Study: Amazon facilities don’t spur big job growth
But Amazon says its 2016 spending led to 200,000 jobs outside company.
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.
Martin Russell, executive director of the Warren County Port Authority, said the announcement of an Amazon facility coming to Monroe would drive job creation and economic growth for the region.
“Amazon’s commitment to Warren County and all of Southwest Ohio will afford those seeking employment with great opportunity. With Warren County’s prime location at the center of the U.S. market, we look forward to partnering with Amazon as they continue to grow their business here and globally,” Russell said.
A new study challenges that premise, finding 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 (EPI) 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. 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.
Amazon employs more than 6,000 people in Ohio. Amazon operates fulfillment centers in Etna and Obetz and recently announced plans to build centers in North Randall and Monroe. The Ohio Tax Credit Authority approved a 1.39 percent, 10-year tax credit for the Amazon facility that is expected to create $26.7 million in new payroll and be a $30 million fixed-asset investment. The tax credit starts in January. As part of the tax credit agreement, the Ohio Tax Credit Authority says Amazon will have to maintain operations at the Monroe location for at least 13 years.
“We are excited to continue growing in Ohio, adding 1,000 new jobs to the more than 6,000 Amazonians already working in the state,” said Sanjay Shah, Amazon’s vice president of North America customer fulfillment. “The support of local leaders and incredible workforce has been instrumental in our decision to locate the new fulfillment center in the state, and we are grateful for the support we’ve received to bring new jobs and investment to Ohio.”
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, but was nearing 100 by the end of 2017.
In the process, the company has become the second-largest U.S.-based employer, trailing only Walmart. Critics have scrutinized the high-pressure working conditions present in its warehousing arm, as well as the public subsidies spent to lure warehouses in the first place.
“They are clearly opening a lot more fulfillment centers; this is a big development in our economy,” Zipperer said. “Local governments are more or less falling over themselves to attract Amazon. That raises the question, what are you actually getting when you basically sacrifice future tax revenue? How big is that trade-off ?”
In a statement last week, Amazon pushed back against the EPI study.
The company says it employed more than 200,000 people in the U.S. 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, Wisconsin, 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.
The study examined 54 Amazon fulfillment centers in 34 U.S. counties, which the authors say covered about three-fourths of Amazon’s warehousing network as it stood in 2015. The authors limited their sample to warehouses opened by that year, an effort to evaluate employment changes in the years following the opening.
EPI, based in Washington, D.C., describes itself as a nonpartisan think tank that advocates for worker-friendly policies. About 30 percent of its funding comes from labor unions.
“The most charitable explanation that would mesh with our findings is Amazon is creating jobs, but they’re not that many to actually detect as a (meaningful) addition to overall employment,” Zipperer said.
The other possibility, he said, is that Amazon warehouse jobs “are just pulling people away from other sectors of the economy,” he said. “Some retail worker is now going to take a job at the warehouse.”