What Happens to a Town When Amazon Moves In?

What Happens to a Town When Amazon Moves In?

What Happens to a Town When Amazon Moves In?

When local stores close up shop, workers lose out.


A few years ago, the greatest menace to the mom-and-pop shop was the Big Box store—“Walmartization”—cannibalizing Main Street’s small businesses and pauperizing workers. But the Big Box has lately started to crumple under a blast of digital trade winds, and the Amazon Empire could prove far more disruptive to labor and communities.

According to a study of Amazon’s community impact by the Institute for Local Self Reliance (ILSR) the mega-retailer has transformed shopping into an increasingly dehumanized process, while consolidating the labor infrastructure into a giant network of low-wage logistical chains where workers’ economic security shrinks and community-based businesses wither.

Currently the scale of Amazon’s global operations, which also include shipping and manufacturing, are outpacing Walmart’s. Amazon captures half of each dollar of US online purchases, according to ILSR’s analysis, and then there’s the virtually limitless scope of the company’s market power, hawking everything from books to blush to blenders. Amazon profits from each stage of the sales and logistics chain, from the web-browsing algorithms foisted on us to its behemoth network of “order fulfillment” warehouses.

“By controlling this critical infrastructure,” ILSR explains, “Amazon both competes with other companies and sets the terms by which these same rivals can reach the market.”

The global logistical and financial structure, ILSR says. provides enormous latitude in dodging local tax laws, yet has led to the hemorrhaging of brick-and-mortar-store jobs. Amazon’s large seasonal workforce relies significantly on third-party staffing firms, making it both difficult to organize workplaces and harder for the brand to be held accountable for shady labor practices. Amazon has in recent years been embroiled in various scandals involving abusive practices such as wage theft and extremely stressful conditions at its warehouses. But often it is not the primary employer, so it can avoid direct liability for the quality of working conditions of its growing, virtually invisible subcontractor workforce.

Amazon has also transformed the way we consume. Like Walmart, its online-shopping system increasingly constrains consumer choice, tracking shoppers toward cheaply produced, mass-branded goods. But Amazon outdoes Walmart in its psychological reach. ILSR states, “The company uses its data on what we browse and buy to shape what we see and adjust prices accordingly…blocking access to certain products, charging higher prices, and delaying shipping times for customers who decline to join its Prime program.”

Retail marketing is becoming both hyper-personalized for consumption and depersonalized for the merchant. According to Stacy Mitchell, a co-author of the ILSR study, Amazon’s retail hegemony is about not just market share but also social control, and not even Walmart ever achieved this level of cultural dominance.

Amazon is a bigger threat because of its anti-competitive tactics and the fact that it has corralled such a large share of the online shopping traffic that competing independent retailers face a difficult choice: they can either continue to try to sell online when fewer and fewer people are going to find them via search engines, or they can become sellers on Amazon, forfeiting all of their product knowledge and a big share of their revenue. Basically, they become something like serfs on a Medieval estate.

Though Amazon boasts of supporting hundreds of thousands of fulfillment workers, according to the ILSR’s analysis of local employment data, “Amazon has eliminated about 149,000 more jobs in retail than it has created in its warehouses, and the pace of layoffs is accelerating as Amazon grows.” In Illinois, for example, about $1.5 million in Amazon sales employed one worker, compared to seven brick-and-mortar jobs for the same volume of sales at a conventional store. The shrinkage and geographic consolidation of retail jobs, which currently make up about one-eighth of the labor market, have killed jobs that were “distributed across virtually every town and neighborhood.”

An analysis of 11 metro areas found that Amazon wages, which are concentrated in “order fulfillment,” not traditional customer service, are some 15 percent lower than the typical pay scale for comparable non-Amazon workers. In Kenosha, Wisconsin, home to two fulfillment centers, an Amazon warehouse worker earns nearly $3.40 per hour less than the average local warehouse worker, which is in turn over $4 less than the local hourly living wage of $16.50. And Kenosha actually granted Amazon hefty tax subsidies to entice them to site their centers in the community. So not only did officials invite in an employer that dragged down local wages, it paid for the privilege on the local taxpayers’ dime (presumably further eroding the tax base at local workers’ expense).

Amazon workplaces are also notorious for their drudgery. Many employees are “permatemps” hired through outside staffing firms, often on irregular, volatile schedules, with little job security or opportunities for advancement. The work can be physically hazardous, especially for precarious workers slogging through long, arduous warehouse shifts.

Amazon declined to comment on the report, but generally touts its market power as a net boost for local economies. The company argues it enables home-based microsellers to reach vastly wider markets, with its powerful network harnessing the on-demand “gig economy,” and its fulfillment system has created jobs directly by hiring tens of thousands of full-time and seasonal workers.

For advocates of community-based development, however, Amazon stifles economic diversity and creativity with its closed-loop domination of both our labor and consumption.

Mitchell notes that neither Amazon’s logistics-intensive retail model, nor Walmart’s Big Box brand should be seen as inevitabilities. Some companies still do provide decent, family supporting jobs and union representation, but on a more rational, community-based scale:

[L]ocal retailers succeed by having high-quality employees who know their products and know their customers. It’s often a more rewarding and, in many cases, better paying job. So from a job-creation standpoint, independent retailers and high-wage, union-friendly companies like Costco are the standard.

Retail is at a crossroads right now as a consumption-driven economy crashes into barriers of social inequality. Yet Amazon’s disruption could also spur a return to more community-oriented commerce, with unionized workplaces and localized development:

At least in local stores, in most cases, this work is also more meaningful: the employee is actually engaging with customers and helping them find the right toy, or book, or paint color. And for the customer, these interactions—with employees, with the neighbor you run into at the local store—are part of your sense of community and provide a measure of enjoyment and social connection…. we need to weigh the advantages of convenience against the costs of giving up more plentiful and meaningful jobs, as well as more plentiful and meaningful interactions.

This isn’t a nostalgic yearning for simpler times, but a desire for a more humane economic structure.

Editor’s Note: This article has been updated to include data clarifying Amazon’s use of seasonal temporary workers.

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