of these subsidies.”
In San Joaquin and Stanislaus counties, “I have no doubt that Amazon fulfillment centers are net creators of jobs,” Michael added. “Amazon fulfillment centers are displacing some traditional retail jobs, but it is also true that they are creating new economic activity – basically as acting as an errand-running/shopping service for households.”
Michael noted that increases in warehousing employment in a community also create more transportation jobs and non-payroll jobs for independent contractors.
With its proximity to the Bay Area over the Altamont Pass, San Joaquin County in the northern San Joaquin Valley has two Amazon centers in Tracy and one in Stockton. Before the first one opened in 2013, warehouse employment was fewer than 5,000 jobs and the average wage was about $915 a week. Last summer, employment had grown to more than 12,600 workers. But the average wage had declined by almost $90 a week, to about $826.
Shelley Burcham, economic development manager with the city of Tracy, said no economic incentives were offered to Amazon to build there, but the city did expedite its planning and permitting processes for the company.
Burcham said that when the first center opened, it started with about 1,500 workers, and now Amazon has about 3,500 in one of the centers. “It’s not just entry-level jobs,” she said. “They work with folks to train them and encourage them to move up the ladder in the company.”
Amazon weighed in on the EPI study, insisting that its warehouses do stimulate additional jobs in communities beyond the company’s direct hiring. “In addition to the 200,000 Amazon employees in the U.S., we know … Amazon’s investments led to the creation of 200,000 additional non-Amazon jobs, ranging from construction jobs to healthcare industry positions.”
Zipperer acknowledged that the EPI study’s conclusions are averaged based on counties nationwide, and that some communities might have experienced overall job growth in the wake of Amazon.
“What we did is not only look at before and after an Amazon warehouse opens, but we try to compare it to before and after in similar places where Amazon didn’t open,” Zipperer said. “We try to form a good comparison between a county that looks (economically) like that county, but doesn’t have Amazon.”
“I’m pretty agnostic on how much of an effect that economic incentive packages have” in job creation, he added. “Research shows that they’re pretty much a mixed bag. … I think I would have been surprised had we found a result that showed either a very strong (positive) or negative effect.”
The Modesto Bee’s Patty Guerra contributed to this report.
Exterior of the Amazon fulfillment center on Park Center Drive in Patterson. The facility is one of six the company will eventually operate in the Central Valley. A 855,000 square-foot facility broke ground in Fresno in June. JOAN BARNETT LEE JLEE@MODBEE.COM
Unfulfilled promises
Amazon fulfillment centers do not generate broad-based employment growth
Report • By Janelle Jones and Ben Zipperer • February 1, 2018
What this report finds: When Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries.
Why it matters: State and local governments give away millions in tax abatements, credits, exemptions, and infrastructure assistance to lure Amazon warehouses but don’t get a commensurate “return” on that investment.
What we can do about it: Rather than spending public resources on an ineffective strategy to boost local employment (luring Amazon fulfillment centers), state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development.
Update as of March 1, 2018: Since we ran our original analysis, additional data on fulfillment center openings has become available. We re-ran our analysis and found that the updated data confirm our previous results. See the Appendix for more information.
Introduction and key findings
Since its founding in 1994, Amazon’s network of fulfillment centers has grown to nearly 100 across the country. In 2017, publicly available data identified 95 Amazon fulfillment centers in 25 states. Current estimates suggest that fulfillment centers occupy over three-fourths of the total square footage of Amazon’s entire U.S. distribution infrastructure. (See Appendix Table 3 and methodology for data sources).
The expansion of Amazon’s physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not only fulfillment centers but “sortation” centers that only sort packages, mailing centers, and other facilities.1 In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.2
An analysis of these claims is timely. As Amazon looks to open a second headquarters in 2018, it is employing a similar strategy, on a much larger scale, exchanging tens of thousands of jobs for massive incentives in return. For example, the District of Columbia reportedly offered Amazon a permanent corporate tax rate cut as well as sales tax exemptions. According to The Washington Post, the announcement of the finalists in the running for hosting the new headquarters “also raised more difficult questions about the influence of large tech giants on cities and the possible unintended consequences of giving tax breaks and other benefits to an already successful corporate titan.”3
Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers. And as Amazon has grown, the debate in some cases has specifically focused on Amazon.4
Studying the employment effects of opening Amazon fulfillment centers is an excellent opportunity to provide evidence for this debate. Using publicly available data on the opening of these fulfillment centers, we undertook a rigorous statistical assessment of claims that the opening of an Amazon fulfillment center in a specific county will provide broad employment gains to that local area.
Our key findings show that luring Amazon fulfillment centers is an ineffective strategy for boosting overall local employment
- The opening of an Amazon fulfillment center leads to an increase in warehousing and storage employment in the surrounding county. Two years after an Amazon fulfillment center opens in a county, warehousing employment in the county is approximately 30 percent greater. This effect is robust to numerous statistical controls.
- The opening of an Amazon fulfillment center does not lead to an increase in county-wide employment. Two years after an Amazon fulfillment center opens in a county, overall private-sector employment in the county has not increased. It is possible that the jobs created in the warehousing and storage sector are offset by job losses in other industries, or that the employment growth generated by Amazon is too small to meaningfully detect in the data. This finding of no effect is also robust to a series of statistical controls.
- The fact that some of our specifications show small reductions in county-wide employment—albeit not statistically robust—reinforces just how completely ineffective Amazon fulfillment center openings have been to providing any boost to overall local employment. The exact sign of the overall employment effect of opening an Amazon fulfillment center in a county is actually negative in some of our specifications, indicating that small reductions in county-wide employment follow these openings. Because this effect is not statistically robust across all statistical specifications, we do not claim reductions in county-wide employment but do assert that this effect supports the finding of no job growth.
State and local policymakers seeking maximum long-term benefits should reconsider extending tax incentives to lure businesses
The promise of luring jobs is nearly always and everywhere a very hard one for policymakers to ignore. The jobs gained by one locality that lures an establishment from another locality may be zero-sum, but they’re very visible and easy to point to. Jobs that are displaced by luring an establishment are more diffuse. And the specific jobs that could have been gained in the long-term by instead investing in education or other public goods are harder to celebrate—local officials can’t easily organize a ribbon-cutting ceremony around those kinds of jobs. Nevertheless, our findings support other research suggesting that state and local policymakers should consider the following points when debating whether to extend incentives to lure businesses:
Tax incentives likely constitute an unneeded giveaway
At an intuitive level, offering tax incentives for firms to move businesses to particular locales may strike some as sensible. All else being equal, firms likely would prefer to locate in a particular area if doing so lowered tax costs and hence increased profits. However, there are other considerations that significantly influence location decisions, including access to customers, the quality of public services needed to run businesses (for example, the existence of reliable electricity and high-quality roads) and access to a pool of qualified workers.5
Research has shown that state and local taxes are on average less than 2 percent of the cost of doing business. This means that simply offering to cut taxes won’t do that much to sway firms’ location decisions. In short these incentives are likely ineffective or, at best, an inefficient use of resources. These incentives are largely a windfall to firms that were going to locate in that spot even without the incentives, all while sacrificing revenue that areas need to invest in public goods.6
Tax incentives may do little to boost overall employment
While luring an establishment of an existing national employer to a specific state will create jobs at that establishment, it will not necessarily create more jobs overall. If, for example, labor supply in a particular locale is limited, job gains in the newly lured establishment could be offset by job losses among competitors. This is what happens when luring a Walmart into a county leads to shutdowns of local grocery stores—overall employment and economic activity is unaffected. Measuring the extent of this type of employment displacement is key to assessing the overall economic benefits of luring establishments of existing national chains. Our findings of the lack of overall job growth from opening an Amazon fulfillment center suggest that some sort of employment displacement is taking place, or that the growth in warehousing jobs is too limited to spill over into broad-based employment gains for the overall local economy. This is in keeping with a robust body of evidence indicating that reducing public services to provide tax cuts does not actually spur economic growth and job creation.7
Investments in public services are more effective than tax incentives at generating long-term economic growth
Another key downside of tax incentives is that they deprive states and localities of resources needed to invest in public goods, such as transportation or education. The research literature indicates that public spending and the expansion of public services increases local economic activity—and that such public investment is obviously hamstrung by policies (like offering tax incentives) that reduce resources available to state and local governments. Investments in public services (particularly in early-childhood education) and infrastructure are a much stronger recipe for spurring long-term economic development than providing tax increases to existing national employers.8
Amazon fulfillment centers
The expansive network of centers that store, pack, ship, and provide customer service for products is crucial to Amazon’s business model, which requires quick delivery throughout the country. As displayed in Figure A, construction of Amazon fulfillment centers in the United States increased significantly around 2008. Amazon had under 10 centers through the mid-2000s and had nearly one hundred by the end of 2017.9 The sharp rise in fulfillment centers corresponds with the 2005 introduction of Amazon Prime, in which subscribers pay an annual fee for two-day shipping and other benefits, and the 2006 launch of Fulfillment by Amazon, in which participating sellers have their items stored, packed, and shipped by Amazon.
FIGURE A
Total number of Amazon fulfillment centersCumulative openings, 1997—2017
| Date | Cumulative openings |
| 1997q4 | 1 |
| 1998q1 | 1 |
| 1998q2 | 1 |
| 1998q3 | 1 |
| 1998q4 | 1 |
| 1999q1 | 1 |
| 1999q2 | 2 |
| 1999q3 | 2 |
| 1999q4 | 2 |
| 2000q1 | 2 |
| 2000q2 | 2 |
| 2000q3 | 2 |
| 2000q4 | 3 |
| 2001q1 | 3 |
| 2001q2 | 3 |
| 2001q3 | 3 |
| 2001q4 | 3 |
| 2002q1 | 3 |
| 2002q2 | 3 |
| 2002q3 | 3 |
| 2002q4 | 3 |
| 2003q1 | 3 |
| 2003q2 | 3 |
| 2003q3 | 3 |
| 2003q4 | 3 |
| 2004q1 | 3 |
| 2004q2 | 3 |
| 2004q3 | 3 |
| 2004q4 | 3 |
| 2005q1 | 3 |
| 2005q2 | 4 |
| 2005q3 | 6 |
| 2005q4 | 7 |
| 2006q1 | 7 |
| 2006q2 | 8 |
| 2006q3 | 8 |
| 2006q4 | 8 |
| 2007q1 | 8 |
| 2007q2 | 8 |
| 2007q3 | 11 |
| 2007q4 | 11 |
| 2008q1 | 11 |
| 2008q2 | 12 |
| 2008q3 | 14 |
| 2008q4 | 16 |
| 2009q1 | 16 |
| 2009q2 | 16 |
| 2009q3 | 16 |
| 2009q4 | 16 |
| 2010q1 | 16 |
| 2010q2 | 16 |
| 2010q3 | 20 |
| 2010q4 | 23 |
| 2011q1 | 23 |
| 2011q2 | 26 |
| 2011q3 | 31 |
| 2011q4 | 32 |
| 2012q1 | 32 |
| 2012q2 | 34 |
| 2012q3 | 36 |
| 2012q4 | 41 |
| 2013q1 | 42 |
| 2013q2 | 43 |
| 2013q3 | 43 |
| 2013q4 | 50 |
| 2014q1 | 50 |
| 2014q2 | 50 |
| 2014q3 | 55 |
| 2014q4 | 58 |
| 2015q1 | 63 |
| 2015q2 | 64 |
| 2015q3 | 65 |
| 2015q4 | 69 |
| 2016q1 | 70 |
| 2016q2 | 70 |
| 2016q3 | 79 |
| 2016q4 | 91 |
| 2017q1 | 91 |
| 2017q2 | 92 |
| 2017q3 | 92 |
| 2017q4 | 95 |
20002005201020150255075100AmazonPrimelaunchesFulfillment byAmazon launches
Source: Fulfillment center opening dates compiled from Avalara (“Amazon Fulfillment Center Locations,” accessed October 2017), Guided Imports (“The Complete List of Every Amazon Warehouse and Distribution Center in the World,” last updated April 2017) and MWPVL International (“Amazon Global Fulfillment Center Network,” accessed October 2017).
In 2017, these centers were in 25 states across the country, from California to New Hampshire. According to consulting firm MWPVL International, fulfillment centers account for over three-quarters of the square footage of Amazon’s entire distribution infrastructure.10 (In addition to fulfillment centers, Amazon operates sortation centers that handle only already-packaged goods.)
Because these openings are spread widely across geography and time, they provide a potentially powerful statistical tool to assess their effect on regional employment growth. Creating more jobs is a key reason why state and local governments often try to entice firms to open operations in their regions, and the history of Amazon fulfillment center openings provides a very good case study of whether job creation benefits really do emerge.
Empirical methodology
In this report, we look at the effect of opening an Amazon fulfillment center in a county on that county’s warehousing industry employment as well as overall private-sector employment. For fulfillment center locations and opening dates, we use the publicly downloadable database from Guided Imports, a part of Procu International LLC, a sourcing company headquartered in Shenzhen, China. This database was cross referenced with available data from Avalara, a Seattle-based company providing tax compliance advice to businesses, and consulting firm MWPVL International.11 The sample contains all fulfillment centers listed in each of the three sources during our reference period.
For employment, we use data from the Quarterly Census of Employment and Wages (QCEW), a program of the Bureau of Labor Statistics.12 Because it is based on employment data that state unemployment insurance programs are required to maintain, the QCEW is perhaps the best source of local area employment statistics, covering approximately 95 percent of all employment in the United States and available every quarter.
In addition to overall private-sector employment, the QCEW contains data on the warehousing and storage industry. We limit our sample to the 1,161 counties for which we have warehousing employment information for the entire 2001–2015 period.13 By 2015, there were 69 Amazon fulfillment centers open across the United States in a total of 45 counties. Our balanced sample of 1,161 counties includes 54 fulfillment centers in 34 counties, meaning that it applies to more than three-fourths of the known fulfilment center locations overall in 2015.
To estimate the employment effect of opening a fulfillment center, we examine whether employment rose in a county after it opens a fulfillment center, relative to employment trends in counties that did not receive a fulfillment center. We focus specifically on warehousing employment and total private-sector employment in each county. To account for population changes, we calculate county-level employment-to-population ratios for warehousing and total private-sector employment from Census Bureau estimates of county population, and we use these employment-to-population ratios as our outcomes of interest.14
For robustness, we also control for multiple factors that may be correlated with employment outcomes and fulfillment center openings. For example, counties that open fulfillment centers may have higher warehousing employment in general (regardless of the opening). In addition, warehousing employment and employment overall around the time of a fulfillment center opening may also be affected by national events such as a national recession, or regional or state-specific economic changes or “shocks” to local employment, due to changes in regional labor demand or specific policies that affect employment.
When we estimate the effects of opening a fulfillment center, we use a variety of specifications to control for these permanent differences in employment between counties, and to control for time-varying economic shocks that may occur when fulfillment centers are being opened. Specifically we control for national, regional, and state-specific shocks with three different statistical models: a common time fixed effects model, a Census division–specific time fixed effects model, and a state-specific time fixed effects model. All regressions also include controls for permanent differences in county employment (county fixed effects). Depending on the specification, we also control for a measure of predicted private-sector employment (based on industry shares in the 1996–2000 period), and for different employment trends among counties (county-specific linear time trends).
We also want to make sure that we account for any employment effects that take time to develop after a fulfillment center opening, and that any changes in warehousing and overall employment we see are not simply continuations of existing trends. Therefore we also include lagged indicators of openings in order to capture up to two years of lagged employment effects that may develop after an opening, and directly control for differences in employment up to two years prior to the opening of a fulfillment center.15
Warehousing employment is a larger share of private-sector employment in counties that opened a fulfillment center. In counties that never opened a fulfillment center, warehousing employment was about 0.5 percent of total private-sector employment. In counties that opened a fulfillment center, county warehousing employment averaged about 1.0 percent of total private-sector employment prior to opening a center and 1.4 percent after opening a center. We use county fixed effects to control for persistent differences in the level of warehousing employment between counties that did or did not open a fulfillment center.
Results
We find that warehousing employment rises substantially in counties after an Amazon fulfillment center opens. At the same time, total private sector employment generally does not change after an Amazon fulfillment center opens. In some specifications we find that private-sector employment falls significantly after a center opens but these negative employment findings are not robust across most specifications or time periods. The increases in warehousing employment after a fulfillment center opens do not seem to generate any employment benefits beyond the warehousing and storage sector.
First we examine how warehousing employment changes after a fulfillment center opens in a county. For brevity, the top panel of Figure B reports, for the model using state-specific time fixed effects and county-specific linear trends, the cumulative percent change in warehousing employment due to the opening of a fulfillment center over a period of four years, beginning two years prior to the opening and continuing through two years after the opening. Appendix Figure A reports the cumulative change in warehousing employment for three models: the top panel controls for common national shocks, the middle panel controls for Census division–specific time shocks, and the bottom panel controls for state-and-time-specific shocks. All of the models in the appendix figures (A, showing warehousing employment, and B, showing overall employment) control for county fixed effects and county-specific linear time trends.
FIGURE B
Amazon fulfillment centers increase county warehousing employmentChange in county warehousing employment before and after opening an Amazon fulfillment center, using state-specific time fixed effects model
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 3.97% | -6.42% | 14.36% |
| -1.75 | 9.31% | -5.82% | 24.44% |
| -1.5 | 9.88% | 0.23% | 19.52% |
| -1.25 | 11.34% | 0.44% | 22.24% |
| -1 | 15.42% | -0.66% | 31.49% |
| -0.75 | 6.53% | -3.81% | 16.86% |
| -0.5 | 7.53% | -3.99% | 19.06% |
| -0.25 | 11.23% | -1.65% | 24.10% |
| 0 | 21.14% | 1.44% | 40.84% |
| 0.25 | 14.42% | 1.08% | 27.75% |
| 0.5 | 20.78% | 3.82% | 37.74% |
| 0.75 | 24.90% | 3.84% | 45.97% |
| 1 | 36.14% | 5.18% | 67.11% |
| 1.25 | 42.82% | 14.54% | 71.09% |
| 1.5 | 43.66% | 7.55% | 79.77% |
| 1.75 | 54.66% | 7.63% | 101.70% |
| 2 | 51.18% | 13.67% | 88.68% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low050100-50150%-2.5-2-1.5-1-0.500.511.52BeforeAfter
Notes: Cumulative employment effects are from a regression of warehousing county employment per capita on leads and lags of a count of fulfillment centers in that county, in which the other controls are county fixed effects, state-specific time fixed effects, and county-specific linear time trends. See the Appendix for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors’ calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text.
The solid line in Figure B shows our estimate of the cumulative effect of Amazon fulfillment center openings, with the shaded area around this solid line showing the 95 percent confidence interval of this estimate (The confidence interval reflects our uncertainty around this estimate: we cannot statistically distinguish the estimate in the solid line from any estimate between the two dotted lines forming the confidence interval). This solid line shows that warehousing employment is relatively flat in the two years prior to the opening of a fulfillment center—the solid line is close to zero and zero is always included in the confidence interval. This is obviously reassuring, as it would be odd to pick up an effect of fulfillment centers on employment before they were constructed. However, we show the two years prior precisely to insure we’re not merely attributing the effect of a preexisting trend to the opening of a fulfillment center.
At the time of a fulfillment center opening (t=0), warehousing employment begins to grow substantially. The solid line pulls up from zero, and zero is generally no longer part of the confidence interval.
