Despite the boon it has been for its hometown of Seattle, a new report claims Amazon is killing more jobs than it creates and reducing competition across a variety of industries.
The report from the Institute for Local Self Reliance levels a variety of damning claims against the Seattle online retail giant, contending that Amazon has crippled brick and mortar retail and taken over the online retail sector, forcing sellers to play by their rules. Within the company, the report claims that Amazon is driving down wages of manufacturing and delivery jobs with a long-term goal of automating thousands of positions. And the company is doing this while taking millions in public subsidies to build warehouses around the country. From the report:
When you look past its digital trappings, the way Amazon operates, and the way it’s changing the economy, looks less like the future and more like the past. Amazon resembles the 19th century railroad baron controlling which businesses get to market and what they have to pay to get there, and like the garment factory owner of that same unequal Gilded Age, who paid laborers a piece rate. Amazon has monopoly ambitions much as Standard Oil once did, and today controls nearly as much of the book industry as Standard Oil controlled of the oil industry when it was broken up in 1911.
Amazon declined to comment on the report. ILSR has taken on Amazon in the past, documenting many of the same issues introduced in today’s report back in 2013. The group has also produced studies claiming that big-box stores are bad deals for cities, and that monopolies are ruining America’s small businesses.
Amazon’s worldwide employment exceeded 306,000 people in the third quarter, but the report found that the company is responsible for 149,000 more lost retail jobs than it has created in its distribution warehouses. The report claims Amazon’s growing dominance has caused more than 135 million square feet of brick and mortar retail space to become vacant, or an equivalent of 700 big box stores and 22,000 main street businesses closing.
Furthermore, the report contends that Amazon is driving down wages in warehouses while forcing workers to endure grueling conditions. The report looked at 11 metro areas in the U.S. where Amazon has warehouses — including Seattle — and found that Amazon paid workers on average 15 percent less than the prevailing warehouse wage. In the Seattle area, where Amazon has five warehouses, average wages are 18 percent less than prevailing pay for warehouse workers, according to the report.
“What Amazon is doing is taking work that has historically provided routes to a prosperous, satisfying life, degraded those jobs in the short term, and in the long term planned to automate them,” said Olivia LaVecchia, one of the authors of the report.
These charges against Amazon stand in stark contrast to its galvanizing impact in Seattle. The company’s rapid expansion has juiced the local real estate market, almost single-handedly creating new neighborhoods like South Lake Union and the Denny Triangle. Amazon’s hiring binge has led to a boom in housing production for the thousands of new employees the company brings to Seattle. In Washington, Amazon employs approximately 35,000 people, and many of those hold high-paying, white collar jobs at its corporate headquarters.
On the flip side many are wary of this unprecedented growth, with some blaming Amazon for new issues like bad traffic, rising housing costs, and income inequality. Seattle Mayor Ed Murray has acknowledged these issues, while calling the company’s growth “a great problem to have.”
Of the more than 300,000 people Amazon employs around the world, 80,000 of them were added in the past year, according to Amazon’s latest earnings report. The company is bringing in 120,000 seasonal workers for the holiday season in the U.S. In its annual shareholder letter, Amazon says third-party sellers on its marketplace have created more than 600,000 jobs, and 70,000 of them make more than $100,000 a year.
Beyond the inflammatory claims of Amazon’s negative impact on the world, the report illustrates just how powerful the online retailer, which started out of Jeff Bezos’ garage, has become. Amazon, according to the report, captures close to $1 of every $2 spent online. Beyond that, it has become the go-to place for shoppers, and in turn, independent sellers need to have a presence on Amazon. Amazon is increasingly getting into brick-and-mortar retail, including grocery stores, book stores and pop up locations.
The company’s rapidly growing Amazon Web Services business controls one-third of the world’s public cloud computing capacity, more than Microsoft, IBM, and Google combined.
Amazon increasingly controls the underlying infrastructure of the economy. Its Marketplace for third-party sellers has become the dominant platform for digital commerce. Its Amazon Web Services division provides the cloud computing backbone for much of the country, powering everyone from Netflix to the CIA. Its distribution network includes warehouses and delivery stations in nearly every major U.S. city, and it’s rapidly moving into shipping and package delivery for both itself and others. By controlling this critical infrastructure, Amazon both competes with other companies and sets the terms by which these same rivals can reach the market.
The authors close the report with a series of policy steps they would like to see taken to rein in Amazon. The report finds that Amazon has taken $613 million in tax-payer dollars for warehouses since 2005, and almost half of the 77 large facilities built between 2005 and 2014 have received some kind of public funding. The authors recommend refraining from these kinds of subsidies in the future, and strengthening anti-trust regulations to break Amazon up into several smaller companies.