The following is reprinted with permission from the Institute for Local Self-Reliance (www.ilsr.org)
Here are five ways Amazon is costing our economy and undermining real job growth.
1. Amazon destroys more jobs than it creates.
Brick-and-mortar retailers employ 47 people for every $10 million in sales, according to an analysis by ILSR of US Census data. (If you exclude chains and look just at independent retailers, the figure is even higher — 52 jobs.) But Amazon employs only 14 people per $10 million in revenue. As Amazon grows and takes market share from other retailers, the result is a decline in jobs, not a gain. In 2012, Amazon expanded its share of retail spending in North America by $8 billion, which works out to a net loss of about 27,000 jobs.
2. Most Amazon jobs are awful.
How does Amazon manage to sell so much stuff with so few workers? The online giant is technologically efficient, yes, but it also excels at squeezing a back-breaking amount of labor out of its employees. Amazon’s workplace abuses, including life-threatening temperatures inside its warehouses, injury-inducing workloads, and neo-Nazi guards, have been well-documented by investigative journalists.
At the Amazon warehouse Obama is visiting in Chattanooga, workers are paid about $11.20 an hour, according to Glassdoor.com. That’s 17 percent less than the average wage for U.S. warehouse workers reported by the U.S. Labor Department.
3. Amazon pilfers value created elsewhere in the economy.
Another way Amazon gets by with such a small workforce is by leaning on the services provided by brick-and-mortar stores. Through its mobile app, Amazon actively encourages consumers to try-out merchandise in stores and then buy online. This allows Amazon to free-ride on the value created by other businesses. Take books, for example. Amazon now accounts for more than half of book sales. But, if you ask Amazon book shoppers where they learned about a book, only rarely is the answer Amazon. Far more often, according to research by Codex Group, they discovered the book while browsing in an actual bookstore.
A similar dynamic is at play across a wide variety of products, from toys to cameras. The threat Amazon’s free-riding poses to the U.S. economy is that, over time, brick-and-mortar stores will no longer be around to showcase new products, depriving both consumers and manufacturers of a valuable service that stimulates demand and innovation.
4. Amazon drains dollars from local economies.
Amazon provides virtually no jobs or economic benefits to the vast majority of communities from which it derives its revenue. This stands in stark contrast to local retailers. Several case studies have found that about $45 of every $100 you spend at locally owned stores stays in your community, supporting other businesses and jobs. (Local retailers buy many goods and services, like printing and accounting, from other local businesses; their employees spend most of their earnings locally; and so on.)
While the figure for national chain stores is considerably smaller, it’s almost zero for Amazon. In most cities and towns, save for a small amount paid to delivery drivers and perhaps a few third-party sellers using Amazon’s platform, all of the money residents spend at Amazon leaves their local economy, never to return.
5. Amazon costs taxpayers.
Amazon’s growth has come at a significant cost to taxpayers. The company has been demanding special tax rebates and subsidies as it expands. It recently received an $8.5 million subsidy to build a warehouse in Delaware, a $2 million grant to expand in Indiana, and more than $10 million worth of tax incentives to open the Chattanooga facilities President Obama is visiting this week.
These deals are on top of the enormous financial advantage Amazon has enjoyed by virtue of not having to collect sales taxes in most of the country for the better part of two decades. That advantage is slowly coming to an end, but, over the years, it cost states and cities billions of dollars in lost revenue, while forcing local retailers to compete with one hand tied behind their backs.
The future Amazon has in mind for our country is a far cry from the middle class prosperity President Obama has been seeking. A better place to look would be along Main Street, among the new generation of independent businesses, small-scale manufacturers, local food producers, and others that are beginning to chart a much more viable path from here to there.
By Stacy Mitchell.
Wake up, Vermont: Amazon sells everything, not just books. Many local authors publish through CreateSpace, owned by Amazon, runners buy running shoes from Zappo's, owned by Amazon, your babies’ diapers come from Diapers.com, also owned by Amazon - and the list is endless. Those sales all come out of the economy of our community. Now, the president is endorsing internet sales at the expense of all bricks & mortar retailers. My question is, could Amazon buy a president and would they sell him at a discount?
