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Should the city be using incentives on Amazon?

| Written by Nick Stumo-Langer | No Comments | Updated on Jul 27, 2017 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/should-the-city-be-using-incentives-on-amazon/

The Florida Times-Union – July 27, 2017

Written by David Jaffee

It says something about the state of the Jacksonville labor market when, according to the Times-Union, hundreds “brave summer heat and long lines to apply for Amazon jobs.”

While we should always welcome expanding job opportunities, it is also important to recognize that Amazon has received $13.4 million in economic development awards from the city in the form of incentives, grants and subsidies.

The first thing to understand is that Amazon is not locating a corporate office or headquarters in Jacksonville but rather “fulfillment centers.” This is the term Amazon uses to describe what will be, in one Jacksonville location, a sprawling 800,000 square foot distribution center designed to rapidly fulfill the orders of its customers in the region.

Second, despite the media hype, Jacksonville has not captured some rare commodity — there are already at least 70 such fulfillment centers nationwide.

Third, and at the risk of being labeled a jobs buzzkiller, the vast majority of Amazon jobs — Amazon anticipates employing 1,500 workers at one site— will be warehouse jobs. As an Amazon press release indicates, “At the facility, Amazon employees will pick, pack and ship small items to customers such as books, electronics and consumer goods.”

What can we learn about these kinds of jobs from the media reports at other locations? The news is not good.

One story leads off this way:

“It’s unspeakably awful to work in an Amazon warehouse. You have to walk between seven and 15 miles a day, enter and exit the buildings through a set of airport-style security scanners that take 30 minutes to get through and you’re constantly being watched.”

One publication interviewed 20 former and current Amazon employees. Workers said they were forced to endure brutal heat inside the sprawling warehouse and were pushed to work at a pace many could not sustain.

In fairness to Amazon, job postings are candid about the physical aspects required of prospective applicants.

They note that one must be able to lift heavy items, walk long distances, climb stairs, squat/bend/reach, work extra hours, withstand temperatures exceeding 90 degrees and tolerate loud noise.

One might expect a high level of compensation for such strenuous labor. But while Amazon has boasted of its high wages, a comprehensive study by the Institute for Local Self-Reliance “found that Amazon’s fulfillment center positions pay an hourly mean wage of $12.32, which is 9 percent less than the industry average for comparable work.”

On the positive side, full-time positions in the warehouse include health insurance, a savings plan, paid parental leave and tuition reimbursement.

The question is what percent of the jobs locally will qualify as full-time? Amazon relies heavily on a large army of temporary/seasonal workers — or “permatemps” — who do not receive these benefit packages.

Given what we know about the kinds of jobs Amazon offers, should cities be providing Amazon with hundreds of millions of dollars in incentives and subsidies? According to the research organization Good Jobs First, Amazon has already received $241 million in subsidies nationwide.

Further, there is no reason for large cities to incentivize Amazon to locate a fulfillment center. The essential core objective of their business model depends upon strategically locating their warehouses within easy striking distance of major population centers in order to expeditiously fulfill online orders.

Despite logical arguments against public subsidies, there is the single retort that trumps any criticism of corporate welfare — jobs.

But as the Institute for Local Self-Reliance has documented, the long-term aggregate impact of Amazon’s national expansion is, in fact, the elimination of jobs.

This is because online retail has been replacing consumer spending in the brick and mortar establishments, resulting in a net job loss.

Given the growing dominance of Amazon, citizens may be interested in learning more about their workplace practices and business model.

If so, I strongly recommend reports that can be found at the websites of Good Jobs First and the Institute for Local Self-Reliance.

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David Jaffee is a professor of sociology at the University of North Florida.

Read the full story here.