Amazon is Lifeline for US Retail Workers if They Live in Right City

The jobless in Columbus can find work at a nearby Amazon warehouse. El Paso workers aren’t so lucky

by Spencer Soper / BLOOMBERG

Elijah Hahe spent years toiling in retail — supermarket cart boy, gas station attendant — with little to show for it but low pay, inconsistent hours and skimpy benefits. So, when Hahe heard a radio ad for positions at a new Amazon. com Inc warehouse near Columbus, Ohio, he applied immediately.

”I knew Amazon was an up-and-coming company, so I figured I’d give it a shot,” says Hahe, who’s 25. “It was definitely scary. Once I got here, I realised it was a good fit.”

A year later, Hahe is training new hires and aspires to run his own warehouse. He has steady full-time work, health benefits and is saving for a three-week vacation to Ireland, something he never considered while working retail.

For many struggling store workers, the answer seems to be: If you can’t beat ‘em, join ‘em. Amazon says it doesn’t count how many of these people it has hired.

But, according to the US Labour Department, the number of workers who lost their jobs at department stores like Sears, Macy’s and JC Penney since 2000 is about the same as the 444,000 hired by the warehousing industry.

Many of these new warehouse jobs are at Amazon fulfilment centres, buildings of about a million sq ft where products are retrieved, packed into boxes and shipped to homes around the country. The 125,000 people toiling in Amazon’s distribution network account for about 25% of the warehouse jobs added in the last 20 years. So, while critics from former US President Barack Obama to US President Donald Trump have blamed Amazon for destroying retail jobs, the online giant is also providing a potential lifeline to those same workers.

There is a wrinkle, however, with long-term implications for the US labour market. The likelihood of someone who lost their job working the Macy’s makeup counter landing a job packing boxes at an Amazon warehouse largely depends on where they live (or their ability to move). BloombergreviewedLabourDepartment data, state notices about store closures and Amazon warehouse announcements over the past 20 years, revealing a concentration of warehouse employment growth clustered around Amazon facilities while retail’s losses are more evenly distributed.

A man sits outside a shuttered Macy’s department store at the Neshaminy Mall in Bensalem, Pennsylvania. (Pic by Bloomberg)

As shoppers shift more of their spending from stores to websites, some warehouse labour markets are winning while many retail markets are losing. The 1,000-plus people who have lost retail jobs over the last decade in the Columbus region where Hahe works, have Amazon as a backstop. As do retail workers in San Bernardino, California, Harrisburg, Pennsylvania and dozens of other markets around the country where Amazon has set up distribution hubs.

But many regions losing department stores can’t take advantage of Amazon’s hiring machine. For example, hundreds of displaced retail workers in El Paso, Texas, are out of luck because there’s no Amazon facility nearby.

“Previously, you needed stores in big towns, medium towns and small towns,” said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University. “With e-commerce, jobs are more aggregated. Some markets will have a huge shortage of jobs. For people caught on the wrong side, this is going to be painful.”

The e-commerce revolution that has decimated the retail industry (Toys “R” Us Inc just filed for bankruptcy protection) is also upending the gender balance. Women hold about 60% of jobs at general merchandise stores but only about a third of those at warehouses, which tend to favour mid-career men without college degrees, says Jed Kolko, the chief economist at job search website

“The rise of e-commerce doesn’t just favour some places over others,” he says. “It favours some people over others.”

Amazon’s growing impact on the economy — including its US$13.7 billion (RM57.39 billion) purchase of Whole Foods Market — has prompted talk in Washington that the company is growing too big and powerful. Trump frequently hints in tweets he’ll try to rein in the e-commerce giant, and Democrats have called for hearings.

No one expects an antitrust investigation against Amazon any time soon, but the company’s public relations machine has been loudly touting its hiring and job-training programmes. In January, CEO Jeff Bezos pledged to create 100,000 jobs over the next 18 months. And earlier this month, the company invited cities to submit proposals to host a second North American headquarters that would eventually employ 50,000 (although some of those could transfer from its Seattle base).

Employees unpack inbound boxes at the Amazon fulfilment centre in Robbinsville, New Jersey (Pic by Bloomberg)

The company is also hiring in an industry that typically pays better. Amazon doesn’t disclose pay but warehouse workers earn an average of US$17 an hour versus US$13 for retail workers at stores selling general merchandise. Plus, warehouse workers get more than 40 hours per week compared to about 30 for retail workers, according to Labour Department data.

Damien Tyson, 30, left a management job in a Florida big-box store and now works as a trainer at the Amazon warehouse in Columbus. Tyson makes more than he ever did in retail, and he’s putting the extra money toward online classes to pursue a degree in data management. He met his fiancé, who also has a retail background, at Amazon and she’s going back to school, as well.

“My fiancé and I are both in college and we wouldn’t have been able to do that if we stayed in retail,” Tyson says.

Amazon’s job creation narrative got a boost in March when the Progressive Policy Institute concluded that the e-commerce industry is adding jobs more quickly than the retail sector is losing them. But the company remains vulnerable to criticism that it’s distribution model means jobs are concentrated in fewer pockets around the country.

El Paso has lost hundreds of retail jobs this year as Macy’s, Sears and other retailers shutter stores. Guadalupe Meyer, 51, watched the death of a local Macy’s first-hand. As she and her colleagues sold off the last of the inventory, they discussed the fate of the only industry they knew.

“We’d talk about how everything is going to Amazon and asked ourselves how we could get jobs there,” says Meyer, who has been applying at other retailers and hotels. “Those are questions we still ask. If we get an Amazon warehouse, I could gather a group of my colleagues and we’re ready to work.”

But Amazon’s nearest warehouse is more than 400 miles (644km) away in Phoenix. The situation in El Paso is so bleak that a local nonprofit petitioned the federal government for Trade Adjustment Assistance, long-term unemployment benefits and education funds for displaced workers.

Such aid is usually reserved for workers affected by off-shoring, when businesses close US factories and customer call centres and shift the work overseas. But Joyce Wilson, who runs Workforce Solutions Borderplex, an economic development agency in El Paso, says the aid should be broadened to retail workers displaced by e-commerce.

“The federal government isn’t paying attention to this,” she says. “They’re talking about coal mining and manufacturing and 19th Century jobs. They aren’t paying attention to what’s happening in retail.” — Bloomberg