Seriously though, I am writing about an appearance by President Obama at an Amazon warehouse in Tennessee, where, independent booksellers believe, he will equate Amazon with innovative, job-creating business that helps the middle class.The utter absurdity of that comparison is breathtaking. Without going too deeply into this, I ask, since when did $11 per hour become a middle class wage? ($11.50 is the average wage paid to Amazon warehouse workers.) Since when does a money-losing company become a poster child for success?
What depresses me the most? Is it the man I voted for twice helping to tilt the competitive playing field in the favor of Amazon? Is it the Wall Street Oligarchs hypocritically voicing support for free market capitalism while creating monopolies left and right and in the middle? Is it Amazon brazenly pricing at a loss in order to harm competition, which once upon a time was thought to be illegal? Is it a recent Justice Department lawsuit against publishers on behalf of Amazon? Or is it my president apparently going along with it? Amazon doesn't surprise me. The president, however, is the greatest political disappointment of my life. I see him as a thief in the night, scurrilously sneaking up and stealing my hard earned business right from under my nose and giving it to Amazon in order to further his illusions of economic growth. More to the point, by endorsing Amazon he completely undercuts our own Local First Vermont program, helps destroy our city centers, encourages non-payment of state and local taxes, and furthers Amazon’s extremely monopolistic agenda, to say nothing of implicitly encouraging the entire population of the country to shop online.
Sadly, it seems that President Obama is desperate to leave some sort of economic legacy in his waning years - even if it means destroying the small business legacies of countless others. I tell my children I will not leave them my bookstore when I die, because I love them too much to do that.
I used to believe that a president of the United States was a president for all citizens. Today, I think he shills for Amazon.com. Today is a day that I question how I can continue to "love" America. For the first time in my life, I fear where our society is heading. For the first time I feel our country is "for sale" to the highest bidder.
This comes after I have served my country in the US Army for 4 years, worked for Senator Hubert Humphrey and Senator Muriel Humphrey for 4 years, lobbied on behalf of small businesses for 20 years and owned them for another 18 years. I used to believe in the dream and now, with the help of my own president, it appears to have been a mirage and even a nightmare. How sad I am, and how powerless I feel. Yet, tomorrow - despite this betrayal of trust - I will open the doors of the store and continue to fight this fight. I hope you will join me.
Sadly, yet with hope,
Phoenix Books, Essex & Burlington
July 29, 2013
President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear President Obama:
On behalf of the American Booksellers Association, we are writing today to call your attention to how Amazon’s business practices are actually harming small businesses and the American economy. While Amazon may make news by touting the creation of some 7,000 new warehouse jobs (many of which are seasonal), what is woefully underreported is the number of jobs its practices have cost the economy.
For you to highlight Amazon as a job creator strikes us as greatly misguided.
As you’ve noted so often, small businesses are the engines of the economy. When a small business fails and closes its doors, this has a ripple effect at both a local and a national level. Jobs are lost, workers lose healthcare and seek unemployment insurance, and purchasing decreases. And while Amazon may now be boasting about the creation of jobs, any gains are elusive, and not a long-term solution.
The simple fact is that Amazon’s practices are detrimental to the nation’s economy.
The news this weekend that Amazon is slashing prices far below cost on numerous book titles is further evidence that it will stop at nothing to garner market share at the expense of small businesses that cannot afford to sell inventory below their cost of acquisition. In the end, monopolies are bad for consumers — and there are no examples in American history that prove otherwise.
For more than a decade now, Amazon has flouted sales tax laws in an effort to maintain a competitive advantage over Main Street businesses. To date, 16 states have passed sales tax laws to level the playing field for bricks-and-mortar businesses, and in all but three of those states Amazon (as well as Overstock.com) has fired its online affiliates in order to evade collecting and remitting sales tax to the state (two of the 16 states only just passed their sales tax laws). This has resulted in many online affiliates going out of business. Moreover, by eschewing its obligation to remit sales tax, Amazon has negatively impacted state budgets and services, as well as those of local communities.
In addition, Amazon’s continued practice of using books, both in print and e-book formats, as “loss leaders” in an effort to increase their already immense market share of the retail book trade and to up-sell large-ticket items has impacted Main Street retailers and the communities in which these stores are located in ways that can be calculated (job losses, store closures, a decrease in sales tax revenue, etc.) and in ways that simply cannot (urban blight, budget cuts affecting first responders and other community services, etc.).
