Dee Margo, who is facing a runoff election against Oscar Leeser, put out a political mailing recently that states that Margo brought Amazon to El Paso along with 700 corresponding jobs. Margo, like the Borderplex Alliance are touting the achievement of bringing Amazon to El Paso as well as the 700 promised jobs.
On July 22, 2020 Amazon announced that it was opening an Amazon fulfillment center in El Paso. The proposed 625,000 square-foot warehouse promised to offer 700 jobs at $15 an hour. Amazon expects to the have the warehouse open next year.
The El Paso location fills in a 1,000-mile void for Amazon with Phoenix and San Antonio the closest Amazon fulfillment centers to the city.
But are Amazon fulfillment centers good for the community?
Because the City did not provide Amazon any tax incentives for the warehouse, it will bolster the tax base as it enters service.
But do the promised jobs and the operation benefit the community?
The California Experience
Amazon employs 15,000 full-time workers in eight warehouses near Los Angeles, according to The Atlantic in a 2018 article. The Amazon jobs on the surface look good for the community. According to The Atlantic, the unemployment rate in the area dropped from a 15% high in 2012 to five percent in 2018.
But The Atlantic article notes that few workers stay around long enough to benefit from the benefits the company offers employees after they work for a year. The Atlantic noted that the jobs are “grueling and high-stress” and many of the jobs are seasonal putting workers into a situation of not knowing how many hours they will work each week.
The Atlantic article states that San Bernardino, where the Amazon distribution centers are, have experienced an increase in poverty levels and a drop of 4% in household income.
Ohio And South Carolina Report Similar Experiences
Policy Matters Ohio, a non-profit policy research firm looking to create sustainable economies in Ohio reported in 2018 that Amazon is “one of the largest employers of workers who need food assistance” in Ohio. Amazon, according to the research center, employed about 6,000 workers in 2018. Of those, 1.430 were getting Supplemental Nutrition Assistance Program (SNAP) benefits.
The Economist also in 2018, likewise cited the experience of Lexington South Carolina, where in 2010, Amazon opened a distribution center. By 2018, the annual earnings for warehouse workers in Lexington had “fallen from $47,000 to $32,000.”
The Economic Policy Institute, a non-profit and non-partisan think tank focused on the economic condition of low- and middle-income workers, published a 2018 report analyzing Amazon fulfillment centers in the communities they operate in. The EPI found that the communities where the fulfillment centers open “gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall.” In essence, the report found that new jobs are not created but, rather, the existing jobs are shifted towards Amazon.
As Lexington, Ohio and Los Angeles have demonstrated, the wages drop instead of increase because of Amazon.
Amazon Argues It Benefits The Community
Amazon, for its part, argued in 2018 that its California investment of $2.17 billion generated an additional $2 billion in small businesses; like cleaners, hair salons and eateries that opened near the Amazon facilities. Amazon quoted John Husing, Ph.D., the chief economist for the government partnership (Inland) that brought Amazon to the San Bernardino area.
Husing told the Los Angeles Times in 2019 that “Amazon has created 20,000 new jobs” with salaries in the $15.12 an hour range.
Wages and benefits are not the only issues for the Amazon centers.
Robots Replacing Workers
The shifting of jobs and the impact on the community’s wages aren’t the only thing El Paso needs to be concerned about. By 2019, the San Bernardino Amazon warehousing complex noticed another shift in the jobs at Amazon.
This time it was not lower wages or long hours, but rather a now competitor for the Amazon jobs.
Los Angeles’ KCRW noted in 2019 that the new Amazon facility in Beaumont, the 14th for Amazon in Southern California, that it wasn’t people that would be picking items from the warehouse floor – it was now going to be robots. According to KCRW, the “fulfilment center came online and tripled the output of what the facility was able to do,” without tripling the number of workers. KCRW quoted Paul Granillo, the head of the nonprofit Inland Economic Partnership, as saying that “automation” achieved the increase in output.
Johannes Moenius, an economics professor at the University of Redlands, quoted by KCRW, believes that “about 75% of the logistics jobs face automation” with many of the Amazon jobs to be outsourced to robots in the coming years.
In 2019, Brookins Institute released a report on automation. The report noted that the San Bernardino area now faces another job threat on its Amazon facilities – one of robots taking the jobs. Robots will be supplanting workers in the Amazon warehouses. In the next 15-years, low-skilled will be far more affected than middle-skilled workers, noted Brookins.
The automation will worsen inequality notes the report. “One-quarter of American jobs will be seriously disrupted” by automation said the report. In the California Inland Empire project, “100% of tasks performed by packaging and filling machine operators may be automated.”
A Los Angeles Times article in 2019, reported that the threat of robots resulted in “hundreds of residents” packing a San Bernardino meeting to discuss a “$200-million air cargo facility” in 2019 to “rail against a huge new logistics center” that was “rumored to be Amazon.com”. The residents wanted to know what kind of jobs, benefits and whether the jobs would be replaced by robots.
On October 27, 2020, Amazon announced a new fulfillment center in Papillion. “Once fully operational, the facility could bring 1,000 full-time jobs to the area with wages starting at $15 per hour,” said Amazon officials. The Papillion “will be home to its newest robotic fulfillment center,” Amazon’s virtual press conference revealed.
The jobs Amazon was now offering were not the entry level poor communities like El Paso depend on, but rather higher-skilled jobs requiring a higher skill set than the traditional warehousing jobs.
Critics of Amazon contend that many of the Amazon jobs are benefit-free temporary positions filled for seasonal work.
Amazon The Job Killer
According to a 2017 Marketwatch report, “millions of retail jobs are threatened as Amazon’s share of online purchases keeps climbing.” Also according to Marketwatch, “every job created at Amazon destroys one or two or three” other jobs. “Amazon is going to destroy more America jobs than China ever did,” noted the Marketwatch report.
Amazon’s business model kills more jobs than it created because it disrupts the traditional retail industry. In addition to disrupting the retail sector, Amazon is now disrupting the warehousing industry through automation.
El Paso may celebrate the 700 promised jobs in the next few years but at what cost? Will the number of jobs in El Paso increase or will Amazon shift jobs from one place to another? Is the promised $15 an hour job rate sustainable or will wages drop overall as other communities have already noted.