Amazon Warehouses Benefit Local Economies, Study Finds
It is often taken as a given that corporate retail giants like Amazon are “killing Main Street.”
“Amazon is a retail monopoly that threatens every corner of our nation’s economy,” United Food and Commercial Workers International Union president Marc Perrone said in 2020. “Left unchecked, it will eradicate jobs, small businesses, and countless American retailers across the nation.”
When the company announced that it would build a corporate headquarters in a New York City suburb, Rep. Alexandria Ocasio-Cortez (D–N.Y.) complained it would displace the existing population. “Shuffling working class people out of a community does not improve their quality of life,” she tweeted.
In a newly-released research paper, Evan Cunningham, a Ph.D candidate in Economics at the University of Minnesota, studied the effects of Amazon’s continued spread across the country—growing from just a handful of warehouses, or “fulfillment centers,” in 2010, to more than 1,300 today in the U.S. alone. On balance, it turns out that Amazon warehouses provide a net positive to local economies.
“I find Amazon’s entry in a metro [area] increases the total employment rate by 1.0 percentage points and average wages by 0.7 percent,” Cunningham writes. “The composition of employment shifts from retail and wholesale trade to warehousing and tradeable services, primarily driven by younger workers. Employment gains are concentrated among non-college workers.”
There are also some drawbacks, though it largely depends on your perspective. “Amazon’s entry increases rents by 1.1 percent and the cost of utilities by 6.0 percent,” while “average home values increase by 5.6 percent.” Higher rents and utility rates may not sound particularly appealing, but Cunningham notes that this is a result of higher housing demand: “The average worker is willing to pay $329 per year to live in a large U.S. city after Amazon’s entry, relative to a counterfactual U.S. economy where Amazon did not expand. This increase was primarily driven by rising home values, implying the benefits accrued to home owners.”
Indeed, as with any increase in demand, costs rise without an equal increase in supply; when a lot of people want to move to one place, housing costs will increase as a result.
Cunningham also examines the influence and effect of state and local subsidies. In a 2019 working paper, economist Timothy J. Bartik
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