All told, according to the Institute for Local Self-Reliance, every $10 million in spending that shifts from Main Street retailers to Amazon results in a net loss of 33 retail jobs. That would mean for 2012 alone — using Amazon’s own numbers about its increase in sales — Amazon cost the U.S. economy almost 42,000 jobs just last year!
At a time when Main Street retailers, including indie bookstores, show promise of recovering from the recession, we are disheartened to see Amazon touted as a “jobs creator” and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true.
Conversely, the value of a local business to its community cannot be overstated — whether through job creation or in the myriad ways it gives back to the community.
We would love to continue this timely and important conversation with you. We’ll bring together a group of real job creators to meet at your favorite local, independent bookstore! And we’ll buy the coffee!
Oren Teicher, CEO
American Booksellers Association
White Plains, New York
Steve Bercu, ABA President
Betsy Burton, ABA Vice President
The King’s English Bookshop
Salt Lake City, Utah
DIESEL, A Bookstore
Santa Monica, California
Valerie B. Koehler
Blue Willow Bookshop
McLean & Eakin Booksellers
Bank Square Books
Third Place Books
Lake Forest Park, Washington
Talking Leaves Books
Buffalo, New York
San Francisco, California
Dear Local Authors,
You might not know that CreateSpace, a self publishing company, is wholly owned by Amazon.com - a company whose questionable business practices go beyond fair competition and instead give every appearance of hostility toward not just independent bookstores, but all bricks and mortar businesses.
We take pride in our selection of books by local authors, and we created our Local Authors’ Programs in order to enable us to carry books by local authors who have self-published. However - since we also want to do everything we can to support Vermont’s strong local economy - we have made a difficult decision: Phoenix Books will not knowingly purchase or sell any books printed by CreateSpace, even if the book is by a local author. Also, Phoenix Books will not offer any services to the authors of books published by CreateSpace as part of a Local Authors' Program arrangement.
For more information on the reasoning behind this decision, we invite you to read this article on our website and this letter from the American Booksellers Association. Then, please feel free to contact Mike DeSanto, co-owner of Phoenix Books, with any questions or concerns about this policy and/or the pros and cons of working with Amazon.
Looking for other options? Check back soon; we'll be posting a list of local and national presses that are not affiliated with Amazon.
On July 8th, over 300 people attended "The Rock & Roll Book Tour" with Chris Bohjalian and Stephen Kiernan in Burlington, Vermont. The event - which was co-presented by Phoenix Books Burlington and Fletcher Free Library - celebrated the launch of Bohjalian's and Kiernan's newest titles - The Light in the Ruins and The Curiosity, respectively. In addition to a book talk, sale, and signing, the evening featured t-shirt giveaways and an opportunity for attendees to win a visit from Chris Bohjalian to their book group meeting. A portion of the proceeds from book sales went to benefit the library, where the event took place. "The authors exceeded expectations with their appearance," says Phoenix Books co-owner Mike DeSanto, "They were received like rock stars. Just great and very exciting to watch them work the audience! Chris and Stephen provided an entertaining and interesting evening, and as the consummate professionals they are, left the audience wanting more. We're crossing our fingers for a reunion tour next year!"
Renee preparing for the event (top left)
Mike introducing the authors (top right)
Chris Bohjalian speaking (middle left)
Stephen Kiernan speaking (middle right)
A packed house (bottom left)
Chris and Stephen autographing books (bottom right)
The Gallery at Phoenix Books Essex is now seeking artists for our Open Studio Weekend exhibit, "Inspired by Maddie."
In 2011, Theron Humphrey decided to traverse the US, meeting and photographing someone new each day. Maddie the Coonhound rides shotgun—and has a special talent, an uncanny sense of balance. The blog and upcoming book Maddie on Things record their adventures. Our exhibit will feature photographs by Theron, as well as work by local artists and community members.
The Gallery at Phoenix Books Essex is now seeking artists for our next exhibit, "Peepers & Creepers." We have a wealth of natural beauty here in Vermont, and this spring we're going to get up close and personal with the reptiles, amphibians, and insects that emerge each spring here in the Green Mountain State. This exhibit will be on our walls from the beginning of March through mid-April.
Do you have a piece of art featuring a peeper or a creeper? Contact Colleen at firstname.lastname@example.org for more details!
While you're at it, mark your calendar for the event that inspired this exhibit: Newt Night with the North Branch Nature Center at Phoenix Books Essex on Wednesday, March 13th. You can read more here.