Amazon's retail dominance harms more than it helps
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We all know how good Amazon is at selling things, but last week’s announcement that it expects to hire 100,000 workers over the next 18 months is a complete snow job. 

Since its start more than 20 years ago, Amazon has been a master of the persuasive business narrative and the timing of its jobs pledge was telling, coming just before the inauguration of President Trump, a prominent critic of Amazon and its founder, Jeff Bezos.

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The real question is 100,000 jobs at what cost?

 

The net results of Amazon’s dominance in retail are both sobering and sad. In 2015 Amazon sales produced a net loss of 222,000 retail jobs nationwide, jobs that would have contributed to the long-term economic health and diversity of communities.

The jobs loss figures, courtesy of "Amazon and Empty Storefronts", a study issued by research firm Civic Economics, are the result of a number of factors.

In 2015, Amazon's U.S. retail sales were an estimated $55.6 billion, a staggering sum, but the net national effect was a total of more than $1.2 billion in lost revenue to state and local governments, according to the Civic Economics study.

That staggering loss was for one year only. In 2014, the estimated revenue loss to states was more than $1 billion.

Just over half of that loss came from Amazon's continued refusal to collect the mandated sales tax, a strategy that played a major role in consolidating its retail dominance while also fueling roughly 10 percent of its sales in states where it does not fully collect.

The remaining lost revenue stems from property taxes that would have resulted had the demand for those sales been directed to, or spurred the opening of, locally owned retail stores. 

While Amazon is now collecting and remitting sales tax in a growing number of states (34, the District of Columbia, and counting), it doesn’t change the fact that sales directed to Amazon are a lost opportunity for "Main Street".

The consolidation of Amazon’s power results in struggling local businesses, shuttered doors, and a dearth of new retail stores and vibrant Main Streets.

This is significant because Main Street retailers employ 49 people for every $10 million in sales, while Amazon employs just 23 people per $10 million in revenue, according to estimates from the nonprofit Institute for Local Self-Reliance (ILSR). 

Moreover, it represents the lost money that local governments desperately need. The revenue of half of the states was lower than budgeted in fiscal year 2016 and those weak conditions have continued into FY 2017.

These shortfalls have resulted in fewer teachers, more students per classroom, longer waits for first responders, and shorter operating hours for libraries, among many other cuts in community services.

What is even more galling is that it was taxpayers who paid for much of Amazon’s growth. It received approximately $613 billion in public subsidies for its distribution centers since 2005, as was noted in a recent report from ILSR.

More than half of the 77 facilities Amazon built between 2005 and 2014 were subsidized by taxpayers. This significant capitalization doesn't even take into account the complex steps Amazon has implemented to shield its revenue from federal tax collection through overseas tax havens. 

It is time to take a hard look at Amazon's growing dominance on commerce, the economy, and our culture. Its latest press release is just a smokescreen for the damage that it has already done.

 

Oren Teicher is the CEO of the American Booksellers Association, a not-for-profit trade association that promotes independent bookstores in the U.S.


 

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