New Analysis: Amazon Warehouses Impose Hidden Costs on Communities

Date: 22 Oct 2015 | posted in: Press Release, Retail | 0 Facebooktwitterredditmail

Amazon is on a building spree, and many local officials are eager to bring one of its giant fulfillment centers to their own backyard.  But a new analysis from the Institute for Local Self-Reliance (ILSR) indicates that communities are losing more than they gain in these projects.

Contact: Stacy Mitchell, 207-232-3681
Co-Director, Institute for Local Self-Reliance (ILSR)

Cities are so eager to lure Amazon that many have resorted to offering the company lavish tax breaks and other public assistance.  Between 2012 and 2014, public records show, Amazon picked up $431 million in local tax incentives to finance its warehouse expansion.

Yet, Amazon fulfillment centers impose so many hidden costs on local economies, ILSR contends, that cities ought to reconsider welcoming them at all, much less greasing the way with public funds.

According to 5 Things Local Officials Need to Know Before Welcoming an Amazon Warehouse, a factsheet released today by ILSR:

  • Amazon doesn’t deliver real job growth.  The company employs just 19 people per $10 million in sales, compared to 47 people per $10 million in sales at local brick-and-mortar retailers. This means that as Amazon grows and crowds out other businesses, the result is a net decrease in jobs.
  • Amazon’s regular fulfillment center employees are paid about 16 percent less than the U.S. average wage for warehouse workers.  Most of those working in its warehouses earn even less than that: as many as two-thirds are temporary workers hired through staffing agencies.
  • In sharp contrast to businesses that rely on local supply chains, Amazon warehouses deliver virtually no spin-off benefits for area firms.
  • Even as it collects public subsidies, Amazon often sidesteps its tax obligations.  For more than 20 years, the company sought to avoid collecting sales tax, even going so far as to conceal its physical presence in some states. Today, Amazon still does not collect sales taxes in 19 states.
  • Amazon warehouses place a heavy burden on public services and infrastructure, most notably the roads surrounding its warehouses.  This causes traffic, safety, and pavement wear impacts, all of which lead to higher public costs.

“Community leaders have barely begun to grapple with the implications of Amazon’s growth,” said Stacy Mitchell, senior researcher and co-director at ILSR.  “Amazon is upending the age-old relationship between commerce and place, and with this shift comes significant costs for local economies.  Our analysis puts hard numbers to some of these costs.  It should spur cities that are courting Amazon warehouses to reconsider.”
The Institute for Local Self-Reliance (ILSR) is a 41-year-old nonprofit research and educational organization based in Minneapolis, MN, Portland, ME, and Washington, DC. ILSR’s mission is to provide innovative strategies, working models, and timely research to support strong communities and local economies.More at

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.