Averaging the findings from our three specifications, we find that by two years after an opening, county warehousing employment has grown by more than 30 percent. Based on average warehousing employment in counties before they open an Amazon fulfillment center, that percentage growth in employment translates to an addition of roughly 1,300 jobs in the warehousing sector. This large gain in warehousing employment seems plausible given that our source data indicate that several fulfillment centers employ 1,000 or more workers.16
Theoretically, Amazon could open a fulfillment center in a county without increasing warehousing employment in the county. For example, the new fulfillment center may simply replace other warehouses that have gone out of business. However, if we had found no effect of fulfillment centers on warehousing employment over all counties we analyzed, it would have meant either that this sort of displacement effect was occurring, or that the statistical tools we are using are simply incapable of capturing the economic effect of opening a fulfillment center. Given the latter possibility, it is reassuring that we find growth in warehousing employment after an opening, as this provides additional confidence that our statistical tools are able to identify a clear signal from these openings.
We also investigated how a fulfillment center opening affected the earnings of warehousing workers, but we found an opening led to little to no change in these workers’ average wages. Estimates varied depending on the specification, but for the most credible specifications that had the smallest preexisting trends (using county-specific linear time trends) the effect of Amazon on warehousing workers’ earnings ranged from negative 1.7 percent to positive 0.5 percent (Appendix Table 1 shows the results for all specifications). None of these preferred estimates was distinguishable from zero at conventional levels of statistical significance.
These results differ from the findings reported in The Economist, which found that the earnings of warehousing workers rose prior to the opening of a fulfillment center and fell afterward, and that warehousing workers in counties with fulfillment centers in December 2017 earned 10 percent less than warehousing workers in counties without centers.17
While both our study and the analysis in The Economist investigate what happened to employment and wages in counties that opened fulfillment centers, our study actually estimates the counterfactual outcome of what would have happened to the labor market in counties with an Amazon presence had Amazon not opened a fulfillment center. We do this by controlling for economic factors (like regional economic shocks or different wage trends among counties) that may affect wage trends in counties that opened a fulfillment center even if that county had never opened a fulfillment center. For this reason, the Economist’s figure simply comparing wages between counties with and without fulfillment centers in December 2017 does not definitively show the effect of opening fulfillment centers.
For example, many of the counties that had fulfillment centers in December 2017 may have only had them for a short time, and may even have seen different wage growth trends in the periods before attracting Amazon warehouses. We account more precisely for these preexisting differences by using the precise timing of a fulfillment center opening, comparing outcomes in counties with and without fulfillment centers around the time of an opening, and by accounting for regional shocks and county-specific trends, as described in the “Empirical methodology” section. The limited wage effect we find in our analysis suggests that some of the wage differences found by The Economist would have occurred regardless of the opening of a fulfillment center.
Additionally, both our wage analysis and the analysis conducted by The Economist use wage data based on total quarterly earnings per worker, as opposed to hourly wages. Our estimates are consistent with reports that Amazon fulfillment centers reduce the hourly wages of warehousing workers, if these employees earning lower hourly wages were to work longer hours, producing a minimal net effect on total quarterly earnings per worker.18
Although we find consistent evidence that fulfillment centers lead to substantial gains in warehousing employment, the new centers do not clearly increase total private-sector employment in the county, as shown in Figure C. Instead, after the fulfillment center opens, private-sector employment remains at relatively the same level, with none of the changes in employment statistically distinguishable from no change in employment at all. Appendix Figure B reports the cumulative change in private-sector employment for three models: the top panel controls for common national shocks, the middle panel controls for Census division–specific time shocks, and the bottom panel controls for state-specific time shocks. All of the models in Appendix Figure B show similar results.
FIGURE C
Amazon fulfillment centers do not increase overall county employmentChange in overall county employment before and after opening an Amazon fulfillment center, using state-specific time fixed effects model
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 0.14% | -0.54% | 0.81% |
| -1.75 | 0.39% | -0.20% | 0.98% |
| -1.5 | 0.51% | -0.39% | 1.42% |
| -1.25 | 0.38% | -0.71% | 1.47% |
| -1 | 0.53% | -0.61% | 1.68% |
| -0.75 | 0.45% | -0.27% | 1.17% |
| -0.5 | 0.57% | -0.51% | 1.65% |
| -0.25 | 0.55% | -0.65% | 1.75% |
| 0 | 0.61% | -0.60% | 1.81% |
| 0.25 | 0.42% | -0.45% | 1.29% |
| 0.5 | 0.40% | -0.80% | 1.59% |
| 0.75 | 0.29% | -0.95% | 1.53% |
| 1 | 0.07% | -1.00% | 1.15% |
| 1.25 | 0.01% | -1.15% | 1.18% |
| 1.5 | -0.49% | -1.85% | 0.87% |
| 1.75 | -0.42% | -1.79% | 0.95% |
| 2 | 0.35% | -0.82% | 1.53% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low0-5-2.52.55%-2.5-2-1.5-1-0.500.511.52BeforeAfter
Notes: Cumulative employment effects are from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county, in which the other controls are county fixed effects, state-specific time fixed effects, and county-specific linear time trends. See the Appendix for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors’ calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text.
In general, we do not find any evidence that the warehousing employment gains a county experiences after an Amazon fulfillment center opens translate into economically meaningful increases in the total number of jobs in the overall private sector.
One concern with the timing of the estimates in Figure B and the appendix figures is that total private-sector employment is already abnormally high in counties about to open a fulfillment center, relative to areas where fulfillment centers are not about to open.
We adopt three strategies to account for this potential problem and report the results in Table 1 and Appendix Table 2. First, instead of just the three models we discussed above, we examine a total of nine statistical models, which differ depending on whether they control for common national, Census division-specific, or state-specific time shocks; whether they include a control for industry-share predicted employment; and whether they include county-specific linear time trends. Second, for robustness and in case employment trends changed dramatically in some areas after the recession beginning in 2008, we present results for both the full 2001–2015 time period, as well as the 2008–2015 period. Third, we directly control for preexisting trends by subtracting them from the cumulative effect of the fulfillment center opening; and in Table 1, we present the three models for each sample for which the preexisting trend was smallest in magnitude. (Appendix Table 2 shows the results for all models.)
TABLE 1
Change in county private-sector employment before and after opening an Amazon fulfillment centerPercent employment changes in the two years before and the two years after an opening
| 2001–2015 sample | 2008–2015 sample | |||||
| (1) | (2) | (3) | (4) | (5) | (6) | |
| Cumulative percent change two years before the opening | 0.1% | 0.4% | 0.4% | 0.3% | 0.0% | 0.0% |
| (0.4%) | (0.6%) | (0.5%) | (0.3%) | (0.3%) | (0.3%) | |
| Cumulative percent change two years after the opening | -1.4%*** | -1.3%*** | -0.2% | -0.0% | 0.2% | 0.3% |
| (0.4%) | (0.5%) | (0.4%) | (0.4%) | (0.4%) | (0.4%) | |
| Controls | ||||||
| County fixed effects | Y | Y | Y | Y | Y | Y |
| Common time fixed effects | Y | Y | ||||
| Division-specific time fixed effects | Y | Y | ||||
| State-specific time fixed effects | Y | Y | ||||
| Predicted employment | Y | Y | ||||
| County-specific linear time trends | Y | Y | ||||
Notes: This table shows the three models from the 2001–2015 and 2008–2015 sample periods that have the smallest pre-treatment effects. The results from all models are shown in Appendix Table 2. Each column shows cumulative employment effects in the pre-opening or post-opening time period from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects. Other controls are indicated at the bottom of the table. See the Appendix for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors’ calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text.
Overall we continue to fail to find robust evidence that fulfillment centers increase private-sector employment. This lack of increase in overall employment may be due to such a small increase that it is not accounted for, or that there is a shift away from other jobs outside of warehousing as these non-warehousing jobs are displaced by the introduction of a fulfillment center. Reassuringly, the first row of Table 1 shows that for our selection of best-performing models, we do not find significant preexisting trends in employment prior to a county opening a fulfillment center. The second row shows the cumulative effects of opening a fulfillment center on private-sector employment, and we confirm that there is no significant evidence that private-sector employment rises after an opening. The lack of a significant positive employment response is true in both the full 2001–2015 time period and the shorter 2008–2015 period.
Conclusion
State and local governments have many tools and strategies to spur economic growth. One tool proven particularly effective by research is public investment that increases the efficiency and attractiveness of local amenities such as transportation and the quality of local education. Public investment opportunities are obviously curtailed if state and local governments willingly forfeit revenue in the name of attracting businesses. Given this sharp trade-off with public goods provision, the benefits of tax incentives should be exceedingly strong to be pursued as good development policy. So far, the best research has not identified such strong benefits.
This paper bolsters these findings for the most politically salient economic indicators used to assess state and local development policies: the total number of jobs in a locality. We use a high-quality dataset that provides cross-locale variation to assess the effect of opening an Amazon fulfillment center on county-level employment. We find that opening an Amazon fulfillment center does lead to gains in warehouse jobs in a county, but does not lead to gains in overall county-level employment. These findings are consistent with theories arguing that luring establishments from existing national employers to a particular locale may just displace incumbent jobs. This seems to add evidence to an already-strong research base indicating that the zero-sum strategy of attracting existing employers away from other regions does not guarantee good economic outcomes.
It is this lack of broader development benefits that has led to many advocacy organizations, including Good Jobs First, to call for “turning the tables.” Specifically, they argue that firms themselves, not taxpayers, should foot the bill of locating in a community and beginning to draw on the community’s infrastructure. Instead of committing to giving away public funds to attract existing employers from other regions in a zero-sum contest, communities should demand concrete actions that ensure that an employer’s arrival will make their region a more prosperous place—or that at least offset some of the harms the arrival could create.
Good Jobs First lays out what such concrete demonstrations from Amazon (and by extension other employers) could include: an impact fee to offset lost tax revenues if existing retailers lose business or close and a Community Benefits Agreement (CBA) that ensures a range of benefits. The CBA could require that the employer provide jobs with living wages and benefits, hire disadvantaged workers, evaluate the environmental impact of the facility, and provide other benefits.19 Good Jobs First has also weighed in on what Amazon should offer to cities bidding to become the home of Amazon’s next headquarters. In an open letter, Good Jobs First calls on Amazon president Jeff Bezos to provide affordable housing supports, transit investments, and a commitment to strengthen small business.20
Appendix
Update as of March 1, 2018: Since we ran our original analysis, additional data on fulfillment center openings has become available. Using the same analysis with updated data confirms our previous findings that fulfillment center openings in a county do not significantly add to overall private sector employment in that area. Details of our analysis of the updated data are described below.
As of February 28, 2018, the list of MWPVL fulfillment center openings contains some openings that we did not include in our original estimates.21 The openings data we use in the original study indicate 69, 91, and 95 fulfillment center openings by the end of 2015, 2016, and 2017, respectively. After we incorporate all additional fulfillment center openings reported in the updated MWPVL data that contained quarterly or monthly dates of opening, the number of fulfillment center openings increases to 75, 100, and 120 openings by 2015, 2016, and 2017, respectively.
These additional openings do not meaningfully affect our results. Using nine models over two sample periods, for a total of 18 specifications, we previously found that a fulfillment center opening affected total private-sector employment by somewhere between -1.5 percent and +0.3 percent (see Appendix Table 2). Running the same analysis but with the new, updated data, we find that the effect on private-sector employment ranges between -1.4 percent and +0.2 percent. In both cases, most results are not statistically distinguishable from zero. In no case do we find positive overall employment effects that are statistically significant.
The current paper and the appendix tables and figures continue to report the estimates that we originally published.
APPENDIX FIGURE A
Effect of opening an Amazon fulfillment center on county warehousing employmentPercent change in employment two years before and after the opening
Common time fixed effects
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 2.62% | -8.08% | 13.33% |
| -1.75 | 6.93% | -7.20% | 21.06% |
| -1.5 | 7.29% | -2.96% | 17.54% |
| -1.25 | 8.83% | -2.42% | 20.07% |
| -1 | 11.53% | -4.15% | 27.20% |
| -0.75 | 3.84% | -7.44% | 15.12% |
| -0.5 | 4.73% | -7.77% | 17.23% |
| -0.25 | 7.33% | -6.98% | 21.64% |
| 0 | 16.23% | -4.35% | 36.81% |
| 0.25 | 12.31% | -2.25% | 26.87% |
| 0.5 | 17.49% | 0.77% | 34.21% |
| 0.75 | 19.95% | -0.73% | 40.63% |
| 1 | 27.18% | -3.21% | 57.56% |
| 1.25 | 31.40% | 2.16% | 60.64% |
| 1.5 | 28.99% | -2.74% | 60.73% |
| 1.75 | 36.44% | -4.78% | 77.65% |
| 2 | 33.37% | 0.06% | 66.69% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low-50050100150%-2.5-2-1.5-1-0.500.511.52BeforeAfter
Division-specific time fixed effects
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 2.75% | -7.83% | 13.33% |
| -1.75 | 7.87% | -6.22% | 21.97% |
| -1.5 | 8.28% | -1.85% | 18.42% |
| -1.25 | 9.80% | -1.35% | 20.96% |
| -1 | 12.73% | -3.15% | 28.61% |
| -0.75 | 4.57% | -6.97% | 16.11% |
| -0.5 | 5.46% | -7.49% | 18.42% |
| -0.25 | 8.46% | -5.74% | 22.66% |
| 0 | 17.92% | -2.62% | 38.46% |
| 0.25 | 13.38% | -0.85% | 27.62% |
| 0.5 | 18.28% | 0.90% | 35.65% |
| 0.75 | 21.06% | 0.28% | 41.84% |
| 1 | 29.25% | -1.34% | 59.85% |
| 1.25 | 34.54% | 5.71% | 63.37% |
| 1.5 | 32.00% | -0.42% | 64.41% |
| 1.75 | 41.40% | 0.46% | 82.33% |
| 2 | 36.87% | 3.75% | 69.99% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low-50050100150%-2.5-2-1.5-1-0.500.511.52BeforeAfter
State-specific fixed effects
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 3.97% | -6.42% | 14.36% |
| -1.75 | 9.31% | -5.82% | 24.44% |
| -1.5 | 9.88% | 0.23% | 19.52% |
| -1.25 | 11.34% | 0.44% | 22.24% |
| -1 | 15.42% | -0.66% | 31.49% |
| -0.75 | 6.53% | -3.81% | 16.86% |
| -0.5 | 7.53% | -3.99% | 19.06% |
| -0.25 | 11.23% | -1.65% | 24.10% |
| 0 | 21.14% | 1.44% | 40.84% |
| 0.25 | 14.42% | 1.08% | 27.75% |
| 0.5 | 20.78% | 3.82% | 37.74% |
| 0.75 | 24.90% | 3.84% | 45.97% |
| 1 | 36.14% | 5.18% | 67.11% |
| 1.25 | 42.82% | 14.54% | 71.09% |
| 1.5 | 43.66% | 7.55% | 79.77% |
| 1.75 | 54.66% | 7.63% | 101.70% |
| 2 | 51.18% | 13.67% | 88.68% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low-50050100150%-2.5-2-1.5-1-0.500.511.52BeforeAfter
Notes: Cumulative employment effects are from a regression of county warehousing employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects and county-specific linear time trends. The top, middle, and bottom panels, respectively, show specifications with common, Census division–specific, and state-specific time fixed effects. See the Appendix tables for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors’ calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text.
APPENDIX FIGURE B
Effect of opening an Amazon fulfillment center on county private-sector employmentPercent change in employment two years before and after the opening
Common time effects
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 0.36% | -0.35% | 1.07% |
| -1.75 | 0.81% | 0.20% | 1.41% |
| -1.5 | 0.99% | 0.24% | 1.74% |
| -1.25 | 0.62% | -0.22% | 1.45% |
| -1 | 0.71% | -0.27% | 1.69% |
| -0.75 | 0.89% | 0.18% | 1.61% |
| -0.5 | 0.89% | -0.05% | 1.84% |
| -0.25 | 0.42% | -0.75% | 1.59% |
| 0 | 0.34% | -1.13% | 1.80% |
| 0.25 | 0.39% | -0.92% | 1.70% |
| 0.5 | 0.35% | -1.06% | 1.76% |
| 0.75 | -0.08% | -1.80% | 1.64% |
| 1 | -0.35% | -2.24% | 1.54% |
| 1.25 | -0.60% | -2.70% | 1.51% |
| 1.5 | -1.32% | -3.16% | 0.52% |
| 1.75 | -1.63% | -3.87% | 0.61% |
| 2 | -0.90% | -2.57% | 0.77% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low-5-2.502.55%-2.5-2-1.5-1-0.500.511.52BeforeAfter
Division-specific time fixed effects
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 0.18% | -0.50% | 0.87% |
| -1.75 | 0.59% | 0.00% | 1.18% |
| -1.5 | 0.79% | -0.07% | 1.65% |
| -1.25 | 0.40% | -0.58% | 1.39% |
| -1 | 0.46% | -0.58% | 1.50% |
| -0.75 | 0.60% | -0.06% | 1.27% |
| -0.5 | 0.78% | -0.15% | 1.70% |
| -0.25 | 0.43% | -0.61% | 1.48% |
| 0 | 0.48% | -0.67% | 1.63% |
| 0.25 | 0.50% | -0.39% | 1.39% |
| 0.5 | 0.56% | -0.49% | 1.61% |
| 0.75 | 0.18% | -0.95% | 1.31% |
| 1 | 0.03% | -0.96% | 1.01% |
| 1.25 | -0.04% | -1.09% | 1.01% |
| 1.5 | -0.34% | -1.33% | 0.65% |
| 1.75 | -0.50% | -1.58% | 0.58% |
| 2 | 0.20% | -0.86% | 1.27% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low-5-2.502.55%-2.5-2-1.5-1-0.500.511.52BeforeAfter
State-specific time fixed effects
| Years from warehouse opening | Elasticity | Elasticity, low estimate | Elasticity, high estimate |
| -2.5 | |||
| -2.25 | 0.00% | 0.00% | 0.00% |
| -2 | 0.14% | -0.54% | 0.81% |
| -1.75 | 0.39% | -0.20% | 0.98% |
| -1.5 | 0.51% | -0.39% | 1.42% |
| -1.25 | 0.38% | -0.71% | 1.47% |
| -1 | 0.53% | -0.61% | 1.68% |
| -0.75 | 0.45% | -0.27% | 1.17% |
| -0.5 | 0.57% | -0.51% | 1.65% |
| -0.25 | 0.55% | -0.65% | 1.75% |
| 0 | 0.61% | -0.60% | 1.81% |
| 0.25 | 0.42% | -0.45% | 1.29% |
| 0.5 | 0.40% | -0.80% | 1.59% |
| 0.75 | 0.29% | -0.95% | 1.53% |
| 1 | 0.07% | -1.00% | 1.15% |
| 1.25 | 0.01% | -1.15% | 1.18% |
| 1.5 | -0.49% | -1.85% | 0.87% |
| 1.75 | -0.42% | -1.79% | 0.95% |
| 2 | 0.35% | -0.82% | 1.53% |
Percent change in employmentYears since openingConfidence interval, highConfidence interval, low-5-2.502.55%-2.5-2-1.5-1-0.500.511.52BeforeAfter
Notes: Cumulative employment effects are from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects and county-specific linear time trends. The top, middle, and bottom panels, respectively, show specifications with common, Census division–specific, and state-specific time fixed effects. See the Appendix tables for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors’ calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text.
