Think-tank study questions Amazon centers’ economic heft
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 supply chain 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 because of the uncertainty over how much “fulfillment centers” really boost the local economy — or whether incentives are truly needed, given Amazon’s push to build 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.
Researchers at the Economic Policy Institute, a leftleaning Washington, D.C., 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.
But economic development officials in towns Amazon now calls home say the warehouses lining Illinois highways deserve more credit for adding jobs, attracting development and raising
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 an 850,000-square-foot fulfillment center in August. It’s the first in Illinois that uses robots to fetch racks of items 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.”
To study the effect on local job growth, Economic Policy Institute 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 increased average wages for warehouse workers in an affected 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.
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.
Amazon issued a statement in response to the Economic Policy Institute study that noted its 200,000 U.S. employees and 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.