Sen. John Thune (R-S.D.), Gov. Kristi Noem (R-S.D.) and Mayor Paul TenHaken also shared comments praising Amazon’s decision to open a center in South Dakota.
Senator John Thune: “Today’s announcement serves as a testament to the success of South Dakota’s business-friendly environment. This distribution facility will bring numerous, high-paying jobs and millions of dollars in investment to the city of Sioux Falls and the rest of the region. I am proud of the state’s economic progress and infrastructure investments that have allowed businesses to thrive.”
Governor Kristi Noem: “South Dakota is open for business, and this commitment has put our state in the position to welcome Amazon to Foundation Park. Amazon is investing in South Dakota with 1,000 jobs, including excellent benefits, which will help fuel our state’s growth for the next generation. So on behalf of the entire state, I want to welcome Amazon to South Dakota.”
Sioux Falls Mayor Paul TenHaken: “We are proud to have been selected by Amazon as their next fulfillment center location. Amazon’s decision to invest in our community reflects the company’s confidence in Sioux Falls’ economic climate and excellent workforce. The team at Amazon has been incredible to work with, and we are excited to welcome them to Sioux Falls and to help make this partnership a win-win for many years to come” [Amazon.com, press release, 2020.12.18].
Amazon is building its warehouse on tax favors from Sioux Falls and the federal government. If Amazon operates its Sioux Falls warehouse the way it operates its current facilities, we will likely have to cough up more taxpayer subsidies to keep Amazon’s workers from going hungry:
Many Amazon warehouse employees struggle to pay the bills, and more than 4,000 employees are on food stamps in nine states studied by the U.S. Government Accountability Office. Only Walmart, McDonald’s and two dollar-store chains have more workers requiring such assistance, according to the report, which said 70% of recipients work full-time. As Amazon opens U.S. warehouses at the rate of about one a day, it’s transforming the logistics industry from a career destination with the promise of middle-class wages into entry-level work that’s just a notch above being a burger flipper or convenience store cashier [Matt Day and Spencer Soper, “Amazon Has Turned a Middle-Class Warehouse Career into a McJob,” Bloomberg via Yahoo News, 2020.12.17].
As I noted in August when Amazon’s coming came out, Amazon’s investments don’t appear to result in net job growth, and the workers they do pull from other employers end up in grueling, high-stress conditions. Even the company’s $15/hour minimum wage may not exert upward pressure on wages. As South Dacola notes, Amazon tends to drive wages for warehouse work down in the markets it enters:
A Bloomberg analysis of government labor statistics reveals that in community after community where Amazon sets up shop, warehouse wages tend to fall. In 68 counties where Amazon has opened one of its largest facilities, average industry compensation slips by more than 6% during the facility’s first two years, according to data from the Bureau of Labor Statistics. In many cases, Amazon quickly becomes the largest logistics player in these counties, so its size and lower pay likely pull down the average. Among economists, there’s a debate about whether the company is creating a kind of monopsony, where there’s only one buyer—or in this case one employer.
While Amazon’s arrival coincides with rising pay in some southern and low-wage precincts, the opposite is true in wealthier parts of the country, including the northeast and Midwest. Six years ago, before the company opened a giant fulfillment center in Robbinsville, New Jersey, warehouse workers made $24 an hour on average, according to BLS data. Last year the average hourly wage slipped to $17.50.
Wages often tick higher in subsequent years, but don’t reach their pre-Amazon level till five years after a new facility opens—meaning that industry workers, on average, find themselves no better off half a decade after Amazon’s arrival [Day and Soper, 2020.12.17].
Amazon responds that it is pulling workers up from crappier retail jobs with lower pay, fewer benefits, and less regular hours. But those workers are still stuck doing cog work, with less chance for advancement than other industry players offer:
Amazon touts a training program for promising workers and says it issued more than 35,000 promotions in its logistics operation this year. Ron Delosreyes, who joined Amazon in 2018, says the first step up added responsibility and no raise. But today he’s a salaried supervisor at a Staten Island, New York, warehouse. “I’d like to stay and keep advancing my career,” he says. “Up and up.”
While 35,000 promotions sounds like a lot, it represents 3.5% of the more than 1 million people who worked in Amazon’s logistics group this year. That’s well below the 9% promotion rate for the industry, as calculated by the payroll processing firm ADP [Day and Soper, 2020.12.17].
Amazon’s workers are trying to organize and fight for their right to fair pay for hard work, but the online giant’s resistance to unions will find aid and comfort in South Dakota’s anti-labor environment.
If I were unemployed or making just $13 an hour at Walmart, I would certainly consider jumping ship to make $15 an hour and get health benefits at Amazon. When you’re on the low end of South Dakota’s economic totem pole, every little bit helps. But let’s not exaggerate how much Amazon will help.