APPENDIX TABLE 1
Change in county warehousing earnings before and after opening an Amazon fulfillment centerPercent earnings changes in the two years before and the two years after an opening
| Common time fixed effects | Division-specific fixed effects | State-specific time fixed effects | |||||||
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | |
| 2001–2015 | |||||||||
| Cumulative percent change two years before the opening | -3.1%*** | -3.2%*** | -0.5% | -3.3%** | -3.4%** | -0.0% | -4.0%*** | -4.2%*** | -0.3% |
| (1.1%) | (1.1%) | (1.2%) | (1.4%) | (1.4%) | (1.4%) | (1.2%) | (1.2%) | (1.6%) | |
| Cumulative percent change two years after the opening | -1.0% | -1.1% | -1.4% | 2.5% | 2.5% | -0.9% | 5.8%*** | 5.5%** | -1.7% |
| (1.1%) | (1.0%) | (1.4%) | (1.7%) | (1.7%) | (1.5%) | (2.1%) | (2.1%) | (1.9%) | |
| 2008–2015 | |||||||||
| Cumulative percent change two years before the opening | -2.4%* | -2.5%* | -1.3% | -2.9%** | -2.8%** | -0.9% | -3.1%** | -3.0%** | -0.8% |
| (1.3%) | (1.3%) | (1.5%) | (1.3%) | (1.3%) | (1.6%) | (1.3%) | (1.4%) | (2.0%) | |
| Cumulative percent change two years after the opening | -1.8%* | -2.0%** | -1.4% | 0.7% | 0.7% | 0.4% | 3.0% | 2.7% | 0.5% |
| (1.0%) | (1.0%) | (1.5%) | (1.5%) | (1.5%) | (1.8%) | (2.3%) | (2.3%) | (1.5%) | |
| Controls | |||||||||
| County fixed effects | Y | Y | Y | Y | Y | Y | Y | Y | Y |
| Predicted employment | Y | Y | Y | ||||||
| County-specific linear time trends | Y | Y | Y | ||||||
Notes: Each column shows cumulative earnings effects in the pre-opening or post-opening time period from a regression of county warehousing quarterly earnings per worker on leads and lags of a count of fulfillment centers in that county as well as county fixed effects. Other controls are indicated at the bottom of the table. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in earnings by dividing coefficients by the sample mean quarterly earnings per worker.
APPENDIX TABLE 2
Change in county private-sector employment before and after opening an Amazon fulfillment centerPercent change in employment two years before and after opening
| Common time fixed effects | Division-specific fixed effects | State-specific time fixed effects | |||||||
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | |
| 2001–2015 | |||||||||
| Cumulative percent change two years before the opening | -0.5% | 0.1% | 0.4% | -0.8%* | -0.5% | 0.4% | -0.8%* | -0.6% | 0.5% |
| (0.4%) | (0.4%) | (0.6%) | (0.4%) | (0.3%) | (0.5%) | (0.5%) | (0.4%) | (0.6%) | |
| Cumulative percent change two years after the opening | -1.5%*** | -1.4%*** | -1.3%*** | -0.2% | -0.0% | -0.2% | -0.4% | 0.1% | -0.2% |
| (0.5%) | (0.4%) | (0.5%) | (0.5%) | (0.4%) | (0.4%) | (0.5%) | (0.5%) | (0.5%) | |
| 2008–2015 | |||||||||
| Cumulative percent change two years before the opening | 0.7%* | 0.7%** | 0.9% | 0.3% | 0.3% | 0.9% | 0.0% | 0.0% | 0.7% |
| (0.4%) | (0.4%) | (0.7%) | (0.3%) | (0.3%) | (0.6%) | (0.3%) | (0.3%) | (0.7%) | |
| Cumulative percent change two years after the opening | -1.1%*** | -1.1** | -0.8% | -0.0% | -0.0% | -0.2% | 0.2% | 0.3% | -0.2% |
| (0.4%) | (0.4%) | (0.9%) | (0.4%) | (0.4%) | (0.6%) | (0.4%) | (0.4%) | (0.7%) | |
| Controls | |||||||||
| County fixed effects | Y | Y | Y | Y | Y | Y | Y | Y | Y |
| Predicted employment | Y | Y | Y | ||||||
| County-specific linear time trends | Y | Y | Y | ||||||
Notes: Each column shows cumulative employment effects in the pre-opening or post-opening time period from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects. Other controls are indicated at the bottom of the table. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors’ calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text.
APPENDIX TABLE 3
Amazon fulfillment centers by state and county
| State | County | Year opened |
| Arizona | Maricopa County | Third quarter 2007 |
| Arizona | Maricopa County | Second quarter 2008 |
| Arizona | Maricopa County | Fourth quarter 2010 |
| Arizona | Maricopa County | Third quarter 2011 |
| California | Riverside County | Third quarter 2014 |
| California | Riverside County | Third quarter 2014 |
| California | Riverside County | Fourth quarter 2016 |
| California | San Bernardino County | Fourth quarter 2012 |
| California | San Bernardino County | Fourth quarter 2014 |
| California | San Bernardino County | Third quarter 2016 |
| California | San Bernardino County | Fourth quarter 2015 |
| California | San Joaquin County | Fourth quarter 2013 |
| California | San Joaquin County | Fourth quarter 2016 |
| California | San Joaquin County | Fourth quarter 2013 |
| California | Stanislaus County | Fourth quarter 2013 |
| Connecticut | Hartford County | Second quarter 2015 |
| Delaware | New Castle County | Fourth quarter 1997 |
| Delaware | New Castle County | Fourth quarter 2012 |
| Florida | Duval County | Fourth quarter 2017 |
| Florida | Hillsborough County | Fourth quarter 2014 |
| Florida | Miami-Dade County | Fourth quarter 2017 |
| Florida | Polk County | Third quarter 2014 |
| Georgia | Douglas County | Fourth quarter 2015 |
| Georgia | Fulton County | First quarter 2015 |
| Georgia | Jackson County | Fourth quarter 2016 |
| Illinois | Madison County | Third quarter 2016 |
| Illinois | Madison County | Third quarter 2016 |
| Illinois | Will County | Fourth quarter 2015 |
| Illinois | Will County | Fourth quarter 2016 |
| Illinois | Will County | Fourth quarter 2016 |
| Illinois | Will County | Fourth quarter 2017 |
| Indiana | Boone County | Third quarter 2008 |
| Indiana | Boone County | Fourth quarter 2013 |
| Indiana | Clark County | Fourth quarter 2012 |
| Indiana | Hendricks County | Fourth quarter 2008 |
| Indiana | Hendricks County | Third quarter 2011 |
| Indiana | Marion County | Second quarter 2011 |
| Indiana | Marion County | Third quarter 2016 |
| Kansas | Johnson County | Fourth quarter 2016 |
| Kansas | Johnson County | Fourth quarter 2016 |
| Kentucky | Boone County | Third quarter 2015 |
| Kentucky | Boone County | Second quarter 2005 |
| Kentucky | Boone County | Fourth quarter 2005 |
| Kentucky | Boone County | Third quarter 2007 |
| Kentucky | Bullitt County | Third quarter 2005 |
| Kentucky | Bullitt County | Second quarter 2012 |
| Kentucky | Bullitt County | Second quarter 2012 |
| Kentucky | Bullitt County | Fourth quarter 2013 |
| Kentucky | Fayette County | Fourth quarter 2000 |
| Kentucky | Fayette County | Second quarter 2006 |
| Kentucky | Jefferson County | Third quarter 2005 |
| Kentucky | Taylor County | Second quarter 1999 |
| Maryland | Baltimore County | First quarter 2015 |
| Massachusetts | Bristol County | Fourth quarter 2016 |
| Michigan | Wayne County | Fourth quarter 2014 |
| Minnesota | Scott County | Third quarter 2016 |
| Nevada | Clark County | Fourth quarter 2008 |
| Nevada | Storey County | Fourth quarter 2010 |
| Nevada | Washoe County | First quarter 2015 |
| New Hampshire | Hillsborough County | Third quarter 2007 |
| New Jersey | Burlington County | Third quarter 2016 |
| New Jersey | Mercer County | Third quarter 2014 |
| North Carolina | Mecklenburg County | Fourth quarter 2016 |
| Ohio | Franklin County | Third quarter 2016 |
| Ohio | Licking County | Third quarter 2016 |
| Pennsylvania | Cumberland County | Third quarter 2010 |
| Pennsylvania | Cumberland County | Third quarter 2010 |
| Pennsylvania | Cumberland County | Second quarter 2013 |
| Pennsylvania | Cumberland County | First quarter 2015 |
| Pennsylvania | Lackawanna County | Fourth quarter 2010 |
| Pennsylvania | Lehigh County | Third quarter 2010 |
| Pennsylvania | Lehigh County | Second quarter 2011 |
| Pennsylvania | Luzerne County | Third quarter 2008 |
| Pennsylvania | Luzerne County | Fourth quarter 2016 |
| Pennsylvania | Northampton County | Fourth quarter 2016 |
| Pennsylvania | York County | Third quarter 2010 |
| South Carolina | Lexington County | Fourth quarter 2011 |
| South Carolina | Lexington County | Second quarter 2017 |
| South Carolina | Spartanburg County | Third quarter 2012 |
| Tennessee | Bradley County | Third quarter 2011 |
| Tennessee | Hamilton County | Third quarter 2011 |
| Tennessee | Rutherford County | Third quarter 2012 |
| Tennessee | Wilson County | Third quarter 2011 |
| Tennessee | Wilson County | First quarter 2013 |
| Texas | Dallas County | Fourth quarter 2015 |
| Texas | Dallas County | Fourth quarter 2016 |
| Texas | Denton County | Fourth quarter 2013 |
| Texas | Hays County | Third quarter 2016 |
| Texas | Tarrant County | Fourth quarter 2013 |
| Texas | Tarrant County | Third quarter 2014 |
| Virginia | Chesterfield County | Fourth quarter 2012 |
| Virginia | Dinwiddie County | Fourth quarter 2012 |
| Washington | King County | First quarter 2016 |
| Washington | Pierce County | Second quarter 2011 |
| Washington | Pierce County | First quarter 2015 |
Source: Avalara (“Amazon Fulfillment Center Locations,” accessed October 2017), Guided Imports (“The Complete List of Every Amazon Warehouse and Distribution Center in the World,” last updated April 2017) and MWPVL International (“Amazon Global Fulfillment Center Network,” accessed October 2017).
Endnotes
- A December 2016 report from Good Jobs First counts “at least $241 million in subsidies to Amazon facilities” since the start of 2015 on top of “some $600 million in subsidies during the previous decade, a substantial portion of which was tied to deals involving sales tax collection.” And “there are likely more subsidies that can’t be quantified here due to lack of disclosure,” the report said. A March 2017 article in Bloomberg Daily Tax Reportsaid that Amazon “is expected to vault past a record for state and local tax subsidies held for many years by Wal-Mart Stores Inc.” which has “captured more than $1.2 billion in tax abatements, credits, exemptions, infrastructure assistance and financing deals during four decades of rapid expansion.” See Thomas Cafcas and Greg LeRoy, Will Amazon Fool Us Twice? Why State and Local Governments Should Stop Subsidizing the Online Giant’s Growing Distribution Network, Good Jobs First, December 2016 and Michael J. Bologna, “Amazon Close to Breaking Wal-Mart Record for Subsidies,” Bloomberg Daily Tax Report, March 20, 2017.
- Jessica Bruder, “With 6,000 New Warehouse Jobs, What Is Amazon Really Delivering?” Reuters, June 17, 2015; Chris Isidore, “Amazon Hiring 7,000 Workers” CNN Money, July 29, 2013; “We’re Hiring: Amazon Creating 120,000 Seasonal Jobs in Customer Fulfillment and Customer Service This Holiday Season,” Amazon Press Release, October 13, 2016; “Amazon Announces Ninth Fulfillment Center in Texas; New Robotics Site Will Create 1,000-Plus Full-Time Jobs,” Amazon Press Release, January 18, 2017.
- See Brian Fung, “Amazon Releases List of Metro Areas Being Considered for Its Second HQ,” The Washington Post, January 18, 2018, which links to the District of Columbia bidding proposal.
- Los Angeles TimesEditorial Board, “Do Tax Incentives Really Create Jobs?” Los Angeles Times, September 10, 2014; Carl Davis, Tax Incentives: Costly for States, Drag on the Nation, Institute on Taxation and Economic Policy, 2013; David Seiden, “Do State Tax Incentives Really Work?” Huffpost, November 22, 2013. For the pro and con debate about Amazon specifically see Mark Vandevelde, “Amazon Is Creating More Jobs than It Destroys,” Financial Times, July 29, 2017, and Jon Swartz, “Amazon Is Creating 100,000 U.S. Jobs, But at What Cost?” USA TODAY, January 13, 2017.
- Robert G. Lynch, Rethinking Growth Strategies: How State and Local Taxes and Services Affect Economic Development. Economic Policy Institute, 2004.
- Davis, Tax Incentives, 2013.
- Lynch, Rethinking Growth Strategies, 2004.
- Lynch, 2004 and Timothy J. Bartik, The Economic Development Benefits of Universal Preschool Education Compared to Traditional Economic Development Programs, W.E. Upjohn Institute for Employment Research, 2006. Recent research also finds state economic development incentives have little correlation with unemployment levels, income levels, or future economic growth. See Timothy J. Bartik, A New Panel Database on Business Incentives for Economic Development Offered by State and Local Governments in the United States, W.E. Upjohn Institute for Employment Research, 2017.
- Our data on Amazon fulfillment centers comes from publically available sources described in the “Empirical methodology” section.
- Estimates from MWPVL tabulations find that fulfillment centers account for 92.8 million out of 121.6 million square feet in Amazon’s distribution network. See “Amazon Global Fulfillment Center Network,” MWPVL, updated January 2018.
- See “Amazon Fulfillment Center Locations,” Avalara TrustFile, accessed October 2017; “The Complete List of Every Amazon Warehouse and Distribution Center in the World,” [downloadable Excel files], Guided Imports, last updated April 2017; MWPVL International, http://www.mwpvl.com/html/amazon_com.html, accessed October 2017.
- QCEW data are available at https://www.bls.gov/cew/datatoc.htm.
- The public-use QCEW data suppresses some county-industry-level aggregations in order to protect employer identities. Our sample begins in 2001 because prior to that date it is not possible to distinguish between whether county-industry employment was truly zero or suppressed. Our sample ends in 2015 because our regressions specifications require two years of data after fulfillment center openings, and openings data were only available through 2017 when we conducted our analyses. We identify the warehousing industry as NAICS (North American Industry Classification System of the Census Bureau) 493. QCEW data are available at https://www.bls.gov/cew/datatoc.htm.
- County population data that we accessed are available at United States Census Bureau, “County Population Totals and Components of Change: 2010–2016,” [online data tables] and https://www2.census.gov/programs-surveys/popest/tables/2000-2010/intercensal/county/
- We regress the industry-level employment-per-capita on an indicator for presence of a fulfillment center in that quarter. In addition to the contemporaneous fulfillment center indicator, we include eight quarters of leads and eight quarters of lags of the indicator. All regressions include county fixed effects. In the table and some of the figures described in the text, we include several additional controls, depending on the specification: common time fixed effects, Census division–specific time fixed effects, or state-specific time fixed effects; a predicted employment-to-population ratio; and county-specific linear trends. For specifications with a control for predicted employment-to-population, predicted employment is an industrial shift-share prediction from the sum of mean 1996–2000 county-level 3-digit NAICS shares of national employment multiplied by contemporaneous national industry-level employment. All regressions are weighted by the mean population in the county and standard errors are clustered at the county level. We convert the percentage-point employment-to-population ratio marginal effect and standard errors into a percent change in employment by dividing coefficients by the sample mean employment-to-population ratio.
- For the three specifications shown in Appendix Figure A, the average cumulative effect over the two-year post-treatment period is 26.0, 28.4, and 40.0 percent (these values are the difference between the cumulative effect in the post-treatment period minus the pre-treatment period). A simple average of these estimates is a 31.5 percent increase in warehousing employment growth. The average warehousing employment in counties that open fulfillment centers, prior to the opening, is about 4,200 jobs.
- See The Economist, “Unfulfillment Centres: What Amazon Does to Wages,” January 20, 2018.
- Olivia LaVecchia and Stacy Mitchell, “Amazon’s Stranglehold: How the Company’s Tightening Grip Is Stifling Competition, Eroding Jobs, and Threatening Communities,” Institute for Local Self-Reliance, November 2016.
- Greg LeRoy, “Memo to Politicians: Bargaining for an Amazon Warehouse? Turn the Tables!” Bloomberg BNA Daily Tax Report, July 25, 2017.
- “‘Not Your Grandparents’ Deal’: Good Jobs First Issues Statement on Amazon HQ2 “Short List” Announcement,” press release, Good Jobs First, January 19, 2018.
- “Amazon Global Fulfillment Network,” MWPVL, accessed February 28, 2018.
See related work on Public Investment | Jobs | Job creation | Taxes | Jobs and Unemployment | Budget, Taxes, and Public Investment | Public Investment
See more work by Janelle Jones and Ben Zipperer
https://www.fresnobee.com/news/local/article203578759.html
Amazon jobs may not be worth all the tax breaks cities give, study says
MARCH 17, 2018 11:15 AM, UPDATED MARCH 18, 2018 08:00 AM
Amazon plans to open a 855,000-square-foot warehouse in Fresno expecting to employ about 1,500 workers when it opens. BY MCCLATCHY
Amazon’s new fulfillment center under construction in southwest Fresno will employ 1,500 workers when it opens this year. The company’s decision last summer to locate the center in Fresno came only after the city affirmed a package of economic incentives that will be worth up to $30 million over the next 30 years.
The rebates that the company will get on property and sales taxes are among the types of job-growing strategies used by communities across the country to entice Amazon and other companies. But the effectiveness of such incentives is being questioned by a Washington, D.C., think tank’s economic analysis of the employment effects of Amazon’s fulfillment centers.
In the Economic Policy Institute’s report entitled “Unfulfilled Promises,” EPI economist Ben Zipperer and economic analyst Janelle Jones concluded that on average, “Amazon’s fulfillment centers are ineffective at providing net job growth.”
“When Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries,” the report states.
Zipperer told The Bee that while Amazon certainly generates job growth within the warehousing industry sector when it opens one of its massive order-filling centers in a community, it does not appear to translate into employment gains across the entire local economy. “It seems to be shifting the composition of employment in some places,” Zipperer said. “You do see more warehousing workers. They are definitely hiring.”
In Fresno County, where total employment amounted to about 393,000 workers across all industries last fall, warehouse employment is a relatively small component, according to figures from the state Employment Development Department and the federal Bureau of Labor Statistics. A total of 34 companies operated general warehouse/storage businesses – not including agricultural cold storage – and collectively employed fewer than 1,200 workers in the county.
That’s well below peak warehouse employment of almost 1,600 workers in 2006, before the economic recession, but it’s still a rebound from fewer than 830 workers in the recession’s aftermath in 2011.
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HOW MANY AMAZON JOBS?
When Amazon’s warehouse opens, probably this summer, the company expects to have about 1,500 employees. Nearby to the west, a new Ulta Beauty distribution center is also expected to open this summer with more than 540 employees. Together, they will more than double the ranks of warehouse employees in Fresno County. The number of workers at both centers is expected to expand seasonally to handle holiday rush periods.
But the EPI researchers suggest that in a community’s overall economy, the effects of an Amazon warehouse coming to town may not be all they’re cracked up to be. The overall number of people employed in a county after Amazon arrives is relatively flat when compared to before the company opened a center.
In the report, the EPI economists offer two possible explanations: “That the jobs created in the warehouse and storage sector are offset by job losses in other industries, or that the employment growth generated by Amazon is too small to meaningfully detect in the data.”
