The slow collapse of traditional retailing is attributable to Amazon more than any other single company. We’re sad to report, then, that a new study finds that a new Amazon warehouse won’t create any jobs in your decrepit town, at all.
Logically, it would seem that since online retailing is killing off regular retailing, a simple way for a city to keep its employment base strong in our new economy would be to entice Amazon to build distribution centers in the city. Staying abreast of technological change, and all that. And indeed, cities and counties across America have offered Amazon all types of tax incentives—over a billion dollars’ worth—as sweeteners to attract those warehouses, and their jobs.
But a new report from the Economic Policy Institute finds that this entire strategy has a serious flaw: no new jobs.
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.
In fact, economists found that some counties actually saw small reductions in overall employment in years after Amazon warehouses opened there. At the very least, it is safe to say that offering corporate welfare to attract these facilities is not a good use of public funds. “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,” the report says. “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.”
This is the baby version of the travesty that is the national competition for Amazon’s second headquarters. And both are utterly stupid. Amazon does not need the public’s money. It is already getting plenty of it selling stuff.
[For more on what those warehouse jobs are really like, see here.]