Amazon warehouses don't lead to broad job growth: study

Report says cities should refrain from offering tax breaks

Zuma Press/TNS

An Amazon associate fills shopping bags with products for customers orders at the Amazon.com Prime Now fulfillment center warehouse in Los Angeles.
Zuma Press/TNS An Amazon associate fills shopping bags with products for customers orders at the Amazon.com Prime Now fulfillment center warehouse in Los Angeles.

SEATTLE — When Amazon discloses its plans to build a new warehouse, the news release is predictable.

An Amazon executive cites the number of jobs that the company plans to fill. Elected officials thank Amazon and praise the vibrancy of their business community. And, sometimes, they predict benefits that will flow from Amazon’s investment.

Middletown, Del., Mayor Kenneth Branner, for example, said an Amazon facility announced in 2012 would “be a jump start to our economy and bring additional employment growth to our area.”

But a new study challenges that premise, finding that counties that house a new Amazon depot show no growth in the number of total jobs in the wider economy during the two years after a facility’s opening.

“Amazon, when it opens a fulfillment center, does add warehousing jobs,” said Ben Zipperer, an economist at the Economic Policy Institute and a co-author of the study released last week, using Amazon’s term for its warehouses, which tend to employ between 500 and 1,500 people each.

“But those don’t really translate to any sort of broad-based economic growth in the county that they open the centers in.”

In the absence of an obvious hiring boom, the study’s authors contend that mayors and state officials should refrain from spending public dollars and providing tax breaks to secure Amazon’s commitment to build warehouses in their region.

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The report is the latest fodder for the debate about Amazon’s growing role in the U.S. economy, and the use of public funds to offset the costs of the company’s rapid expansion.

The Seattle company’s warehousing footprint has expanded dramatically in recent years, as Amazon placed depots closer to major population centers to deliver packages quicker and cheaper. The company had fewer than 10 centers through the mid-2000s, the study says, and was nearing 100 by the end of 2017.

In the process, the company has become the second-largest U.S.-based employer, trailing only Wal-Mart.

In one case cited by Good Jobs First, a corporate subsidy watchdog that has criticized payments to Amazon, Chattanooga, Tenn., offered Amazon $30 million in property tax rebates, 80 acres of free land and $4 million in state payments to prepare the site for a warehouse built in the area that came online in 2011.

In a statement last week, Amazon pushed back against the EPI study.

The company says it employed more than 200,000 people in the United States in 2016, and estimates that its spending led to the creation of another 200,000 jobs outside the company, including temporary construction jobs.

Michael Mandel, an economist with the Progressive Policy Institute who contends that e-commerce jobs of the sort Amazon creates reduce income inequality, criticized the EPI study in a blog post. He noted that the study didn’t include in its data set the case of Kenosha, Wisc., home to an Amazon warehouse since 2015 that has seen stronger employment growth than the state as a whole.

Zipperer said EPI limited its study to counties with warehouse employment data in a Bureau of Labor Statistics database available for the period between 2001 and 2015.

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