The report asserts that instead of providing millions in tax rebates and other economic incentives to lure Amazon in hopes of stimulating job growth across a local economy, “state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development.”
“These (economic incentive) strategies sacrifice future tax revenue and hope there is some kind of payoff,” Zipperer said. “They’re taking revenue that we would have had to spend on something else and instead spend it on Amazon in the hope that it will result in more jobs for everybody.
“What we’re finding is, that sacrifice is a very risky bet,” he added. “A lot of the things we know communities want their governments to spend that money on that generate employment – things like education and infrastructure – tend to have much higher job multipliers.”
In Fresno, however, where the incentives are the result of a job-growth initiative championed by then-Fresno City Councilman – and now mayor – Lee Brand, the EPI study is a subject of scorn and skepticism.
“It’s hard to take any study seriously that only does enough research to get the answers they want, and clearly EPI wanted to try to disprove Amazon’s economic benefit to the communities where they locate,” Brand said. “Any Fresno high school student can tell you that the addition of 2,500 jobs starting at $15 an hour with benefits at the full operation of the Amazon fulfillment center will increase employment and reduce poverty in the area.”
“We doubly benefit because all the tax incentives for Amazon and Ulta are conditioned on those job promises and we expect nothing but a positive impact from the presence of these new e-commerce centers in our city,” Brand said.
WHAT IS FRESNO PUTTING UP?
Brand’s Economic Expansion Act, approved by the City Council two years ago, calls for Fresno to rebate 90 percent of the city’s share of property taxes that Amazon’s subsidiary, Golden State FC, would pay on the increased value of the site for the next 30 years, as well as a rebate of the city’s entire share of sales and use taxes paid by the company on purchases it makes in Fresno.
To qualify for those incentives, however, Golden State FC is required to create at least 750 new full-time jobs at the center. The incentives are hard-capped at $30 million, depending on the number of jobs created by the company.
An economic analysis prepared for the city’s Economic Development Department estimated that the actual property tax rebates would amount to about $15.3 million over 30 years, plus about $750,000 in sales tax rebates. That same analysis, conducted before annual increases to California’s minimum wage kicked in, anticipated that the potential payroll at the Amazon fulfillment center would add up to more than $2.2 billion over 30 years – money that would circulate within the community as employees spend at local businesses, buy homes, and pay sales and property taxes.
Amazon weighed in with its own rebuttal of the EPI study, insisting that its warehouses do stimulate additional jobs in communities beyond the company’s direct hiring. “In addition to the 200,000 Amazon employees in the U.S., we know … Amazon’s investments led to the creation of 200,000 additional non-Amazon jobs, ranging from construction jobs to healthcare industry positions,” the company said in a written statement. “Over the last five years, counties that have received Amazon investment have seen the unemployment rate drop by 4.8 percentage points on average, and in some areas, the rate has been lower than the state average.”
An Amazon spokeswoman said the company’s estimates are based on modeling methods used by the U.S. Bureau of Economic Analysis.
In many areas of the country, however, the five-year period cited by Amazon has been characterized by economic recovery and corresponding employment growth, seemingly making it difficult for Amazon – or anyone else – to know definitively whether all of the additional job creation claimed by Amazon are directly attributable to the company, or due to organic growth that would have happened in the local economy regardless of Amazon.
In Fresno County, overall private-sector employment grew by more than 31,000 jobs from 2012 through 2016 – an increase of about 11.2 percent before Amazon even formally had Fresno in its crosshairs. The warehouse sector, in the meantime, gained just over 200 jobs.
Online retail giant Amazon expects to employ 1,500 people at a new order-filling center that will open in the summer of 2018. Tim Sheehan TSHEEHAN@FRESNOBEE.COM
Amazon has fulfillment centers that it either operates or uses as outsourced warehouses scattered across the state. It has six in San Bernardino County alone. Prior to Amazon opening its first center there in 2012, fewer than 10,000 people worked in warehouse jobs. As of last summer, those jobs had nearly tripled to almost 30,000 – the effects of not only Amazon, but other companies opening warehouses there as the Inland Empire becomes a major logistics center serving Southern California.
Even at that pace of industry growth, warehouse employment was less than 5 percent of San Bernardino County’s overall job pool.
WHAT ABOUT THE WAGES?
According to state and federal estimates, the average weekly wages for warehouse workers in Fresno County’s pre-Amazon era climbed by 44 percent since 2000 – from $583 a week in 2000 to $842 a week last fall. Wages actually peaked at an average of $884 a week in 2015. Across all industries in Fresno County, the average wage last fall was about $804 per week.
By comparison, the city’s economic analysis of Amazon estimated an average wage of $26,000 per year for employees – or about $500 a week.
In San Bernardino County, the average weekly wage of warehouse workers has actually fallen slightly in the Amazon era, from $728 a week in 2011 to $713 a week last summer – and the loss is greater when inflation is factored in.
In the meantime, wages for workers across all industry sectors in San Bernardino County rose from an average of $730 a week to $811. In four of the six California counties in which Amazon has established fulfillment centers, the average weekly wage for employees in the warehouse sector has gone down, not up. The two exceptions were in Los Angeles County, where the company has a center in Long Beach, and Sacramento County.
With its proximity to the Bay Area over the Altamont Pass, San Joaquin County in the northern San Joaquin Valley has two Amazon centers in Tracy and one in Stockton. Before the first one opened in 2013, warehouse employment was fewer than 5,000 jobs and the average wage was about $915 a week. Last summer, employment had grown to more than 12,600 workers. But the average wage had declined by almost $90 a week, to about $826.
Shelley Burcham, economic development manager with the city of Tracy, said no economic incentives were offered to Amazon to build there, but the city did expedite its planning and permitting processes for the company.
Burcham said that when the first center opened, it started with about 1,500 workers, and now Amazon has about 3,500 in one of the centers. “It’s not just entry-level jobs,” she said. “They work with folks to train them and encourage them to move up the ladder in the company.”
During peak seasons, the number of employees ramps up to about 7,000. “People in the industry talk about this ‘Amazon effect,’ that in the peak seasons when they need more workers, sometimes workers in those industries may jump from one job or another for a dollar or two more an hour,” she said. “But we’ve not heard that from employees here.”
But while the EPI study suggested that Amazon generally doesn’t provide a net boost to jobs across a county’s overall economy, Burcham said the fulfillment centers in Tracy have created a net gain in jobs.
Economist Jeffrey Michael, director of the Center for Business and Policy Research at Stockton’s University of the Pacific, said he generally agrees with EPI’s policy conclusion about communities throwing tax incentives at Amazon. “There isn’t good justification for public subsidies for Amazon fulfillment centers,” he said. “They are going to locate in places that allow them to best serve California population centers regardless of these subsidies.”
In San Joaquin and Stanislaus counties, “I have no doubt that Amazon fulfillment centers are net creators of jobs,” Michael added. “Amazon fulfillment centers are displacing some traditional retail jobs, but it is also true that they are creating new economic activity – basically as acting as an errand-running/shopping service for households.”
Michael noted that increases in warehousing employment in a community also create more transportation jobs and non-payroll jobs for independent contractors..
Zipperer acknowledged that the EPI study’s conclusions are averaged based on counties nationwide, and that some communities might have experienced overall job growth in the wake of Amazon.
“What we did is not only look at before and after an Amazon warehouse opens, but we try to compare it to before and after in similar places where Amazon didn’t open,” Zipperer said. “We try to form a good comparison between a county that looks (economically) like that county, but doesn’t have Amazon.”
“I’m pretty agnostic on how much of an effect that economic incentive packages have” in job creation, he added. “Research shows that they’re pretty much a mixed bag. … I think I would have been surprised had we found a result that showed either a very strong (positive) or negative effect.”
Tim Sheehan: 559-441-6319, @TimSheehanNews
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Workers at an Amazon fulfillment center sort packages for shipping to customers in this AP file photo. Amazon’s 855,000-square-foot warehouse in south Fresno will initially employ 1,500 people when it opens later this year. The company said the center will handle orders for smaller-sized items such as books, electronic devices and children’s toys. ASSOCIATED PRESS
https://www.theatlantic.com/business/archive/2018/02/amazon-warehouses-poor-cities/552020/
What Amazon Does to Poor Cities
The debate over Amazon’s HQ2 obscures the company’s rapid expansion of warehouses in low-income areas.
Kevork Djansezian / Getty
- Story by Alana Semuels FEBRUARY 1, 2018
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SAN BERNARDINO, Calif.—This community was still reeling from the recession in 2012 when it got a piece of what seemed like good news. Amazon, the global internet retailer, was opening a massive 950,000-square-foot distribution center, one of its first in California, and hiring more than 1,000 people here.“This opportunity is a rare and wonderful thing,” San Bernardino Mayor Pat Morris told a local newspaper at the time.
In the months and years that followed, Amazon dramatically expanded its footprint in and around San Bernardino, a city 60 miles east of Los Angeles. The company now employs more than 15,000 full-time workers in eight fulfillment centers (where goods are stored and then packed for shipment) and one sortation center (where packages are organized by delivery area) in the Inland Empire, the desert region bordering Los Angeles that encompasses Riverside and San Bernardino counties. This expansion provided a lifeline to the struggling region, creating jobs and contributing tax revenue to an area sorely in need of both. In San Bernardino, the unemployment rate that was as high as 15 percent in 2012 is now 5 percent.
Yet in many ways, Amazon has not been a “rare and wonderful” opportunity for San Bernardino. Workers say the warehouse jobs are grueling and high stress, and that few people are able to stay in them long enough to reap the offered benefits, many of which don’t become available until people have been with the company a year or more. Some of the jobs Amazon creates are seasonal or temporary, thrusting workers into a precarious situation in which they don’t know how many hours they’ll work a week or what their schedule will be. Though the company does pay more than the minimum wage, and offers benefits such as tuition reimbursement, health care, and stock options, the nature of the work obviates many of those benefits, workers say. “It’s a step back from where we were,” says Pat Morris, now the former mayor, about the jobs that Amazon offers. “But it’s a lot better than where we would otherwise be,” he says.
San Bernardino is just one of the many communities across the country grappling with the same question: Is any new job a good job? These places, many located on the outskirts of major cities, have lost retail and manufacturing jobs and, in many cases, are still recovering from the recession and desperate to attract economic activity. This often means battling each other to lure companies like Amazon, which is rapidly expanding its distribution centers across the country. But as the experience of San Bernardino shows, Amazon can exacerbate the economic problems that city leaders had hoped it would solve. The share of people living in poverty in San Bernardino was at 28.1 percent in 2016, the most recent year for which census data is available, compared to 23.4 in 2011, the year before Amazon arrived. The median household income in 2016, at $38,456, is 4 percent lower than it was in 2011. This poverty near Amazon facilities is not just an inland-California phenomenon—according to a report by the left-leaning group Policy Matters Ohio, one in 10 Amazon employees in Ohio is on food stamps.
The arrival of Amazon has been bittersweet for people like Gabriel Alvarado, 35. He started working at Amazon’s San Bernardino distribution center in 2013, making $12 an hour, hoping that the job would help him support his new wife and two stepdaughters. Amazon proved a stressful place to work, with managers chewing out employees for not moving fast enough, he told me, which was tough to put up with for meager pay. (An Amazon spokeswoman, Nina Lindsey, told me that, like most companies, Amazon has performance expectations, but that it supports people not performing with dedicated coaches to help them improve.)
Meanwhile, Gabriel watched as his 39-year-old brother Jose worked across the street, doing the same type of job at a warehouse for the grocery chain Stater Brothers. The 1,000 workers there are unionized and get full medical benefits, pensions, and retiree medical benefits. Wages start at $26 an hour, but many workers make a lot more than that because Stater Brothers operates an incentive program in which people who grab orders—doing similar tasks to workers at Amazon—are rewarded if they go faster than the average speed. Jose Alvarado is able to support a wife and four children on his Stater Brothers salary. When his son was diagnosed with a rare form of anemia, his insurance covered everything.
Though Gabriel was doing the same type of work at Amazon, he had to shell out more money for health care, and made a lot less money. “I saw my brother doing the same type of work, but moneywise, he had better credit, he could afford more, while I was barely getting by,” Gabriel told me. He has tried to get a job with Stater Brothers to no avail, and says there are few other local options but at Amazon or at companies that work for Amazon. In 2016, he used Amazon’s tuition reimbursement to get his commercial driving license, attending school on the weekends while working during the week. But the best job he could find was working for a third-party contractor, driving a truck for Amazon. “It’s either Amazon or nothing,” he told me.
The lack of other opportunities for people like Gabriel Alvarado illuminates the problem these communities face when deciding to offer tax breaks and incentives to compete for Amazon to build warehouses in their towns. If these places don’t get a new Amazon facility, they won’t instead get companies like Stater Brothers that are willing to come in and pay double or triple the minimum wage for jobs that don’t require a college education. For many places, the choice is not between Amazon or another, better employer. The choice, instead, is Amazon or nothing. “There’s this way in which Amazon’s warehouses are perceived to be a good thing for a community, but that’s only because the context in which they are being proposed and built is so devoid of better opportunities,” says Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, a nonprofit that advocates for sustainable community development. “It’s an indicator of how badly our economy is doing in terms of providing meaningful and valuable opportunities for people.”
“They make it like the Hunger Games. That’s what we actually call it.”
Morris, the former mayor of San Bernardino, told me that in 2012, Amazon seemed like a lifesaver. San Bernardino’s unemployment rate was at 15 percent, home values had fallen 57 percent since 2007, and the city, facing a $45 million budget shortfall, would file for bankruptcy in August of that year. “At the point they came in, any job is a good job,” he said. But the jobs the company is offering are indicative of how the economy has changed in San Bernardino in the past few decades. “To a certain extent, based on the history, it’s a step down for families,” he said. The jobs that used to dominate San Bernardino were unionized ones with good benefits, at the Kaiser steel mill, the Santa Fe railroad maintenance yard, and the Norton Air Force Base. Now, jobs like the ones Amazon creates pay less and aren’t unionized, and require multiple members of a household to work, often more than one job.
As Amazon continues to grow at a rapid clip, more communities are in the same position as San Bernardino—desperate to attract new jobs, even ones that pale in comparison to past opportunities, in the absence of anything else. Although efforts to recruit new distribution centers garner less national attention than the race to attract Amazon’s HQ2— its second corporate headquarters, where the company is expected to add as many as 50,000 jobs—when added up, these other facilities create a large number of jobs. Amazon now has 342 facilities, including fulfillment centers, Prime hubs, and sortation centers, in the United States, up from 18 in 2007, according to MWPVL International, a supply-chain and logistics consulting firm. Amazon employed 180,000 people in the United States in 2016, and said last year that it planned to add more than 100,000 full-time, full-benefit jobs by mid-2018. The company is a microcosm of the growing logistics industry, which is booming as more and more people order goods online. The company is growing even in places where it already has a substantial presence: Although it has eight fulfillment centers near San Bernardino, Amazon recently announced it was adding two more facilities nearby, creating 2,000 more jobs.
Amazon allows visitors to tour one of its warehouses in San Bernardino, and I went late last year to try and understand how distribution centers work. The warehouse, called ONT2 internally, is a vast complex, where clean concrete floors stretch out in all directions covering the distance of about 16 football fields. Bright yellow posts divide the different sections of the building, where people unpack shipments, load shelves, unload shelves, and pack everything from puzzles to lightbulbs into Amazon’s ubiquitous brown boxes. Conveyor belts covering several miles whir throughout the facility, moving goods among floors.
For local residents, starting work in this facility or one like it can seem like a blessing. At around $12 an hour, 40 hours a week, full-time jobs pay higher than many others in the region, and the benefits are also better than many other jobs in the industry. But workers are required to be on their feet all day, and receive scant time for bathroom breaks or lunch. They’re pressured to meet certain production goals and are penalized by getting “written up”—the first step in getting fired—for not meeting them, they say. They’re also allowed very little time off, and written up if they go over a certain amount of time off, these workers say, even if they get sick. This is according to in-depth conversations I’ve had with 10 current and former Amazon employees. These employees work in the San Bernardino facility, as well as Amazon distribution and sortation centers in Moreno Valley, California; Jeffersonville, Indiana; and Kent, Washington. Amazon has been sued in the past by part-time, contract workers. All but one of the people I interviewed were full-time employees, not contract workers, and they didn’t think working directly for Amazon was so great, either. As one worker, John Burgett, a current employee in Indiana who has detailed his experiences on the blog Amazon Emancipatory, told me, “It’s very physically and emotionally grueling. They’re walking a fine line in the community—everybody knows someone who’s worked there, and no one says it’s a good place to work.”
Many people who start out at Amazon warehouses begin as “pickers.” These are the people who walk through the enormous aisles in the Amazon warehouses where goods are stored, and, reading information from a handheld scanner, put items that have been ordered online into yellow bins, called totes. The scanner gives pickers an amount of time to “pick” an item based on where it is stored, and blue bars on the scanner count down the amount of time they have left to complete the task. Slightly more desirable than picking is stowing. “Stowers” take bins of items that have been shipped to Amazon and store them on the shelves for the pickers to grab when ordered. Other employees work as “packers.” They take items from yellow totes, scan them, grab a box and packing tape, the size of which is recommended by a computer, and pack individual customers’ orders, putting the finished boxes on a fast-moving conveyor belt.
The workers I talked to said that the problem with these jobs is not just that they’re physical or monotonous—which they are—but, rather, that Amazon puts an incredible amount of pressure on people to continue to work faster and faster. Many of the employees mentioned the fear of being “written up” and losing their jobs, which will thrust them into other low-paid jobs with fewer benefits. If pickers don’t grab an item in a certain amount of time, they get written up. If they take too long a bathroom break, they get written up. If they’re not walking as fast or performing as well as the majority of employees, they get written up. “You constantly feel like, ‘I’m not doing enough, I need to do a little more,’ and that’s their business model,” Burgett said. “The constant trying to chase your rate, trying to stay ahead of being written up—it affects you psychologically.” This pressure is not limited to warehouse workers; a 2015 New York Times story detailed a corporate culture where white-collar workers were pushed psychologically as well.
Another man, a former carpenter who works in the stow department in Moreno Valley and didn’t want his name used because he still works for Amazon, said that without warning, Amazon changed the amount of time workers had to stow an item from six minutes to four minutes and 12 seconds. “They make it like the Hunger Games,” he said. “That’s what we actually call it.” Workers are competing against an average time, and so they are, in essence, competing against each other. Those who can’t keep up are written up and then fired, he said.
Another Moreno Valley employee, who has been a picker at Amazon for two and a half years, says the company constantly sends messages to workers’ scanners telling them to work faster. They’ll run competitions such as a “Power Hour” in which workers are encouraged to work as hard as they can for a prize. One recent prize was a cookie. Another time, the winner of Power Hour would be entered into a raffle to win a gift card. “I don’t want a cookie or a gift card. I’ll take it, but I’d rather a living wage. Or not being timed when you’re sitting on the toilet,” said the man, who lives with his father because he and his girlfriend can’t afford their own place, and didn’t want his name used because he hopes to get promoted at Amazon.
An Amazon worker stows goods in the San Bernardino facility. (Alana Semuels / The Atlantic)
One woman I talked to in Moreno Valley, who didn’t want her name used because she is in the process of suing Amazon, said that working at the company strained her heart and caused psychological problems that she’s still dealing with. She was written up for not working enough hours after she went to the emergency room because of her heart problem, she says. On the other hand, she says, she made enough money at Amazon to buy her first new car. “That’s what makes people not want to quit—the pay,” she said. “People say, ‘You can treat me any type of way, since this is the best money we can get out here in Moreno Valley.’”
