Thursday, April 30, 2015

Don't Subsidize Amazon

When I heard that Amazon hopes to build a distribution center in Shakopee (an outer suburb southwest of Minneapolis) as long as it gets $5 million in tax subsidies, I wanted to write about it. I wanted to remind everyone that Amazon creates low-wage, hellish jobs and that they make their workers stand, unpaid, in security lines every day.

But I didn't get it written, and now Olivia LaVecchia of the Institute for Local Self-Reliance has done it for me.

She reminds us not only of those two points, she also added these:

  • Amazon has already gotten $419 million in subsidies from other states and local governments.
  • Amazon continues to fight the sales tax exemption they've enjoyed since their founding. It cut ties with Minnesota affiliates when Minnesota passed a sales tax in 2013 that applied to them.
  • The average hourly wage at an Amazon warehouse is below the average U.S. warehouse wage. (And that doesn't include the average-lowering unpaid hours standing in line.)
Her strongest points of all may be these:
...the numbers show that Amazon actually destroys more jobs than it creates. While brick-and-mortar retailers employ 47 people for every $10 million in sales, Amazon employs only 14 people per $10 million in revenue, according to U.S. census data and Amazon’s annual reports. This means that as Amazon grows and crowds out other businesses, the result is a net decrease in jobs.

Within that slice of brick-and-mortar retailers, it is independent retailers that create even more jobs, our research has found — 57 jobs for every $10 million in sales. In other words, providing tax breaks to giant companies like Amazon disadvantages the locally owned enterprises that add real value to the economy.

These local businesses are the ones that maintain a diverse and competitive marketplace, keep dollars in the area economy, and foster civic engagement and community well-being. These are also the companies that could use subsidies like training grants or low-interest loans to actually create more value — instead of more private profit.
The best local investment of all, in my opinion, would be co-ops like the new store being built by Seward Co-op on 38th Street in South Minneapolis. It not only brings food to an under-served area, it will create hundreds of jobs that pay more than Amazon and provide room for promotion, too. And it's community owned.

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