It’s official: Amazon made a deal with elected officials and developers to locate two giant fulfillment centers in Edwardsville, Ill. (Which counts as the St. Louis metropolitan area, except that this plan cleverly doesn’t count as having nexus in Missouri so Amazon will still be exempt from collecting and paying Missouri sales tax on Missouri sales.) Everyone is crooning about the supposed 1,000 “high quality jobs” that will be created.
No word yet on just how, in an Amazon spokesperson’s words, the local officials were “very supportive” of Amazon’s requirements for locating there. In other states, this has often meant various property, payroll and sales tax abatements or outright exemptions as well as lots of free infrastructure support for sewage, water and other services to the warehouses. Meanwhile, the locally-owned main street bricks and mortar stores continue to make our communities attractive places to in which to live, work, shop, play and be tourists, yet we have had little to no access to capital, be it loan, grant or gift from unsuspecting taxpayers.
This constant preference for giant remotely owned box stores (and Amazon) persists in our area in spite of study after study showing the myriad ways in which locally owned businesses contribute far more to the local economy that chain stores and Amazon, creating and maintaining quality jobs at a far higher rate and reinvesting dollars in the local community at two to three times the rate of chain stores.
It is a no brainer: support locally owned business if you want to see an economic turnaround.
Yet incredibly, our public officials continue to do the same thing –give financial support to giant remote companies like Amazon—over and over in hopes of achieving a different result, which as we all know, is the very definition of stupid. A recent article in The St. Louis Post-Dispatch reported on a maddenly obvious example. In the May 1 issue, David Nicklaus wrote:
“Area governments have provided more than $2 billion of subsidies to retail developers in the past couple of decades, but metropolitan St. Louis has the same number of people working in retailing as it did in 1990.
The numbers looked a little better in pre-recession 2007, but about 5,000 store jobs have disappeared since then. For every new Lucky’s Market or Ikea we’ve gained, a Kmart or OfficeMax has closed.”
You could easily include “Amazon Fulfillment Center” in this article because the Edwardsville facilities will be the Amazon version of a big box store, albeit with grueling, sweatshop conditions.
The biggest reason investing in big box stores and Amazon fulfillment centers does not create more jobs is not that other big box stores close. It’s that locally-owned, main street stores close and they are in fact, the biggest job creators, not Ikea or Amazon.
Even counting all the jobs in Amazon distribution centers, Amazon sales produced a net loss of 135,973 retail jobs.
Let’s be clear:
- Amazon jobs are not high quality. Amazon keeps costs low at its Allentown, PA facility by not installing air conditioning and instead requested ambulances to be stationed outside as workers, including pregnant women, collapsed when the heat reached up to 110 inside. Company officials refused to even open windows. But hey, they added some fans.
- States with Amazon facilities still see a net job loss.
One employee said it’s now like “working in a convection oven while blow-drying your hair.”
Amazon and Empty Storefronts is a ground-breaking study released in 2016. It found that the economic impact of Amazon in 2014 alone was staggering.
From the study:
“In 2014, Amazon sold $44.1 billion worth of retail goods nationwide, all while avoiding $625 million in state and local sales taxes.
That is the equivalent of 30,000 retail storefronts, 107 million square feet of commercial space, which might have paid $420 million in property taxes.
A total of more than $1 billion in revenue lost to state and local governments, $8.48 for every household in America.
Amazon also operated 65 million square feet of distribution space, employing roughly 30,000 full-time workers and 104,000 part-time and seasonal workers.
Even counting all the jobs in Amazon distribution centers, Amazon sales produced a net loss of 135,973 retail jobs.”
What did this mean in Illinois?
Again, to quote from the study:
Illinois: Essential Findings
- In 2014, Amazon sold $1,834.5 million worth of retail goods statewide, all while avoiding $36.1 million in state and local sales taxes.
- That is the equivalent of 1,289 retail storefronts, 4.5 million square feet of commercial space, which might have paid $23.6 million in property taxes.
- A total of more than $59.8 million in revenue lost to state and local governments, $12.51 for every household in Illinois.
- Amazon also operated 1.7 million square feet of distribution space in Illinois, employing roughly 3,431 workers.
- Even counting all the jobs in Amazon distribution centers, Amazon sales produced a net loss of 7,802 retail jobs in Illinois.
In January, 2015, Illinois became the 24th state to require Amazon to comply with the same tax laws as Illinois-based retailers, which will go a long way to levelling the playing field for bricks and mortar businesses located in the fiscally-challenged state. Yet it seems clear that Edwardsville, a lovely small town with a great Main Street comeback, will be subsidizing their sweatshop anyway.