I did talk to one Amazon worker who started as a picker and made his way up to management. David Koneck, now 34 years old, was one of the first workers hired by Amazon when the San Bernardino facility first opened. At the time, Koneck, who graduated from high school but not from college, was running a company that administered diagnostic tests for high-school students. That job was unstable in the aftermath of recession-era budget cuts, so when Amazon announced it was hiring, he applied right away, attracted by the benefits, such as health insurance and a program that allowed him and his wife to share paid leave when they had their first child. He started by working as a picker on the night shift, and within nine months was promoted. Both were good jobs, he told me—he and his wife bought their first house, in Hesperia, California, while he was an hourly associate. (Public records show it cost $182,500.) The company gave him lots of opportunities to move up and receive training in different areas, he said. After two years with the company, he was promoted again, and moved into management. Today, he’s an operations manager. “I wanted to come in here and achieve as much as I could, and nothing has stood in my way,” he told me. “It’s been nothing but positive support for me.” He’s now trying to help other hourly associates move up the Amazon ladder.
Most communities aren’t in a position to negotiate with Amazon to ensure that workers will be treated well.
Amazon says that many employees have experiences similar to Koneck’s. At one Kentucky facility, according to Lindsey, the Amazon spokeswoman, more than 100 employees have been with Amazon for more than 15 years. But the workers I talked to say few employees make it more than a year. Their theory was that Amazon begins to cull employees when they are reaching the two-year mark, at which point their stock options would vest. (Lindsey says it is “strongly” in Amazon’s interest to retain employees to provide them with opportunities to develop, because the company is growing so quickly.) The former carpenter says employees call workers approaching the two-year mark “the walking dead” because they are working hard not to get fired, but many of them will be. “Very few Tier One employees ever make it to two years of continuous service,” Burgett writes. Anecdotally, he estimates that about 5 percent of new hires receive vested stock shares. “There are only two options,” Gabriel Alvarado told me. “You get tired—tired of trying to make rate every week, tired of the write-ups—or you get fired because you didn’t make quota or run out of unpaid time off.” Associates receive 10 hours of paid time off when they begin, Lindsey told me, which is essentially one day off. Most associates work four 10-hour shifts a week and only accrue a small amount of paid time off every pay period, workers said, which means it can take months to get another day off.
“When we’re thinking about Amazon coming in and creating a huge number of jobs, what’s the quality of jobs? We should also be really examining that,” says Beth Gutelius, a researcher at the Great Cities Institute at University of Illinois at Chicago who wrote her dissertation about the warehouse industry in the Chicago suburbs. “Sometimes these more exurban areas are really desperate for jobs, and you can’t deny that, but places do have to really think hard about it.”
Current officials in San Bernardino maintain that Amazon’s presence has been a positive one. The new mayor, R. Carey Davis, told me that the city has seen a number of benefits since Amazon opened its first warehouse. The company has contributed hundreds of thousands of dollars to local schools and charities, for example. “The city of San Bernardino has found that Amazon has been a very good neighbor and private partner for the city of San Bernardino,” he said. Amazon’s presence has signaled to other cities that San Bernardino is a good place to locate, with qualified workers, and an efficient city government, says Mike Burrows, the executive director of the Inland Valley Development Agency and the San Bernardino International Airport Authority. It’s helped create jobs on the land once used by the Norton Air Force Base until it closed two decades ago. Amazon recently surpassed Stater Brothers, which had been the largest employer on the land formerly occupied by the air force base with 2,000 employees, according to the Inland Valley Development Agency. Now, Amazon has 4,900 employees in San Bernardino.
The arrival of Amazon may have been good for other businesses in the Inland Empire, but its effects on individual residents seem less positive. While warehousing and storage was one of the fastest-growing sectors in the Inland Empire over the past decade, adding 35,800 jobs, the area also has the lowest annual private-sector average wage out of the country’s 50 largest metropolitan areas. A report from the Institute for Local Self-Reliance found that Amazon paid 11 percent less than the average warehouse in the Inland Empire; a similar analysis by The Economist found that workers earn about 10 percent less in areas where Amazon operates than similar workers employed elsewhere.
Kevork Djansezian / Getty
Amazon has the potential to be the shining knight that city officials hope it will be when it opens in their cities. Amazon could become more like Stater Brothers—paying workers more, incentivizing efficiency rather than punishing workers who fall behind, supporting efforts to form a union. It could treat workers like Jose Alvarado is treated. After 11 years at Stater Brothers, Alvarado, who also plays on the company softball team, has no plans to leave. “I’m able to support my whole family and live a really good life,” he told me, a stark contrast to his brother.
But that would require a wholesale change in Amazon’s business practices, which would probably not sit well with consumers who have become accustomed to free shipping and cheap goods. (Amazon is losing money on its e-commerce operations, which are subsidized by other parts of its business.) “More opportunity for folks with less education is generally a good thing,” says Gutelius, the Chicago researcher. “It would be a much better thing if the job quality were better, if there were some real kind of job ladder over time.”
Efforts to get Amazon to change its labor practices have been unsuccessful thus far. Randy Korgan, the business representative and director of the Teamsters Local 63, which represents the Stater Brothers employees, told me that his office frequently gets calls from Amazon employees wanting to organize. But organizing is difficult because there’s so much turnover at Amazon facilities and because people fear losing their jobs if they speak up. Burgett, the Indiana Amazon worker, repeatedly tried to organize his facility, he told me. The turnover was so high that it was difficult to get people to commit to a union campaign. The temps at Amazon are too focused on getting a full-time job to join a union, he said, and the full-time employees don’t stick around long enough to join. He worked with both the local SEIU and then the Teamsters to start an organizing drive, but could never get any traction. He told me that whenever Amazon hears rumors of a union drive, the company calls a special “all hands” meeting to explain why a union wouldn’t be good for the facility. (Lindsey said that Amazon has an open-door policy that encourages associates to bring concerns directly to the management team. “We firmly believe this direct connection is the most effective way to understand and respond to the needs of our workforce,” she wrote, in an email.)
Gabriel Alvarado, too, said he talked with some friends about starting a union in San Bernardino, after contrasting his situation with that of his brother. Amazon soon called a meeting and asked workers what they wanted to make their jobs better, he says, but few of the workers’ suggestions were carried out. No Amazon warehouse has been organized thus far. In 2014, workers at an Amazon warehouse in Middletown, Delaware, voted 21–6 against joining the International Association of Machinists and Aerospace Workers. Burgett thinks these outcomes are the result of, what he calls in his blog, Amazon’s “well-oiled and well-financed anti-union machinery.”
There are many other reasons communities might pause before welcoming an Amazon warehouse. But many still welcome the company, believing that it’s better to have some jobs in the new Amazon economy than no jobs at all. Fresno, another economically depressed city in California, offered Amazon $15.3 million in property tax rebates and $750,000 in sales tax rebates to locate a facility there, an offer Amazon was happy to take up. Amazon won $23 million in local tax incentives over two years to open distribution centers in three Texas cities. The company has received $48 million in state, county, and city financial incentives to build facilities in Florida.
This race to the bottom may be preventing cities from holding Amazon—or other logistics companies—accountable. After all, most communities aren’t in a position to negotiate with Amazon to ensure that workers will be treated well. Last year, I interviewed Michael Tubbs, the mayor of Stockton, California, shortly after Amazon announced in August that it was locating a distribution center and 1,000 jobs in the inland city in Northern California. Tubbs is young and progressive, but still told me that Stockton had little power over Amazon. “I don’t think the city of Stockton currently, with an unemployment rate double the state average, is in a position to make a ton of demands on companies who can go anywhere,” he told me. San Bernardino had tried to negotiate that it would get a portion of the sales tax of all the goods that came through its distribution center, but ultimately spent money to build roads and provide police and fire protection to the warehouse and does not get any sales-tax revenues from the warehouse, Morris said. (The state of California, not Amazon, quashed the deal.)
As the race for Amazon’s HQ2 shows, other cities competing for Amazon jobs offer up all sorts of concessions, and worry that in passing any wage and hour mandates, they’ll lose the jobs. “I think often, local policymakers are really eager to get companies in, they want employment, but they don’t necessarily give a lot of stipulations about how many of these workers are temps, how many are paid a living wage,” Ellen Reese, chair of the labor-studies program at the University of California, Riverside, told me.
It’s true that cities desperate for jobs may find it difficult to attract companies if they pass minimum-wage mandates or other labor laws. But the alternative, it seems, is jobs that don’t create a middle-class lifestyle for residents, which in turn affects local spending, the housing market, and the tax base, and leads to a poor standard of living. Many cities, San Bernardino included, are calculating that any job creation is good news. They may soon find that with Amazon, that calculation does not apply.
ALANA SEMUELS is a former staff writer at The Atlantic.
Journalist Investigates Amazon Warehouse Life And The Pitfalls Of ‘One-Click America’
Dave Davies
Amazon tractor trailers line up outside the Amazon Fulfillment Center in Staten Island, N.Y., in April 2020. The pandemic has been good for the company’s bottom line.
Mark Lennihan / AP
Ballots are being counted this week in what could be a watershed election in Bessemer, Ala.
The vote will determine whether nearly 6,000 employees of the Amazon warehouse there will be represented by a union, something the company has forcefully resisted in its workplaces across the country.
Journalist Alec MacGillis says the stakes of the vote are “enormous.”
“This is really the first time that any union has gotten this far in trying to organize an Amazon warehouse,” he says. “And if you step back a little bit, this really could help decide the question of what work is going to look like, what life is going to look like, for the working class in America in years to come.”
MacGillis writes about Amazon’s growing impact on American life in his new book, Fulfillment: Winning and Losing in One-Click America. He notes that the pandemic has been very good for the company’s bottom line: Amazon’s sales jumped 40% last year, and company founder Jeff Bezos, whose net worth is estimated at around $180 billion, is now the richest person on the planet.
“The fact is that the company grew so much over the past year because Americans, in much greater numbers than before, really embraced the sort of ‘one-click’ approach to our daily life,” MacGillis says.
But not everyone has benefited from Amazon’s success. While the company has boosted employment and economic opportunities in some locations, other areas have become stagnant. MacGillis notes that communities that are home to Amazon warehouses don’t always come out ahead.
“Working at an Amazon warehouse has really become the mass-labor option for Americans,” MacGillis says. But he adds, “The Amazon job also does pay quite a bit less than the manufacturing jobs of yore … despite the fact that the jobs in these warehouses are often nearly as strenuous or physically taxing as those manufacturing jobs were.”
Amazon is so ubiquitous that it can be hard to avoid its reach. MacGillis admits that he’s not an “absolutist” when it comes to one-click shopping.
“I use Amazon when I have to,” he says. “This is not about a cold-turkey approach. It’s just about thinking about our purchases, thinking about the way we live and really thinking about what lies behind that one click.”
Interview Highlights
On Amazon’s effort to fight off the union drive in Bessemer
They may have been somewhat more constrained because there was so much scrutiny on this particular election. They know that there are a lot of eyes on them, but they’ve still been quite aggressive in trying to head off the union. Just constant messages, anti-union messages, coming to the workers. They’ve, as usual, hired law firms that specialize in fending off unions. There’s just been a very strong sense of just how displeased they would be if workers were to vote to organize, to the point where there’s some concern that Amazon might actually shut down this entire warehouse if there were, in fact, a vote to organize. So they’ve been very, very aggressive while being somewhat more aware of just the fact that the eyes of the country are on them in this case.
On what it’s like to work in an Amazon warehouse
It’s not only demanding, but it’s incredibly repetitive. I think a lot of us kind of hoped that as work got more automated in warehouses like this, and you got more and more robots into there, that it would kind of free up people to do more autonomous, fulfilling kind of work. In fact, the opposite has happened. Bringing the robots in has actually made the work more repetitive and more essentially robotic. … And it’s also just so isolating. The isolating quality of the work has gotten even worse during the pandemic, because there’s been an effort to separate people out more on the floor so they don’t give each other the virus. So work that used to be done maybe by two or three people in a given part of the floor is now done by just one person, which not only makes the jobs tougher, but also makes them more isolating.
The loss of community in these jobs is one of the big parts of what’s changed, the fact that you used to know all the people you worked with, you were maybe related to some of them. After you left work at the steel mill on Sparrows Point [in Baltimore], you would often, of course, roll out of your shift and go to the bar, go to the diner, whatever it might be with the people you worked with. Now you go in, you do your shift, your 10-hour shift — it’s very grueling, repetitive, demanding — and then you get the heck out of there. A former millworker who lives nearby says … that they’ve had full speed bumps [put] in because people are just desperate to get out of there.
On the effects of Amazon’s tax breaks in the communities it operates in
Typically, it’s some form of a tax subsidy, where the company will not have to pay all the taxes that would normally be due both on the property itself (the warehouse [or] the data center) or payroll taxes on the workers that will be employed at them. So, essentially, just a great reduction in its tax bill in the community where it’s setting up shop. And the effect of this is, of course, to erode the local tax base and to greatly reduce the amount of money that’s coming into local coffers, to support local services, to support the roads and the police and fire and schools.
One reason this is a special problem is that Amazon, when it comes into a community, of course, brings much greater demands for public services. There’s all the wear and tear on the roads that come with the incredible increased traffic of cars and trucks [and] delivery trucks. There are frequent calls for emergency assistance at the warehouses. The Amazon warehouses tend to have their own in-house medical teams that are called AmCare, but they’re not always on duty or they can’t sometimes handle the severity of a given case, including some of the fatal accidents that I wrote about in the book. And so you have police and fire and EMS in the local community having to respond to the warehouses for lots of calls when Amazon is itself not supporting those services through the tax dollars that it has essentially been able to avoid paying.
On how Amazon uses its data to knock out competition
The company is able to collect so much data about what kind of products are doing well and then in many cases … it has then managed to come up with products of its own where it’s actually selling products under its own labels. So it’ll go out and get some manufacturer to make a given product that strongly resembles the one that was doing well on the site from some other seller and then sell it under one of its own private-label names. Amazon says this is hardly any different than retail companies that for years now have offered their goods under their own labels. You go into the grocery store, and you see all manner of goods that that grocery store or other retailers [are] selling under their own label. The difference is the data that Amazon has been able to collect and the way it’s been able to use the data it’s collecting on sales on the site to inform its own decisions to go after a particular product. And there’s just been all sorts of examples of it being able to essentially just knock out a product that was doing well on the site and then sell it under its own name.
On Bezos’ ownership of The Washington Post
The Washington Post has benefited greatly from the investment by Bezos, and I’m very happy for my former colleagues there who simply have more resources now to do their jobs. There is a fundamental awkwardness that comes with one of the richest men in the world, the founder of this enormous, powerful company, owning the newspaper. The newspaper has done quite a good job of covering various aspects of Amazon. They have a very good reporter based in Seattle who covers the company. They occasionally do tough stories about various aspects of the company, whether it’s the counterfeit goods on the site or other things.
What the newspaper has been in an awkward position to cover is the whole scale of the takeover of Washington by Amazon. That is a huge story that has not yet really been covered by the paper. One can’t help but think that if a different company had acquired as much influence and scale and presence in Washington, that the local newspaper would have been writing about this in a big way. That you haven’t really seen yet in the Post. All of my former colleagues there assure me that there’s no calls coming from Seattle telling them not to do this or that story, and I believe them. It’s a more existential problem than that. It’s really tricky for the paper to tell in a big way what is happening with the Amazon takeover of Washington.
Sam Briger and Thea Chaloner produced and edited the audio of this interview. Bridget Bentz, Molly Seavy-Nesper and Meghan Sullivan adapted it for the Web.
Copyright 2021 Fresh Air. To see more, visit Fresh Air.
State and Local Officials in Ohio Provided Millions of Dollars in Subsidies to Amazon for Jobs That Would Have Come Here Anyway
By Lee Chilcote
The ebullient politicians praised Amazon for creating more than 2,000 $15-per-hour jobs at the former Randall Park Mall, a moribund site that sat crumbling from 2009 to 2014 before it was demolished and then developed into an Amazon warehouse last year. They also praised Amazon for opening two more warehouses in Northeast Ohio, one in Euclid on the site of the former Euclid Square Mall that will employ 1,000-plus people, and one in Akron on the former Rolling Acres Mall site that will employ 1,500-plus people.
Congresswoman Marcia Fudge’s comments summed up the mood of the assembled crowd, which later toured the massive warehouse and got a firsthand look at Amazon’s robotics technology.
“We have to ask ourselves, what is the cost to not have 2,200 jobs? To have an empty mall site?” she asked. “Amazon is making an investment in our community, and it’s a pleasure to be doing good things. I just came from Washington, so it’s refreshing to be here with you all.”
Those job numbers are touted as the defense and explanation for the extravagant public subsidies the state and local cities have handed out to the company owned by the richest man in the world. Literally, as Fudge said, “What is the cost to not [have them]?”
This year, the Ohio Development Services Agency awarded Amazon state tax credits worth $7.8 million over 10 years for the North Randall facility, $3.9 million over 10 years for the Euclid facility, and $7.1 million over 10 years for the planned Akron facility. Amazon also received $8.5 million in grants from Jobs Ohio. Finally, the company received 75-percent local property tax abatement in North Randall, and 15-year, 100-percent tax abatement in Euclid.
The answer to Fudge’s question, many critics argue, is that there would be no cost, and no question, because Amazon would have located the jobs here anyway, without subsidies, in order to fulfill its objective of offering one-day shipping to Prime customers.
“The thing worth focusing on here is: Why is Amazon receiving tax breaks at all?” says Zach Schiller, research director at Policy Matters Ohio. “If you want to provide next day delivery or maybe even sooner than that, you can’t do that from warehouses located hours and hours away. For Ohio to provide a penny of tax breaks for them is a penny ill-spent, because these facilities have to be located in Ohio … the state of Ohio should not just be subsidizing any company that comes in and asks for a tax break. We have limited resources, an opioid crisis, and public education that is insufficiently funded, so we can’t provide for those if we give away all our money through tax breaks.”
Edward “Ned” Hill, a professor of economics at the Ohio State University who spent decades in Northeast Ohio while teaching at the Levin College of Urban Affairs at Cleveland State University, says that the tax subsidies for Amazon are questionable because it’s not clear that the jobs were ever truly at risk. “Amazon did a good job of saying, ‘If you don’t give us subsidy to put the pack and ship centers here, we’ll go somewhere else,'” he says, adding that Amazon has extracted over $1 billion in tax breaks from states across the country.
“But if you look at the centers, they’re in densely populated areas, and they would have gone there anyway,” he says. “Amazon did a superb PR job of shaking down the states, and Ohio was one of many.”
Public subsidies
Almost overnight, Amazon has become one of Ohio’s largest employers, now ranking 25th in the state with more than 11,500 employees. (The company’s ranking will only grow once the Euclid and Akron fulfillment centers are fully up and running). Given that the company pays $15 per hour (up from an average of $13.28 one year ago, and significantly above the state minimum wage of $8.55) and is investing millions of dollars into vacant properties in distressed areas, it’s not a stretch to say these jobs will help our economy. (The irony that the Seattle-based online giant played a role in the death of those malls it is now occupying is not lost on many.)
Nonetheless, the prime reason (pardon the pun) Amazon built its warehouses in Northeast Ohio was so that it could offer one-day shipping to Prime customers. Until recently, the company offered two-day Prime shipping to its customers in Ohio by sending packages from warehouses in other states. However, in April 2019, Amazon announced that it was making one-day shipping the standard for all Prime customers, and the company was expected to spend $800 billion during the second quarter to improve its warehouses and delivery infrastructure. The company is building its new fulfillment centers in Northeast Ohio as part of a nationwide push.
