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Amazon Relies on Food Stamp Subsidies, Won’t Boost Sioux Falls Warehouse Wages

Amazon is indeed building a new warehouse in Sioux Falls, promising to hire 1,000 workers and giving our elected leaders something to brag about:

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” [, 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.


  1. Donald Pay 2020-12-29 13:28

    I don’t buy from Amazon. They are horrible, exploitative employers. Fifteen dollars is not a great wage. It’s a survival wage for one person, but most families couldn’t get by on that pittance

  2. Moses6 2020-12-29 13:47

    I only hope they unionize and get decent wages. Try to raise a family on 600 a week after kids day care, a house payment rent or a car payment break downs groceries.And they wonder why the younger people move out of state.Horrible

  3. Mark Anderson 2020-12-29 15:54

    I learned through my father that unions are the only way ahead. The IBEW was and is a great union. Unfortunately, South Dakota will always be a right to work for less state boys and girls, so have fun doing grueling work and remaining poor.

  4. leslie 2020-12-29 19:26

    Pay employees living wage or get out of the kitchen. Racism, political division will decrease, imo.

  5. grudznick 2020-12-29 19:43

    My thought is that if employees don’t want to work for this Amazon then they should not work for it. Nobody’s forcing anybody to go work there. And it is the Amazon’s choice to pay whatever they want, or whatever they need to entice fellows to want to work there. They can grumble, they can slack on half-hour smoke breaks, they can eat other people’s lasagna in the break room refrigerator, but if they want to get raises they need to work harder.

  6. Mary D 2020-12-29 19:45

    Did South Dakota or Minnehaha County have to give them any tax breaks for building in South Dakota? Sure would be a good time to pass a corporate income tax. That is the main reason they came here. Every cent of income made here in South Dakota will go to Amazon headquarters in the state of Washington. With no taxes and low wages, both exploit South Dakota citizens so politicians can say they did a good deed. South Dakota Legislature continues to give low priority to education so our kids are primed to work at these low paying wages…a lucky few get out of here.

  7. grudznick 2020-12-29 20:09

    So, Ms. Mary, shall we kick them out? Just leave people to work for $13 an hour at the Walmart then?

    When good things happen, some people must still whine. “Oh, lordy, why do not the legislatures pay our teachers, most of whom work reasonably hard for 9 months a year, $200,000 each? And why, or why, must our economy grow and create jobs for people who otherwise would be smoking weed in the park and loafing on unemployment?”

  8. Richard Schriever 2020-12-29 21:10

    The average wage for warehouse workers in SF currently is $13/hr. Amazon pays $15/hr. Both are crap wages.

  9. mike Livingston 2020-12-29 23:50

    Richard In 1995 I was working as an electrical inspector for the SD electrical commission making eleven something and i was as an licensed electrical inspector and electrical contractor. I pushed for better compensation to no avail and many of my peers never pushed for anything

  10. mike Livingston 2020-12-30 00:08

    Doe’s krispy know that amazon is a primary Nemesis of her chosen one and they have all the chips.

  11. Bill 2020-12-30 06:01

    Mark Anderson is on the right track. Workers need unions!

  12. Caleb 2020-12-30 11:33

    grudz, some people in our society are stuck (or believe they are) with whatever job is available, and no employer has to base promotions on work ethic alone. You have a simplistic take on employment reality, and you’re out of touch with just how horrible Amazon is to many of its employees.

  13. Moses6 2020-12-30 18:20

    Evidently low wages are to prevail .

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