When Americans talk about the rise of Amazon and online retail, things get dystopian pretty quickly: loss of jobs, the death of local towns and brick-and-mortar shops, grueling conditions and low pay in Amazon's warehouses, etc. But there might be a bright side to this story.
More and more Americans may be doing their shopping online, but all those goods they buy still have to be physically moved from point A to point B. So as online retail grows, the business of shipping all those purchases grows too: The sector's warehouses are often enormous, having doubled in size since 2010. As brick-and-mortar shops go into decline, at least some of the jobs are being replaced by online retail's national shipping infrastructure.
Here's the really interesting bit.
One of the more disturbing changes in the American economy over the last few decades is that virtually all job creation now occurs in major urban areas. In small towns, less-populated counties, and rural areas, employment growth from business cycle upswings is almost nowhere to be found. But because online retail has to ship everywhere, its warehouses and shipping centers can't stick to this big-cities-only trend. So places like Bullitt County in Kentucky, Kenosha County in Wisconsin, and Bethlehem County in Pennsylvania — which all got hit hard by the decline of manufacturing, department stores, and smaller local economies — have been given a new lease on life as online retail moves in.
The New York Times reported that the 20 counties with the hottest job markets saw only 11 percent of the job gains from online retail specifically. "Warehouses have produced hundreds of thousands of jobs since the recovery began in 2010, adding workers at four times the rate of overall job growth," according to the Times. "A significant chunk of that growth has occurred outside large metropolitan areas, in counties that had relatively little of the picking-and-packing work until recently."
Having captured 43 percent of the online retail market, Amazon and its fulfillment centers are obviously the big player here. But they're not the only ones. Everyone from Walmart to Costco, FedEx, Safeway, and even smaller online retailers like Zulily are part of this shift.
But we also have to ask: Exactly how good is this good news?
Online retail may be adding jobs, but is it adding enough jobs to make up for the employment that's been lost? Is their pay comparable? These questions are actually rather hard to answer, as it depends on how you slice the data.
The Progressive Policy Institute — which champions e-commerce, and which the Times cited in its story — found that online retail creates jobs at a vastly higher rate than brick-and-mortar stores are shedding them, and that pay is quite higher, too. The Institute for Local Self-Reliance, which is a lot more critical of online retail and Amazon specifically, found the opposite. NBC News took a look at the issue this summer, and concluded that online retail tends to pay $12-to-$14 an hour, which is about the same as the old brick-and-mortar stores, but less than manufacturing. A Bloomberg analysis said the jobs lost in old-fashioned department stores are more or less equal to the jobs created by online retail. So it may just be a wash.
Given how city-centered the modern economy is, geography is a big factor as well. In fact, if you look at brick-and-mortar retail in the aggregate, the "retail apocalypse" looks a lot less impressive: What's really going on is that a specific kind of retail — the department stores that could be relied on to provide jobs in smaller towns and markets — have gone into a tailspin. And while Amazon's fulfillment centers spread well beyond America's major urban hubs, they don't spread as far as Macy's, Sears, or JC Penny once did. It's probably safe to assume the same is true of the rest of online retail.
Finally, online retail can have other problems. Amazon has been hounded by reports of grinding working conditions and long hours at its fulfillment centers. Walmart is getting into online retail in a big way, and it's infamous for low pay. Both companies are also well-known for their hostility to unions.
As with most things in life, online retail can't be painted strictly in black or white. The negatives — low pay, labor exploitation, worker powerlessness, tepid job creation, temporary employment, and even monopoly power — are all familiar problems throughout the American economy. And there are real positives: online retail's tendency to look for workers outside the major urban labor markets, and the unprecedented ability to buy all sorts of remarkable things from around the country and the world.
So the question isn't just whether the tradeoff of online retail is worth it. It's how that tradeoff can be improved: Can we reduce the damage that sites like Amazon do without losing their unique benefits?