For its part, Amazon says it was simply taking advantage of tax incentive programs that are already being offered by the state of Ohio. Spokesperson Andre Woodson said in an emailed statement, “Incentives are taken into account when evaluating the total cost of operations, but the majority of incentives we pursue for fulfillment centers are statutory — they are available ‘as of right’ to companies that qualify, and are based on performance metrics (i.e. job creation).”
Yet, according to Schiller, “Ohio’s job creation tax credit has what’s called a ‘but for’ requirement, which means that it’s only supposed to be provided when ‘but for’ this it would go out of state. They’re required to explain what other states they’ve been trying to get help from or they might go to, because the state of Ohio should not just be subsidizing any company that comes in and asks for a tax break.”
Matt Englehart, a spokesperson for Jobs Ohio, disputes the notion that the Amazon jobs were not competitive, saying that the tax incentives were necessary in order to attract them. “We needed to remain competitive with other states,” he says. “We’re bringing jobs to communities where they’re needed.” However, Englehart did not address Schiller’s criticism that Amazon would have located here anyway, because it needed to be in Ohio to offer one-day Prime shipping.
According to Hill, the relationship between the state and Amazon goes back to the Kasich administration, which gave the company a massive $77 million tax break for locating its data centers in central Ohio and creating about 1,000 jobs. While the data center jobs could have gone elsewhere, Hill says that Amazon’s “preexisting relationship” with the state helped them win even more incentives. “In effect, they’re providing subsidies to Amazon which are giving them an advantage over retail jobs, which is blatantly against free market principles,” he says.
As for local tax abatement, Hill also debates whether that’s justified. Amazon selected the malls for their square footage and proximity to population centers and highways, which make them unique sites that are hard to replicate. Yet the cities of Euclid and North Randall wanted Amazon badly. “It’s traditional footloose economic development politics at work,” Hill says. “The cities are dying to see something happen on these sites — not only is it job creation and a nice ribbon cutting for the mayor, but they can get rid of a piece of albatross real estate. They don’t know if the company is lying about going somewhere else or not, but they’d rather not take the chance.”
North Randall mayor Dave Smith did not return a phone call seeking comment. Jonathan Holody, director of planning and development for the city of Euclid, said in an email that Amazon took advantage of the city’s longstanding tax abatement policy: “The new facility is located in an existing CRA (Community Reinvestment Act) area that provides 100% abatement on new property taxes for 15 years for new construction, so Amazon received that benefit.”
Holody also says while 15-year, 100-percent tax abatement may seem like a lot, Amazon workers will also pay income taxes that are shared by the city and the schools. “Right off the bat, the project eliminated a major blight in our community,” he says. “It was a very visible sign of reinvestment in the community by Amazon. In addition, the direct benefit is the income taxes that the city and schools receive from Amazon. It’s a huge boost to local governments.”
He adds that Amazon is attracting new development, citing the fact that this eastside suburb is experiencing the highest levels of commercial permit activity in recent years. “It helps raise attention and put our city on the radar for other people looking for a place to locate their businesses,” he says. “Amazon’s business is logistics — for them to choose Euclid reinforces what we’re saying, that it’s a great location, it’s centrally located, with proximity to regional workforce and great access to region’s freeway infrastructure and public transportation.”
Although Euclid’s tax abatement policy has been in place for decades, Holody believes it may be time to give it another look. “With improvements in the industrial corridor, with the changing market and increased interest, it might make sense for Euclid to look at whether or not abatement is appropriate, or still needed to continue to induce development,” he says. “But other cities are being aggressive with incentives, and it’s also possible that abatement is still necessary.”
Amazon touts its local school partnerships — at the PR event, the company presented a $20,000 check to the Warrensville Heights schools for STEM education — yet commercial tax abatement can cost school districts much-needed revenue. Euclid Schools are asking voters to approve an 8.7 mill, 10-year emergency operating levy on the Nov. 5 ballot, an expansive levy that follows sweeping cuts that were made after a similar levy campaign failed last year.
According to the schools’ website, “As a result of the property tax abatement [for the Amazon fulfillment center], the district will not receive approximately $1,265,000 in property taxes annually for the next 15 years.” However, Euclid is one of the few cities in Northeast Ohio that shares income tax revenue with its schools, and the district will receive about $435,000 per year as a result.
Both the Euclid and Warrensville Heights schools have struggled on state report cards for many years, though Warrensville saw improvements on the most recent state report card. Euclid earned a D on the report card, with a performance index of 63.856, while the Warrensville Heights schools raised their performance from an F to a C with a performance index of 67.871.
Good jobs
In response to nationwide public pressure, Amazon has taken steps toward creating good jobs that lift its workers out of poverty and offer them opportunities for advancement. Last year, the company raised wages for warehouse workers to $15 an hour, or $31,200 per year for full-time workers. This was due in part to the Fight for $15, a political movement advocating for the federal minimum wage to be raised to $15 per hour. Previously, the average worker earned $13.68 per hour or $28,454 per year. Amazon also says that 90 percent of its warehouse workers are full-time employees who receive health care, 20-week paid parental leave, and pre-payment of tuition for courses in high-demand fields.
Yet critics say that Amazon can and should do more to create high-quality jobs that allow its workers to support themselves and their families. Schiller points to a 2017 Policy Matters report showing that of 6,000 Amazon workers in Ohio, at least 1,430 were getting assistance under the Supplemental Nutrition Assistance Program (SNAP), according to the Ohio Department of Job and Family Services (unfortunately, more recent data is not available). Although this was before the wage hike, Schiller says that the number receiving food aid is still likely unacceptably high.
“As much as it’s a positive thing that they’ve increased their minimum to $15 per hour, for that to become a sort of paragon of what the future of employment is, that is for me a pretty forbidding and negative development,” he says. “While these are better than some jobs, I still would not consider them good jobs, and that’s what’s wrong with what they’re saying.”
“For me, it’s an unacceptable state of affairs when the richest man in the world is paying levels that are more than what you need to apply for food assistance, but not by a whole lot,” he adds.
- For its part, Amazon says that previously reported figures on SNAP eligibility can be misleading because they include people who only worked for Amazon for a short period of time or chose to work part-time. “SNAP eligibility is mostly determined by household size and not hourly wage,” said Woodson. “We encourage anyone to compare our median pay and benefits to other retailers and major employers. All Amazon employees — full-time, part-time, temporary and seasonal — effective Nov. 1, 2018, receive a $15 per hour minimum wage. Specifically, hourly associates working in our North Randall fulfillment center make between $16.50 to $17.95 an hour — plus opportunities for over-time, which pays time-and-a-half and other monetary benefits. This compensation is in addition to our benefits package which includes comprehensive health, vision and dental insurance, a 401(k) with a 50-percent match, generous parental leave, and training for in-demand jobs through our Career Choice program for all full-time employees working in fulfillment centers across the U.S.”
“We have hundreds of full-time roles available; however, some prefer part-time for the flexibility or other personal reasons,” he added.
In recent years, dozens of news stories in national publications like the New York Times, Newsweek and Time Magazine have reported on the alarming working conditions at Amazon warehouses. These stories have cited British workers urinating in trash cans because they didn’t have time for bathroom breaks, workers in Stoughton, Massachusetts forced to work on Thanksgiving, and a Columbus worker who had a heart attack and did not receive medical attention for 20 minutes. He died, and Amazon later claimed it was a “personal medical issue.”
Some news reports have also questioned the high number of EMS calls at Amazon facilities. In 2017, a reporter for Bloomberg who examined 911 calls at a facility in Licking County east of Columbus found that EMS workers were making at least once-daily runs to the Amazon facility in Etna, about 3.1 miles away, and that their resources were “under strain” as a result.
In March 2019, a Daily Beast article, “Colony of Hell: 911 Calls from Inside Amazon Warehouses,” reported on an apparent rash of suicide attempts at 46 Amazon warehouses in 17 states: “Amazon, founded by the now-richest man in the world, has long faced criticism about working conditions at its warehouses: the high-pressure pace, the stultifying boredom, the timed bathroom breaks, and the digital surveillance that monitors performance … The 911 calls and police reports collected through open-record requests are not evidence that Amazon staffers experience suicidal episodes more often than other American workers, in or out of a warehouse — but they do offer a visceral, real-time glimpse of employees on the edge.”
A log of 911 calls received from the North Randall police department after Policy Matters placed a public records request reveals that there were 233 EMS requests at the North Randall facility between Sept. 8, 2018, and July 30, 2019. That amounts to more than two every three days in the first 11 months of Amazon’s operations. The calls were for medical issues including chest pain, shortness of breath, dizziness, foot and hand injuries, and high blood pressure. There were also a number of seizures, heart attacks and strokes. Additionally, during this period, there were 10 suicide attempts. While nothing conclusive can be drawn from this data, it provides a glimpse of the sometimes harsh and harrowing reality of working in an Amazon warehouse.
Woodson didn’t respond specifically to questions about the high volume of EMS calls, but said the company is committed to safety: “The physical and mental well-being of our associates is our top priority, and we are proud of both our efforts and overall success in this area. We provide comprehensive medical care starting on day one, 24-hour-a-day free and confidential services, and various leave accommodation options covering both mental and physical health concerns.”
Woodson also said that Amazon invests heavily in safety training, inspections and ergonomic assessments, and that associates are encouraged to report safety concerns and suggestions. Further, he addressed the concerns about working conditions by saying that Amazon’s policy is that employees don’t work more than 3.5 hours without a designated break off of the floor. The standard shift for fulfillment center employees is four days on, three days off. The shifts are 10-hour shifts with either two thirty-minute breaks, or two 15-minute breaks and a third 30-minute break. Employees are able to take short, paid breaks any time throughout their shift. The North Randall fulfillment center takes two 30-minute breaks per shift.
Amazon’s warehouses around the country have taken heat for their safety issues. A recent report from the New York Committee for Occupational Safety and Health (NYCOSH) found that the injury rate at the 2,000-worker Staten Island warehouse is nearly three times the national average for warehouse workers. The Columbus incident in which a worker did not receive medical attention for 20 minutes after suffering a heart attack was among a series of accidents and fatalities that have led to Amazon’s inclusion on the National Council for Occupational Safety and Health’s 2019 Dirty Dozen list of the most dangerous employers in the United States.
Bright spots
One upside to Amazon’s growth in Northeast Ohio is that wages may go up in the distribution sector, Hill says. He cites the fact that wages for warehouse jobs in Central Ohio went up after Amazon opened its fulfillment centers there, as other companies tried to compete in a tight labor market. Amazon’s entry-level $15 per hour jobs with benefits are good opportunities for lower-skill workers, he says.
“The question becomes, good jobs for who?” Hill says, arguing that while Amazon may experience a lot of attrition among new hires, those who succeed may find opportunities there. Furthermore, he prefers to let the private market sort out which jobs are good jobs. “There’s nothing worse than a highly paid tenured professor telling you your job sucks,” he quips.
However, a 2018 report by the Economic Policy Institute found that “when Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries.”
Another upside is that Amazon’s Northeast Ohio warehouses are also located on bus routes, which makes them accessible to people who don’t have cars, Hill says. And of course, given Amazon’s investments in training and education for its workers, some of them could end up getting better-paid, more highly skilled positions in the future.
Amazon will continue to move up the food chain of Ohio employers, yet Hill doesn’t expect the company to add net jobs to the state’s economy. “They’re swapping with retail jobs,” he says, indicating that as Amazon continues to grow, traditional brick and mortar retail will decline. “They might be somewhat higher wage and more may be full-time, but they’re not really that different.”
It’s also likely that sometime in the not-too-distant future there will be fewer, higher-skill jobs and more robots at the warehouses. “The average wage will go up, but you’ll have a very different kind of employee,” he says.
Schiller says that the $15 per hour jobs that Amazon is bringing to Northeast Ohio still only allow working families to barely scrape by. While Amazon jobs pay about 150 percent of the federal poverty level, a single-parent household of three really needs to earn about 200 percent. The fact that local and state politicians are cheering Amazon’s arrival points to the lackluster economy.
“We have poverty greater than it was 10 years after this longest-ever recovery” despite a near full-employment economy, says Schiller, citing recent Census data.
Boyd McCamish, organizing director for the Central Region of Workers United, says elected leaders need to stop congratulating themselves and begin to grapple with what Amazon really means for the state’s economy, where inflation-adjusted wages are lower than they were in 1979, according to Policy Matters.
“Lots of people in the statehouse like to pat themselves on the back about how much Amazon or the distribution business generally is bringing to Ohio … but the giveaways, ostensibly because they pay $15 an hour and offer benefits, just tell you what kind of a grip Amazon has on our economy,” he says. “Until we can get companies like Amazon and Walmart to play by any rules but their own, things are going to continue to deteriorate.”
https://economicrt.org/publication/too-big-to-govern/
TOO BIG TO GOVERN
PUBLIC BALANCE SHEET FOR THE WORLD’S LARGEST STORE
NOVEMBER 26, 2019 / BY DANIEL FLAMING AND PATRICK BURNS
UNDERWRITER: LOS ANGELES COUNTY FEDERATION OF LABORDOWNLOAD
Amazon is flourishing as a corporation. On good days in the stock market it is worth $1 trillion, making it most valuable company on the planet. Amazon has come of age financially. This report examines its standing as a socially accountable corporate citizen, with close attention to the impact of Amazon’s logistics operations on the public balance sheet in the four-county Los Angeles region. This region purchased an estimated $7.2 billion in goods from Amazon in 2018.
Amazon’s trucks hauled an estimated 15.5 billion ton-miles of truck cargo in the region last year, altering how land is used, making heavy use of the transportation infrastructure, affecting air quality, and shaping the economic and living conditions of workers and their families.
Amazon’s warehouses have been welcomed by some communities as a source of jobs and economic growth, but there has not been an assessment of the costs of its presence. As with individuals, communities that have come of age are able to make decisions that shape their own future and safeguard their own well-being. The most successful cities take purposeful action to influence the economy in ways that help workers earn sustaining livelihoods.
Amazon’s customers are concentrated in affluent coastal and hillside neighborhoods, but warehouses and workers are concentrated 60 to 70 miles away in struggling working class communities. This geographic divide reflects the economic polarization and structure of privilege in the four-county region. And public infrastructure and local communities bear the financial and environmental costs of trucking goods from ports to warehouses to consumers. Truck routes from ports to warehouses traverse low-income communities of color, adversely affecting air quality and health in those communities.
The popularity of Amazon attests to its excellent customer care. This report provides a balance sheet from the public perspective to support greater transparency in fiscal policy, broader risk assessment, and financial equity with the employees and communities that drive its profitability.
IMPACTS ON THE LAND AND AIR
Every day, ships, trucks, trains, and airplanes bring an estimated 21,500 diesel truck loads of merchandise to and from 21 Amazon warehouses in the four-county region. In total, Amazon’s trucking operations in the four-county region in 2018 created an estimated $642 million in uncompensated public costs for noise, road wear, accidents, and harmful emissions.
With an average of 2,180 miles traveled per flight, Amazon’s flights into and out of airports in Riverside and San Bernardino counties released an estimated 620,000 metric tons of CO2 into the atmosphere in 2018. The climate change resulting from those emissions creates an estimated $45 million in social costs for impacts on agricultural productivity, human health, flooding, and ecosystem services.
IMPACTS ON WORKERS
Amazon’s intense, demanding corporate culture has benefited those at the top, but not necessarily workers who do the heavy lifting of the logistical network that brings packages to our homes. Proximity to lower-income neighborhoods in the four-county region facilitates Amazon’s access to a job-hungry labor force. At the same time, the wages paid by Amazon perpetuate the economic struggle in these neighborhoods.
Amazon’s warehouse jobs are grueling and high-stress. Customer orders must be assembled and delivered on rapid schedules. Warehouse workers wear tracking devices that management uses to monitor where they are at any time, how many steps they take to get their packages assembled, and how long it takes to pick up each item. Those who can’t meet the assembly quotas are terminated.
Most logistics employees are working full-time to support their families but 86 percent earn less than the basic living wage for Riverside and San Bernardino counties. The typical worker had total annual earnings in 2017 of $20,585, which is slightly over half of the living wage. Fourteen percent were under the federal poverty threshold and another 31 percent were just above the poverty threshold.
For every $1 in wages paid by Amazon, warehouse workers receive an estimated $0.24 in public assistance benefits. The average annual amount of public benefits per worker is $5,245. The biggest component of public benefits is subsidized health insurance.
Public benefit amounts remain high even for full-time warehouse workers. Workers who were at the job 2,080 hours a year (40 hours a week, 52 weeks a year) received an average of $5,094 in benefits to make up the deficit in the basic needs of their families that were not met by their wages.
As a consequence of having low wages and insufficient incomes to afford adequate homes for their families, 57 percent of Amazon warehouse workers live in housing that is overcrowded and substandard. There is direct and indirect evidence of significant homelessness among warehouse workers.
The economic condition of logistics worker contrasts starkly with workers employed in Silicon Beach and Hollywood in entertainment, computer and mathematics jobs. These workers make a living wage and earn enough to afford housing and buy Amazon products. The higher standard of living they enjoy demonstrates that when the job market or the regulatory environment requires it, Amazon can afford to pay sustainable wages.
PUBLIC OVERSIGHT
Public Records Act requests were submitted to 39 public jurisdictions where Amazon facilities are located. Nineteen jurisdictions said they had no records related to Amazon. This includes the cities of Jurupa Valley, Riverside and San Bernardino where Amazon has large warehouse facilities and Culver City where Amazon has a major movie production studio.
Seven cities completed environmental impact reports (EIRs), which represent the highest level of local policy analysis regarding Amazon’s impacts. These EIRs supported development of over 36 million square feet of warehouse space and up to 89 plane flights a day. No impacts on the environment, transportation infrastructure or human well-being were identified that warranted stopping a project. Often job creation was identified as the reason for proceeding with a project.
The only benefits that cities are receiving from Amazon’s warehouses are from construction jobs and fees, and employment of residents in low-wage warehouse jobs, along with modest, trickle-down multiplier effects as they spend their sparse earnings. Cities do not receive sales tax revenue from the sale of goods in these warehouses.
The “overriding consideration” put forward in EIRs, that Amazon’s warehouses would provide good jobs and strengthen the economy, does not stand up to scrutiny. This report shows that Amazon’s trucks cause extensive uncompensated damage to public roads and Amazon’s warehouse jobs pay so little that workers can’t afford adequate housing and rely on public assistance. The substandard housing conditions of Amazon’s warehouse workers and their inability to afford food or healthcare for their families weaken the economies of cities.
PUBLIC BALANCE SHEET
Public tools for assessing and regulating Amazon’s impacts are inadequate. The available policy review tools are used infrequently, look only at fragments of Amazon’s local impacts, and show a strong pro-development bias.
A new oversight structure is needed to assess the risk and impacts of Amazon’s activities, and to establish regulatory standards that require the public balance sheet from Amazon’s operations to pay its full costs to the public and to employees.
Controversy has surfaced about Amazon’s scant corporate income tax payments and whether it is contributing adequately to the general welfare. Over the past decade, Amazon has paid less than three percent of its $27 billion in profits for federal income tax.
This report uses publicly available data to estimate Amazon’s impacts. The directional findings are sound and often conservative, with methods and sources referenced throughout. Amazon is a data-rich organization with extensive information about wages, working conditions, public subsidies, logistics operations, and carbon footprint. We recommend that Amazon collaborate in improving the accuracy of this public balance sheet.
