Groups staffed by progressives have claimed that Amazon warehouses harm local economies, such as a left-wing group whose managers include the former ACLU National Political Director. But the data appears to refute this claim. Such warehouses seem to increase the size of local economies and increase wages, especially among people without college degrees. As a news report explains,
In a newly-released research paper, Evan Cunningham, a Ph.D candidate in Economics at the University of Minnesota, studied the effects of Amazon’s continued spread across the country—growing from just a handful of warehouses, or ‘fulfillment centers,’ in 2010, to more than 1,300 today in the U.S. alone. On balance, it turns out that Amazon warehouses provide a net positive to local economies.
‘I find Amazon’s entry in a metro [area] increases the total employment rate by 1.0 percentage points and average wages by 0.7 percent,’ Cunningham writes. “The composition of employment shifts from retail and wholesale trade to warehousing and tradeable services, primarily driven by younger workers. Employment gains are concentrated among non-college workers.”
There are also some drawbacks, though it largely depends on your perspective. “Amazon’s entry increases rents by 1.1 percent and the cost of utilities by 6.0 percent,” while “average home values increase by 5.6 percent.”
Most — but not all — people benefit from the presence of a warehouse in their city or county. If you are a renter, the slightly increased rent is generally more than offset by your slightly higher income. But if you are a home buyer who didn’t previously own a home you can sell to pay for your new home, and you were already employed before the Amazon warehouse came to your area, you are probably worse off. If you are a home seller looking to leave the area, you are definitely better off due to the value the Amazon warehouse added to your home.
If home values are going up due to the presence of an Amazon warehouse, then the locality should lower its property tax rate to offset the higher home values, because higher home values generate more property tax revenue, and the amount of tax revenue a city or county needs shouldn’t rise very much just because the warehouse has increases its population a bit.