What about Missouri? Not one of the 24 states that wised up and started charging Amazon at least sales tax, effectively punishing bricks and mortar retail located in the state and employing Missouri voters.
Missouri: Essential Findings
- In 2014, Amazon sold $768.3 million worth of retail goods statewide, all while avoiding $60.2 million in state and local sales taxes.
- Amazon sales produced a net loss of 4,704 retail jobs in Missouri.
- That is the equivalent of 540 retail storefronts, 1.9 million square feet of commercial space, which might have paid $7.6 million in property taxes.
- A total of more than $67.8 million in revenue lost to state and local governments, $28.71 for every household in Missouri.
- Having no Amazon distribution centers to offset retail job losses, Amazon sales produced a net loss of 4,704 retail jobs in Missouri.
- Bonus Factoid courtesy the Small Business Administration: In 2012, small businesses in Missouri employed roughly half the private workforce and created nearly 30,000 new jobs.
Amazon’s physical presence in our region is NOT a positive development. What would be a positive development is if Missouri would require the anti-labor behemoth to at least collect and pay sales tax. The rest of Missouri’s retail business citizens will still be creating jobs, paying payroll and property taxes while Amazon drains the state of its vitality, but at least there would be some sales tax revenue. It’s called efairness and it should be the law.
When you call 911, do you want to be put on hold because the tax base doesn’t support enough first responders?
State and local officials should not give remote etailers a pass on corporate responsibility while expecting the business owners who pay the salaries of those officials as well as the salaries of the most of their constituents, to adhere to the law. It is short-sighted, expensive, and detrimental to the vitality and economic health of the state. Policy-makers should redirect their planning to programs that ensure the health of their local main-street businesses. There are plenty of models at work across the country that have turned neighborhoods and main streets around.
What I say to consumers
Where you spend your dollar is a political act. You literally cast a vote for the kind of community in which you want to live.
When you call 911, do you want to be put on hold because the tax base doesn’t support enough first responders? Do you want good roads? Decent schools? Sewers? How about somewhere to walk around other than on a treadmill at a gym? Perhaps a park or two for your kids?
I am not saying you have to go cold turkey. I know it’s easy and quick and sometimes appears to be less expensive but if you shift even 1 out of 10 transactions to a local retailer, you’d make a demonstrable contribution to your local economy. Civic Economics did a study in Grand Rapids, MI in 2008 (a year most of us would rather forget economically) and found that just a 10%shift in market share from chains to local companies in just 3 sectors: groceries, pharmacies and full-service restaurants would generate an additional $137 million in revenue and 1600 jobs.
Easy Way to Shop local on line: Independent bookstores are locally-based retailers with e-commerce websites. You can shop on line AND local. Check with some of your other favorite places to see what online services they might offer. You would be surprised. www.left-bank.com
What I AM saying is start spending at least some of your money in local establishments. Even a ten percent shift in spending from chains and on-line etailers to locally owned businesses can result in significant revenue generation for the community and job creation. Real job creation.
What I say to folks who sell through Amazon
You affiliate because you think you simply have no choice. Doesn’t that concern you even a little bit?You affiliate because you have come to the conclusion that they are the only online game in town. They are not. And even if you decide to affiliate anyway, wouldn’t you like more say in the terms of sale for your business?
Do you really want one gigantic, completely unregulated company to decide what’s best for you?
Support policies that level the playing field.
Consider alternative platforms for your business that give you more control. Otherwise you risk becoming merely another of Amazon’s “quality” jobs.
What I say to organizations who think they can raise money telling all their friends to shop on Amazon
Please see the economic impact of Amazon in the study I quote from. An economically healthy community has money to spend on local charities.
Most local businesses, including my own, support local charities with money, time, and resources that are almost immeasurably more effective than you will see when you send money to Jeff Bezos.
I have never seen Bezos donate books and time to St. Louis Public school children, serve on the board of a local charity, weed and plant the first Transgender Memorial Garden in the country, do a winter clothing drive for St. Louis’s homeless and personally deliver said clothing (Mo Costello, MoKaBe’s), underwrite free and reduced veterinary services for stray animals (Carol House) or show up for anything that helped St. Louis in any way.
Lots of local businesses, including my own, have numerous programs for generating revenue for your cause. It’s our community.
We actually care.
We, local independent retailers–your tax-paying, job-creating friends, family, neighbors, and constituents, encourage you to support homegrown initiatives instead of inviting Amazon in to destroy anymore of our community.