Amazon has received nearly $850 million in public subsidies in the four-county region, some documented in public records, others estimated. This includes:
- $3 million for building construction
- $25 million for movie production
- $30 million for city waivers of traffic impact fees
- $45 million annually for climate change impacts from cargo aircraft flights
- $98 million annually in public assistance for warehouse workers
- $647 million annually in uncompensated public costs for warehouse trucking
This is only a partial list, for example, it doesn’t include public costs to offset the wage deficits of underpaid delivery drivers employed by Amazon and its subcontractors.
Only 7 percent of the public subsidies that Amazon has received are one-time outlays. The other 93 percent of subsidies are ongoing and will recur year-after-year until Amazon raises wages and lowers greenhouse gas emissions.
American society expects that adults will pay their own way in the world, clean up their messes, and reciprocate what others do for them. These expectations are reasonable for corporate citizens as well.
Amazon has grown explosively as an autonomous, fresh thinking, hard driving organization that has taken maximum advantage of every freedom and opportunity allowed it. But it is no longer just an agile adventurer. Amazon is now a dominant force in shaping communities where its logistics operations are located and its workers live. It is restructuring industries, destroying brick-and-mortar retail jobs and replacing them with warehouse and delivery jobs.
Phaeton (cover image) did not know his limits, overreached and fell to his own destruction. Amazon can avoid this fate by finding its footing as an equitable community partner and continue to rise both as an economic success and a corporate citizen.
It is time for Amazon to come of age and pay its own way. This means paying its full costs to the communities that host it and the workers who create its profits. Amazon will benefit when its workers have living incomes because they will have the buying power to purchase the products it sells.
RECOMMENDATIONS
Based on the findings in this report, the Economic Roundtable makes the following nine recommendations for achieving equity in Amazon’s logistics operations:
- Pay a minimum wage of $20 an hour, adjusted annually for cost of living changes, to provide a living income for warehouse workers and delivery drivers.
- Provide comprehensive and affordable health insurance for warehouse workers and delivery drivers and their families, eliminating the need for workers and their families to rely on publicly subsidized Medi-Cal health insurance.
- Allow work breaks for warehouse workers that enable them to remain hydrated, use bathrooms and eat mid-shift meals.
- Provide affordable child care onsite or at nearby child care centers.
- Require logistics subcontractors to provide the same wage floor and benefits as Amazon.
- Invest Amazon’s assets in building affordable housing in communities where its logistics facilities are located as well as the communities where employees from those facilities live.
- Become a partner in local, regional and statewide initiatives to raise the wage floor for the entire logistics sector so that all warehouse, trucking and delivery companies meet the same standards of civic responsibility as Amazon.
- Step up as a leader in reducing climate change impacts by deploying zero emission vehicles and disclosing its full carbon footprint.
- Collaborate in improving and expanding the scope of impact estimates provided in this report to support analysis, planning and policies for reducing the costs and increasing the benefits of the services Amazon provides.
Press Coverage
Amazon triples Southern California warehouse network to deliver packages faster
By Jeff Collins, Orange County Register (March 26, 2021)
Unboxing Amazon – Will the E-Commerce Giant Deliver for Oxnard?
By Kimberly Rivers, Ventura County Reporter (December 2, 2020)
Amazon Delivery Drivers Are Overwhelmed and Overworked by Covid-19 Surge
By Lauren Kaori Gurley, Vice Media Group (July 1, 2020)
Amazon’s Largest Warehouse Hub has a Coronavirus Case. Workers Say Changes Need to be Made
By April Glaser and David Ingram, NBC News (March 26, 2020)
Amazon Announces Massive Hiring Spree As Experts Predict Flagship Prime Delivery Service Will Falter
The Daily Hodl (March 18, 2020)
USA: Amazon ist zum größten Online-Händler der Welt geworden
By Christiane Meier, Weltspiegel – ARD | Das Erste (January 26, 2020)
Activists Build a Grass-Roots Alliance Against Amazon
By David Streitfeld, New York Times (November 26, 2019)
Amazon Prime Will Falter During Coronavirus Crisis, Experts Say
By Lauren Kaori Gurley, Vice Motherboard (March 14 2020)
Over 100 Residents of California’s Inland Empire Occupy Amazon Developer’s Offices
By Lauren Kaori Gurley, Vice Motherboard (January 23, 2020)
Amazon’s impact on workers and the environment
By Madeleine Brand, KCRW Press Play (November 27, 2019)
Here’s what Amazon promised Utah in 2019 and what it has delivered
By Clara Hatcher, The Salt Lake Tribune (January 08, 2020)
Amazon has too much power over our economy: activist
By Nick Rose, Yahoo Finance (November 29, 2019)
Black Friday protesters hit back with ‘Buy Nothing Day’
By Kristin Myers, Yahoo Finance (November 29, 2019)
Black Friday Amazon deals’ costs: Workers’ health, climate change and your own taxes
By Michelle Chen, NBC News, Think (November 29, 2019)
Author of scathing report about Amazon’s impact on its warehouse communities wants Central New York to ‘be aware’
By Andrew Donovan, ABC 9, WSYR-TV, Syracuse, N.Y. (November 27, 2019)
Meet the massive coalition vowing to end Amazon’s ‘powerful grip over our society’
By Arianne Cohen, Fast Company (November 26, 2019)
Amazon pushes back against accusations its warehouses harm the communities that house them
By Evie Fordham, Fox Business News (November 27, 2019)
A new group thinks Amazon is ‘too big to govern’ and wants to lead the resistance
By Juliana Feliciano Reyes, Chicago Tribune (November 27, 2019)
The anti-Amazon movement is gaining steam. Will Black Friday shoppers care?
By Maya Shwayder, Digital Trends (November 27, 2019)
New report suggests Amazon makes some changes before Central New York might want its warehouse
By Andrew Donovan, ABC7 Nexstar Broadcasting (November 26, 2019)
Criticism mounts as ‘peak’ season for Amazon arrives
By Benjamin Romano, Seattle Times (December 1, 2019)
Athena vs. Amazon: New Coalition Debuts on Eve of Holiday Shopping Season to Call Out Company’s “Long Line of Abuses”
By Eoin Higgins, Common Dreams (November 26, 2019)
New Report Outlines Amazon’s Environmental, Labor Damages
By Dees Stribling, Bisnow (November 26, 2019
What Is Amazon Doing To Communities? Report Looks At Tech Giant’s Impact On Los Angeles Area
By Marcy Kreiter, International Business Times (November 26, 2019)
Amazon Abuses Workers and the Climate—Because It Can
By Sonali Kolhatkar, Truth Dig (December 5, 2019)
Amazon’s Bringing More Jobs – And Questions About Its Economic Benefits – To Utah
By John Reed, National Public Radio, KUER Utah (December 4, 2019)
Amazon’s 1-Day Free Shipping Might Do More Harm Than Good. Here’s Why
By Al Root, Barron’s (December 2, 2019)
Criticism increases as the peak season for Amazon arrives
By James Lew, The Media HQ (December 3, 2019)
The Amazon behemoth and its would-be grassroots David
By David Streitfeld, The Philadelphia Tribune (November 28, 2019)
Amazon workers’ injuries spike during holiday season at Illinois facility
By Curtis Black, The Chicago Reporter (December 10, 2019)
Grassroots Opposition to Amazon Coalescing as Groups Protest Working Conditions, Environmental Damage
By Ian Corbin, Karma (November 27, 2019)
Activists take aim at Amazon with new coalition
Business Report (November 26, 2019)
Scathing Reports Document Worker Abuses At Amazon Warehouses Just In Time For Holiday Rush
By Tyler Durden, Zero Hedge (November 27, 2019)
Rapport: Amazon blesse les communautés où il a des entrepôts
Jambon Burst (November 27, 2019)
Dozens of activists groups form national coalition against Amazon
By Kiro Radio Staff, My Northwest (November 26, 2019)
Amazon (NASDAQ:AMZN) Refutes Claims Of Its Warehouses Harming Communities Housing Them
By Ryan Booth, Argus Journal (November 29, 2019)
Happy? Holidays! Worker injuries spike at Amazon warehouses seasonally, data shows
By Molly Wood, Marketplace Tech (December 3, 2019)
Politico Playbook: Valley Talk
Anna Palmer, Jake Sherman, Eli Okun and Garret Ross, Politico (November 26, 2019)
Scathing reports document negative impacts of Amazon warehouse model
By Linda Baker, Freight Waves (November 26, 2019)
Today’s News & Commentary — November 27, 2019
OnLabor (November 27, 2019)
The effort to challenge the Amazon increasing dominance
By jamesb, Political Dog 101 (November 26, 2019)
March 26, 2018
Many Localities Are Unprepared to Collect Taxes on Online Purchases: Amazon.com and other E-Retailers Receive Tax Advantage Over Local Businesses
Online retailer Amazon.com made headlines last year when it began collecting every state-level sales tax on its direct sales.[1] Savvy observers quickly noted that this change did not affect the company’s large and growing “marketplace” business, where it conducts sales in partnership with third-parties and rarely collects tax.[2] But far fewer have noticed that even on its direct sales, Amazon is still not collecting some local-level taxes. This analysis reveals that in seven states (Alabama, Alaska, Idaho, Iowa, Mississippi, New Mexico, and Pennsylvania), Amazon is either not collecting local taxes or is charging a lower tax rate than local retailers. While this collection gap is troubling on its own, it also suggests that many localities are unprepared to reap the benefits of expanded sales tax collection authority that may soon be coming from the U.S. Supreme Court or Congress. Worse, this lack of preparedness extends beyond the seven states identified above and includes states such as Colorado and Illinois where Amazon collects local tax, but where e-retailers without in-state facilities may not be able to do so.
Local Taxes Going Uncollected by Amazon
ITEP identified the seven states in which Amazon is not collecting local taxes (or is charging a lower rate) by entering dozens of shipping addresses into the Amazon.com website, observing the sales tax amount charged on a consumer electronics item, and comparing that amount to the combined state and local sales tax rate levied in that jurisdiction.[3] Based on this analysis, the gap between what Amazon collects and what local retailers collect can be as high as 7.5 percent of an item’s pre-tax purchase price (in Homer, Alaska), but it is more commonly in the range of 1 to 3 percentage points.
Figure 2 offers a sampling of the largest cities where Amazon charges less tax than local retailers, as well as the size of the tax advantage that the company enjoys over those local businesses.
A more detailed analysis is provided in Figure 3 below, which shows Amazon’s average, and maximum, price advantage in each state by using an example of an item purchased for $100.
While the reasons behind Amazon’s ongoing tax advantage vary across states, the basic fairness and economic problems do not. There is little logic in asking consumers who prefer to shop at local businesses to pay more toward funding public services than consumers who shop via their laptops or smartphones. Additionally, local economies are harmed by this arrangement because it incentivizes price-conscious shoppers to buy from out-of-state Internet retailers instead of businesses that hire local residents, pay local property taxes, and otherwise contribute to the local economy. And funding for local services suffers as well, as a large and growing share of retail sales take place over the Internet.
In diagnosing the reasons for Amazon’s non-collection of some local taxes, the seven states discussed in this brief can be sorted into at least four groups. These groupings are discussed in more detail below but in most cases, the gaps in collection result from outdated or otherwise flawed state and local tax laws, rather than a specific tax avoidance strategy used by Amazon.
States without local “use taxes”
In many states, Amazon is not collecting the sales tax, but is instead collecting the backstop “use tax” that applies to interstate sales. Because state-level use taxes are set at the same rate as state-level sales taxes, collecting use tax as opposed to sales tax seldom makes much difference. But localities in Idaho, Iowa, and Mississippi lack their own local use taxes and therefore the company is not collecting any local tax amount.[4] To remedy this problem, theses states should enact legislation authorizing their local governments to levy use taxes and localities should exercise that authority.
“Origin-sourced” states
The current structure of New Mexico and Pennsylvania’s sales tax laws prevents Amazon from collecting local-level taxes on its sales into those states. Both states use “origin-sourcing,” which means that the location of the seller, rather than the buyer, determines the amount of local tax that must be added to a purchase. In New Mexico’s case, Amazon lacks any in-state presence and therefore remits only the state-level (5.125 percent) tax that is owed on any sale originating outside the state. In Pennsylvania, since the company lacks fulfillment centers in the only two jurisdictions with local-level sales taxes (Philadelphia and Allegheny County, which includes Pittsburgh), its sales do not originate from parts of the state with local sales taxes and therefore those taxes go uncollected.[5] Local lawmakers in Philadelphia, Pittsburgh, and throughout the state of New Mexico should be troubled by the fact that Amazon is not permitted to collect local sales taxes on their residents’ purchases. Requiring that these types of sales be “destination-sourced,” where the location of the buyer determines the tax amount collected, would put local retailers on an even footing with out-of-state or out-of-town retailers such as Amazon. Local lawmakers in these two states should pursue destination-sourcing of their local taxes, though state law will likely need to be changed to authorize these taxes.
Localities that lack a state-level advocate
Alaska is the only state that allows local-level general sales taxes without also levying its own statewide sales tax. In contrast to the other 36 states with local sales taxes, Alaska’s state government therefore lacks a vested interest in the outcome of the push for e-retail sales tax collection. As a result, Alaska’s localities have been left without a coordinated effort, or a negotiator, working to see that sales taxes are collected by e-retailers selling into the state. Since Amazon appears to lack a physical presence in Alaska, local governments such as Juneau and Wasilla have limited options for pursuing tax collection on their own. In the absence of new collection authority from the federal government, Alaska localities’ best recourse may be to urge state lawmakers to put pressure on Amazon to begin collecting local sales taxes by enacting a remote sales tax reporting law similar to Colorado’s, or by including local tax collection as a requirement in any future tax incentive offers.[6] In addition, any localities that levy sales taxes but not use taxes should implement use taxes, which already exist in some parts of the state.[7]
State offers preferential rate
In 2015, Alabama lawmakers sought to encourage e-retailers to voluntarily collect the taxes owed on their sales by enacting the Simplified Seller Use Tax Remittance Act.[8] Instead of collecting a combined state and local tax that ranges from 4 to 11 percent in different parts of the state, the Act allows sellers to collect a flat 8 percent tax on every sale made to customers in Alabama. It also allows customers located in areas with tax rates below 8 percent to receive a refund or credit from the state to reimburse them for the amount they were overcharged. While the law did spur companies such as Amazon to begin collecting Alabama taxes, it did not completely level the playing field between e-retailers and Alabama’s own in-state businesses. Three of Alabama’s five largest cities (Birmingham, Montgomery, and Mobile) have combined state and local sales tax rates of 10 percent, while the other two (Huntsville and Tuscaloosa) have rates of 9 percent. As a result, local businesses in the state’s largest commercial centers are at a competitive disadvantage relative to Amazon and other retailers participating in the program because the state offers a preferential tax rate to out-of-state businesses. While such a preferential rate may have made sense as a short-run measure designed to bring out-of-state companies into the state’s tax collection system, in the long-run it is indefensible to offer businesses with no local presence a tax advantage over in-state businesses. State lawmakers should revisit this law with an eye toward creating a more level playing field for Alabama’s retailers and a more adequate revenue stream for local governments.
What Happens if Federal Restrictions on Tax Collection are Eased?
A series of U.S. Supreme Court decisions, most recently Quill Corp. v. North Dakota (1992), have prevented states and localities from requiring out-of-state retailers to collect sales tax. These decisions were rooted largely in the idea that state and local tax systems were too complex for retailers to navigate from afar. But modern tax collection software has rendered this concern largely obsolete and the Court is widely expected to loosen restrictions on state and local tax collection later this year.
If this occurs, most of the localities spotlighted in this brief are unlikely to benefit because state and/or local laws are not written to allow for local tax collection on sales made by out-of-state retailers. Without changes in law, these localities will continue to see their tax bases eroded as consumers increasingly shop online, and local businesses in these communities will continue to face an unlevel playing field as they collect local sales taxes that out-of-state online companies can (or must) forego collecting.
Notably, in the context of e-retailers other than Amazon.com, this problem extends beyond the seven states highlighted in this brief. In Illinois, for example, Amazon has a physical presence and appears to be collecting and remitting local sales tax amounts based on each customer’s shipping address.[9] Retailers located entirely outside of the state, however, are unlikely to collect those same local taxes. The tax filing service TaxJar explains that “Illinois wants sellers who made a sale into Illinois from outside the state [to] charge a flat Illinois ‘use tax’ rate of 6.25% … You are not required to charge any local sales tax rates.”[10]
Similarly, TaxJar states that in Colorado, out-of-state retailers should collect a special “retailer’s use tax” that “does not include any local city or county taxes that may be applicable.”[11] The Colorado Department of Revenue clarifies that those “city and county use taxes are paid directly to those jurisdictions if applicable” and urges sellers to “contact the cities and counties directly for more information on local use taxes.”[12] But since many Colorado cities lack use taxes or levy those taxes at lower rates than their ordinary sales taxes, it appears that out-of-state e-retailers will sometimes find themselves collecting less tax than their locally-based competitors.[13]
A full analysis of how out-of-state retailers are impacted by every localities’ sales and/or use tax laws is beyond the scope of this brief, but local lawmakers around the country should evaluate whether they are positioned to collect local taxes in the event that the federal government eases restrictions on doing so. Generally speaking, localities with destination-sourced sales and use taxes are in the best position to collect tax revenue from online sales.
Conclusion
Many states and localities have begun to collect sales taxes on at least some sales made by out-of-state e-retailers and are eager to expand that collection in the wake of an upcoming Supreme Court ruling that is expected to ease federal restrictions on doing so. Other localities, however, are not collecting tax from out-of-state or even out-of-town businesses because of problematic restrictions in state or local law. Amazon.com, for instance, is not collecting local tax (or is collecting a lower tax amount) in seven of the 37 states with local-level sales taxes. This collection gap is harming local governments’ ability to fund vital programs, and it is contributing to an unlevel playing field for local businesses because millions of shoppers are able to pay less tax if they choose to buy products from out-of-state companies over the Internet rather than at local stores. Reforms such as “destination-sourcing” and the implementation of local “use taxes,” both of which are already common in many states, could help bring these localities’ tax systems into the digital age.
[1] Davis, Carl. “Amazon Will Collect Every State Sales Tax by April 1.” Institute on Taxation and Economic Policy, Just Taxes Blog. Mar. 21, 2017. Available at: https://itep.org/amazon-will-collect-every-state-sales-tax-by-april-1/.
[2] Washington State is a notable exception, as the company recently began collecting and remitting sales taxes on behalf of third-parties. Amazon will do the same in Pennsylvania beginning Apr. 1, 2018. See: Kim, Eugene. “Amazon steps into tax collection with service that could help states collect billions in lost revenue.” CNBC. Nov. 15, 2017. Available at: https://www.cnbc.com/2017/11/15/amazon-marketplace-tax-collection-comes-to-washington-in-2018.html. Levy, Ari. “Amazon will start collecting sales tax for shipments to Pennsylvania as states seek to recoup billions.” CNBC. Mar. 2, 2018. Available at: https://www.cnbc.com/2018/03/02/amazon-to-start-collecting-sales-tax-for-shipments-to-pennsylvania.html.
[3] Findings are summarized in Figure 1. Note that the “physical presence” information in that map is taken from the following two sources: “Economic Impact.” Amazon.com. Accessed Mar. 12, 2018. Available at: https://www.amazon.com/p/feature/nsog9ct4onemec9. “Amazon Fulfillment Center Locations.” Avalara TrustFile. Accessed Mar. 12, 2018. Available at: https://www1.avalara.com/trustfile/en/resources/amazon-warehouse-locations.html.
[4] Local use tax information is available from the Sales Tax Institute at http://www.salestaxinstitute.com/resources/rates, accessed Mar. 12, 2018.
