Do Amazon Fulfillment Centers Help or Harm Local Economies?

Abstract

In this paper, I investigate the Amazon Corporation’s impact on the economic well-being of the communities that house its warehouses, or “Fulfillment Centers.” A review of the literature surrounding Amazon’s economic impact suggests that it has a negative net impact on local economies because it disrupts the distribution of private and public goods, suppresses wages, and displaces work in other sectors. My analytical contribution builds off of the Economic Policy Institute’s analysis of Amazon’s impact on county-level employment. I investigate: is Amazon’s impact on warehousing/storage sector employment (which EPI found to be significantly positive) and private-sector employment (which EPI found to not be significant) substantively meaningful and homogenous across communities of different sizes and regions of the U.S.? And are these findings consistent with one of EPI’s two hypotheses for their findings? Authors Jones and Zipperer hypothesize that Amazon does not have a significant impact on private sector employment because either 1) jobs created in the warehousing and storage sector are offset by job losses in other industries, or 2) Amazon creates too few jobs to significantly influence county-level employment. After replicating their analysis and re-creating each output by region and county metropolitan status, I found that Amazon creates slightly better economic outcomes for smaller metropolitan counties and counties located in the Northeastern and Western regions of the U.S. These findings are largely consistent with the second hypothesis. However, each coefficient, when translated into substantive estimations of county-level job growth, appears minute even when significant—for example, in smaller metropolitan counties, Amazon increases the proportion of private-sector jobs that are characterized as warehousing and storage-sector from just under one percent to just over one percent. Given the enormous economic investment necessary to attract an Amazon warehouse, and the unequivocal evidence for Amazon’s negative impact on local economies, it appears that Amazon’s substantively small impact on private-sector and warehousing and storage-sector employment does not justify the investment.