[5] “Amazon Fulfillment Center Locations.” Avalara TrustFile. Accessed Mar. 12, 2018. Available at: https://www1.avalara.com/trustfile/en/resources/amazon-warehouse-locations.html.
[6] Mazerov, Michael. “States Should Adopt a Version of Colorado’s Remote Sales Tax Law.” Center on Budget and Policy Priorities. Aug. 3, 2017. Available at: https://www.cbpp.org/research/state-budget-and-tax/states-should-adopt-a-version-of-colorados-remote-sales-tax-law.
[7] The Sales Tax Institute reports that some Alaska localities levy use taxes while others do not. See http://www.salestaxinstitute.com/resources/rates, accessed Mar. 12, 2018.
[8] A description of the Act, and of amendments made in 2017, is available from the Alabama Department of Revenue at: https://revenue.alabama.gov/sales-use/simplified-sellers-use-tax-ssut/.
[9] ITEP confirmed this by inputting shipping addresses located in Chicago, DeKalb, Galesburg, Peoria, Springfield, and Wheaton into the Amazon.com website and confirming that the sales tax amount charged matched the combined state and local sales tax rate levied within each of those localities.
[10] “Illinois Sales Tax Guide for Businesses.” TaxJar. Accessed Mar. 12, 2018. Available at: https://www.taxjar.com/states/illinois-sales-tax-online/#how-to-collect-sales-tax-in-illinois. For an interesting overview of the history of this issue in Chicago and Cook County, see: Hamer, Brian. “A Fair Revenue Solution for Cook County.” State Tax Notes. Dec. 4, 2017.
[11] “Colorado Sales Tax Guide for Businesses.” TaxJar. Accessed Mar. 12, 2018. Available at: https://www.taxjar.com/states/colorado-sales-tax-online/#how-to-collect-sales-tax-in-colorado.
[12] Colorado Department of Revenue. “Retailer’s Use Tax Return: Instructions.” DR 0173. Jun. 22, 2016. Available at: https://www.colorado.gov/pacific/sites/default/files/DR0173.pdf.
[13] Colorado Department of Revenue. “Colorado Sales/Use Tax Rates.” DR 1002. Dec. 29, 2017. Available at: https://www.colorado.gov/pacific/sites/default/files/DR1002.pdf.
Amazon wants waiver from local labor requirement connected to tax breaks
EDITOR’S NOTE 4.30.21: Due to an editing error, the original version of this story referred to Monroe County’s economic development agency by its recently retired brand name, Imagine Monroe. The agency is now and better known by the acronym COMIDA.
Monroe County’s economic development agency has already approved millions of dollars in tax breaks to Amazon for the proposed construction of a warehouse and distribution center in Gates.
Now, according to the county’s director of planning and development, the online retailer has asked for another sort of break — from having to hire only local people to build the facility.
Any time the County of Monroe Industrial Development Agency, COMIDA, gives companies tax incentives on construction, it does so on the condition that workers from the region will be hired for the job. Companies can ask to waive the requirement, but they typically have to show that they were unable to find adequate help in the area for their request to be granted.
Ana Liss, the county’s director of planning and development, told COMIDA board members at their latest meeting on April 20 that they will “tentatively will be entertaining a request” from Amazon and Dallas-based real estate developer Trammell Crow Company for at least a partial waiver of the local labor requirement at their next meeting in May.
“If they’re seeking a blanket waiver I’m not signing off on that,” Liss said. “That requires board input, board approval. And of course I’ll be briefing this board once those entities come to me with vetted evidence.”
- Construction on an Amazon warehouse and distribution center on Manitou Road in Gates was under way in April 2021.
An Amazon spokesperson would neither confirm nor deny that the company and its developer are seeking a waiver.
“Amazon is a dynamic business and we are constantly exploring new locations,” said spokesperson Jenna Hilzenrath. “We weigh a variety of factors when deciding where to develop future sites to best serve customers, however, we have a policy of not commenting on our future roadmap.”
On Friday, after CITY reported that Amazon was seeking a waiver, the company issued a statement that read:
“Amazon has a variety of projects in various stages across the U.S. and we are proud to support the creation of job opportunities for residents in those areas, even before our operations facilities launch. During the construction process, our developers and general contractors use an open bid process available to any qualified party who shows interest in a project; this includes both non-union and union, local, regional, and national contractors with the relevant experience and expertise. As always, we follow all local and state labor policies and processes.”
In recent years, Amazon has been building warehouses and distribution centers across the state, including in Henrietta and Greece.
The company and its developer have said they plan to invest $412 million to build a 2.6 million-square-foot facility on Manitou Road off Route 531 in Gates. In January, COMIDA approved $134.7 million in property, mortgage, and sales tax exemptions for the project. Amazon has said it plans to hire 1,000 people to work at the facility.
Liss said the companies were particularly concerned about finding enough laborers to pour concrete because of the sheer size of that job. She added that the county will be negotiating with Amazon and its developer should they present a case for a waiver.
But news of Amazon’s request got a chilly reception from two COMIDA board members, who bristled at the notion that one of the largest and wealthiest companies in the United States might try to bypass local labor requirements.
“I think we were very transparent,” said board member Jay Popli, the executive vice president of Popli Design Group, an architectural, engineering, and land surveying firm based in Penfield. “You request these benefits, these are the rules. And what they’re saying is, ‘We’ll see about that.’”
It wouldn’t be the first time.
Amazon has a history of requesting and receiving waivers on local labor requirements attached to tax incentives — and some municipalities, desperate for jobs and investment, have gone along.
Last year, the Onondaga County Industrial Development Agency granted a similar request from Amazon and Trammell Crow to forgo using local labor to build a 3.8-million-square-foot warehouse in the Syracuse suburb of Clay. The agency had already granted $70.8 million in tax breaks for the project when the developer sought relief from the local labor requirement, telling agency officials that it was only able to fill 70 percent of the construction jobs with local workers.
The Onondaga County IDA, apparently satisfied that the company did its due diligence, ultimately provided the waiver.
In 2017, Amazon talked officials in Miami-Dade County, Florida, into releasing it from a requirement to pay “responsible wages” to employees at a new fulfillment center. The $92 million facility was on land the company was leasing from the county’s airport.
The town of Montgomery in Orange County in New York last year released the developer of an Amazon warehouse from using local labor to install a fire sprinkler system and to do concrete and metal work.
Now Monroe County officials find themselves in a game of chicken with one of the most powerful and wealthiest companies in the world. The warehouse Amazon wants to put in Gates was originally supposed to be built in Grand Island. The company walked away from the Erie County town following substantial opposition to the project.
As Liss discussed the issue with COMIDA board members, she emphasized that the county will negotiate with Amazon and its developer, but only to an extent. She relayed that County Executive Adam Bello had “made it clear to me that we’re not going to accept anything more generous than what Onondaga County granted, and we’re going to hold them to account.”
Board member Troy Milne, the business manager of Sheet Metal Workers Local No. 46, criticized the companies for what he said was their failure to share their construction schedule with COMIDA and the building trades unions. If the unions had that information, he said, they could help the companies find local workers.
Monroe County Legislator Rachel Barnhart, who in the past has been critical of some economic development subsidies handed out by the county, said the onus is on Amazon and its developer to make the case that it can’t find the workers it needs here.
“The bottom line is they’re getting more than $100 million in incentives and they should have to use local labor,” Barnhart said.
Jeremy Moule is CITY’s news editor. He can be reached at jmoule@rochester-citynews.com.
https://earthjustice.org/blog/2020-april/amazon-inland-empire-workers-covid-19
What It’s Like to Be Boxed In By Amazon
As COVID-19 puts online shopping into overdrive, workers and warehouse communities are demanding solutions to protect their health and ensure a livable future.
By Jessica A. Knoblauch | February 17, 2021
E-commerce warehouses are inflicting “slow violence” on California’s Inland Empire, says Anthony Victoria-Midence, a longtime local environmental voice.
HANNAH ROTHSTEIN FOR EARTHJUSTICE
As COVID-19 creates a boom in internet retail, companies like Amazon are going into overdrive. Labor organizers and environmental health activists are rising to the moment and confronting the wizard behind the curtain of online shopping: the logistics operations that are as problematic as they are profitable.
In this time of crisis, these companies and their logistics centers are crucial in ensuring people receive basic needs. But they also have a long history of skirting environmental laws and exploiting workers.
J.J., whose name has been changed to protect their identity, is just one of many Amazon workers who knows what it’s like to feel boxed in by the warehouse world. In the Inland Empire, a giant logistics hub located an hour east of L.A. where J.J. lives and works, residents choke on the thick, black smoke of diesel emissions wafting from the industry’s army of idling trucks. They’re kept awake at night by the constant low rumble of giant semis barreling along the interstate, and the high-pitched whir of cargo planes flying overhead.
Inside the warehouses, the morale stinks as bad as the air pollution. J.J., who uses they/them pronouns, has been reprimanded for helping other workers while they take a bathroom break. And many of the people J.J. started with a few months back are gone — having already quit or been fired
“I worry about my job security,” says J.J., “But I feel more comfortable than average because I try to work as much as two or three people… though I barely get paid as one.”
The COVID-19 crisis makes this situation even more unbearable. Amazon workers are risking their lives as COVID-19 spreads through the company’s warehouses.
But the Inland Empire is fighting back. As lawmakers roll out the red carpet for yet another massive logistics center — slated for Amazon — union members, faith leaders, area residents, and environmental justice advocates are demanding an upgrade from one of the pandemic’s most profitable companies.
Warehouses bump up against homes in the Inland Empire.
DAVID MCNEW / THE NEW YORK TIMES
The Inland Empire wasn’t always the epicenter of the miles-long warehouses, big-rig semis, and heavy-duty machinery that supply our online shopping demands. “America’s Shopping Cart” was once a major hub for the citrus industry. Communities of color, pushed to the Inland Empire through historic patterns of redlining and discriminatory land use policies, made their homes below the towering San Bernardino Mountains.
In the 1970s, however, the valley of oranges transformed into a valley of warehouses after cheap land combined with easy access to numerous freeways, railyards, and shipping ports lured in the booming logistics industry. In the past decade, nearly 150 million square feet of warehouse space has been built in the Inland Empire, the equivalent of about four Central Parks. It’s no wonder then that toxic diesel fumes from the area’s countless semi trucks and trains now hang over the valley, trapped by the San Bernardino and San Gabriel mountains and joined by more pollution from nearby L.A.
The end result smells like a lit cigarette dropped into a bottle of orangee Fanta.
Angelica Balderas, who lives in the Inland Empire, experiences respiratory health problems that she believes are caused by the area’s polluted air.
“I feel drained, my chest feels tight, I have difficulty breathing, and everything takes more energy,” says Angelica Balderas, a 39-year-old Inland Empire resident who went to the hospital at least five times in 2019 seeking medical attention for respiratory issues.
Balderas is hardly alone. The Inland Empire has some of the worst ozone and soot pollution in the country. San Bernardino and Riverside counties, which encompass the region, have asthma rates twice as high as the national average.
Anthony Victoria-Midence, a longtime local environmental voice, says that building more warehouses in the “diesel death zones” will sicken even more people in an area that’s already overburdened by pollution. And though more warehouses will inevitably mean more jobs, the question is at what cost. News reports have described the warehouse environment as “soul crushing,” where employees are treated like “robots” and injuries are common. Fewer than half the jobs in the Inland Empire pay a living wage.
“It’s like this slow violence that the e-commerce chain inflicts,” says Victoria-Midence, “It’s a cycle of madness.”
Inland Empire residents were livid when they first learned of a proposal to build a massive new warehouse in their neighborhood. The 700,000-square-foot facility is expected to emit a literal ton of air pollution each day into the community. The project will also bring with it round-the-clock flights (about 24 per day) and 500 daily truck trips to the suburban area.
In December 2019, late in the evening on Cyber Monday, about 100 people gathered in front of one of Amazon’s many warehouses in the Inland Empire. They were armed with a list of demands for Jeff Bezos, the former CEO of Amazon and one of the world’s richest people. (Bezos makes about $2,489 per second, more than twice what the median U.S. worker makes in a week.)
Area residents and union members are asking Amazon to provide the community with basic quality-of-life benefits like guaranteed living-wage jobs and strong pollution reduction plans at the proposed facility. Specifically, they’re pushing Amazon to purchase zero-emissions electric trucks, which will keep the air free of harmful diesel pollution.
“That means none of this ‘near’ zero emissions crap,” says J.J. “That’s pretty much jargon to pass off something like natural gas, which is definitely still a source of pollution.”
J.J. came to the environmental justice movement a few years back, after seeing a YouTube video explaining the urgency of the climate crisis. J.J. decided to get involved with groups like the Sunrise Movement, which calls for expansive, visionary policies like a Green New Deal to address climate change.
While at work, J.J. is careful to keep quiet about their extracurricular activities. During the Cyber Monday protest, J.J. covered their face and took off their glasses to mask their identity. At work, J.J. says, people have sometimes worn literal masks, designed specifically to filter out air pollution. (This was before the pandemic.)
Pastor Kelvin Ward worked in Amazon warehouses for almost three years. He calls the conditions there “inhumane.”
Pastor Kelvin Ward, a former Amazon employee who grew up in Riverside, can also attest to the warehouses’ hazardous working conditions. During his almost three years working there, Ward saw employees so strapped for time that they would choose not to walk to the bathroom. Maintenance workers often claimed they would find human waste in the trash receptacles.
“What I saw when I was there, it was inhumane,” says Ward. “We were treated like slaves.”
During the Cyber Monday action, protestors blocked one of Amazon’s driveways so that the company couldn’t fulfil its orders on the busiest shopping day of the year. Ward, who spoke at the protest, took satisfaction in pushing back against a company that doesn’t invest in the wellbeing of the surrounding community.
Says Ward, “We did our part.”
A coalition of groups against the new warehouse has also organized several local actions to say “enough” to the endless tide of warehouse expansions in the Inland Empire. Outside the region, they are supported by groups demanding that Amazon take stronger climate action and enact better COVID-19 protections for workers, 20,000 of which have tested positive for coronavirus.
Amazon warehouse workers process orders.
MATT CARDY / GETTY IMAGES
While local and national pressure mounts for a cleaner logistics industry, Earthjustice is applying pressure inside the courtroom. On behalf of coalition members like the Sierra Club and the Teamsters Local 1932, Earthjustice has sued the Federal Aviation Administration for its failure to adequately assess the proposed warehouse’s environmental impact to residents of San Bernardino. In February, the court heard oral arguments in the case.
“The federal government’s insistence that this project will have no significant impact is wild. It means a lot of additional air pollution in one of the most polluted counties in the country,” says Earthjustice attorney Adrian Martinez. “So if this project doesn’t have an impact on our air pollution, then nothing will.”
Martinez adds that the cursory review by the federal government, working with the San Bernardino International Airport Authority, is “just a slap in the face to everyone who lives here and who cares about these important issues.”
Community members protested at the offices of the developer working on the new warehouse in January 2020.
The warehouse lawsuit is part of a broader fight to clean up Southern California’s notoriously dirty air. An effort known as the Right to Zero campaign aims to electrify everything — from California’s power grid to its numerous shipping ports — to save lives, protect the climate, and strengthen the economy. The logistics industry, until recently, has largely flown under the radar despite the industry’s significant climate impact from its diesel-powered ships, trains, trucks, and construction equipment.
J.J. says that if companies like Amazon are as passionate about climate change and community welfare as they claim, they should agree to the demands that local residents and workers are saying will benefit the community.
“If you really want to be a leader for change, this is how you do it,” says J.J. “Listen to the community, and deliver the solutions they’re asking for.”
This piece was originally published in April 2020 and has been updated to reflect the latest news.
https://www.emissionstax.org/how-amazon-bankrupts-communities/
cut and past disabled to below – not a word doc.
May 9 2017
https://www.cbsnews.com/news/amazons-1-billion-in-tax-breaks-does-it-pay-off-for-cities/
Amazon’s $1 billion in tax breaks: Does it pay off for cities?
BY CORY SCHOUTEN
FEBRUARY 5, 2018 / 5:30 AM / MONEYWATCH
Twenty U.S. and Canadian cities are offering lavish tax benefits and incentives as they vie to become the new home for Amazon.com’s second headquarters. But a new study raises questions about whether such tax incentives actually pay off for the towns and states that offer them.
Amazon.com (AMZN) has likely received $1 billion in incentives from state and local governments in 25 states where the online retailing giant operates 95 fulfillment centers, according to a new study by the left-leaning Economic Policy Institute. Yet those incentives may not have paid off, the study suggests.
The massive Amazon distribution centers failed to boost overall employment in their markets within two years of opening even as they boosted distribution employment by 30 percent, the study notes. The authors, Ben Zipperer and Janelle Jones, suspect that’s because workers are either shifting industries or the Amazon facilities are creating too few new jobs to make a dent in overall employment.
Amazon did not immediately return a request for comment.
The study is attracting attention as Amazon employs a similar strategy, on a much larger scale, of seeking government incentives for a second headquarters beyond Seattle. The company named 20 finalist cities last month, setting off a debate about the use of economic incentives to attract businesses. Some policy experts and economists say such incentives do little for local towns or states other than cost them money.
There’s no question Amazon’s proposed second headquarters, which promises 50,000 jobs across a broad range of skills and pay levels, is a very different animal from a distribution center with mostly low-wage jobs. Still, EPI’s Jones said she hopes her study gives local government officials some pause as they build out proposals for Amazon.
Ironically, Jones notes, cities would have been better prepared to meet Amazon’s requirements for local education offerings and transportation infrastructure had they spent less on tax incentives for prior deals and more on funding local infrastructure.
“What we know for sure is the millions of public dollars that will be given away,” she said of the Amazon headquarters search. “What we don’t know is the outcome — what’s the return on that investment. With fulfillment centers, we have a pretty concrete idea of what that return will be. We want people to stop and think: ‘Do we know what it will be for HQ2?'”
The study adds EPI’s voice to a chorus of skeptics including the nonprofit policy advocacy organization Good Jobs First and the bestselling author and urban-policy expert Richard Florida, who last week launched a Change.org petition with the headline “Support a Non-Aggression Pact for Amazon’s HQ2.”
The petition, co-signed by a broad range of economists and urbanists across the political spectrum, argues that business location incentives offered by local governments are often “wasteful and counterproductive” and that those in the works for Amazon could take the largesse to new extremes. It urges local leaders to “compete on the underlying strength of their communities — not on public handouts to private business.”
“While we are supportive of Amazon’s quest to build a new headquarters, we fear that the contest among jurisdictions — cities, metro regions, states, and provinces — for this facility threatens to spiral out of control,” the petition notes. “Already, at least four jurisdictions have proposed multi-billion-dollar incentive packages. This use of Amazon’s market power to extract incentives from local and state governments is rent-seeking and anticompetitive. It is in the public interest to resist such behavior and not play into or enable it.”
Jones, the EPI economic analyst, told CBS MoneyWatch she understands why it’s difficult for local government officials to resist the urge to give away the store: Everyone loves to bring out a shovel to break ground and claim credit for new jobs.
She said EPI chose Amazon for its incentives study because there’s a ton of of available data, but there are plenty of examples of similar deals with similar dubious value to local taxpayers.
“This is really just an example of this phenomenon of cities, states and localities being willing to give away everything — millions, hundreds of millions of dollars — to lure a business when you can’t be sure you’re actually getting the return you want,” she said. “The point is that when states and cities give away millions to Amazon or anyone else, they’re really forfeiting that money that could be used for so many other things, from Pre-K to public education to infrastructure.”
First published on February 5, 2018 / 5:30 AM