Amazon's Good Deed Doesn't Go Unpunished
Back in 2018, Amazon announced plans to open a fulfillment center in Bessemer, Alabama, an old coal town of around 27,000 people about 20 miles southwest of Birmingham. When Amazon announced the $325 million fulfillment center, the company pledged it would create 1,500 jobs that paid $15 per hour and provided 401k retirement programs, health insurance, and tuition reimbursement. Bessemer’s mayor called it the “largest single private investment in the city’s 131-year history.”
Despite the fulfilled promise the new facility represents, labor relations between the company and the 6,000 employees soured quickly with a mail-in vote on unionization starting today. Essentially, employees living in a relatively impoverished community may seek to bite the hand that feeds them.
Poor labor relations and the threat of unionization aside, the movement of large corporations into places like Bessemer, and the subsequent investment, is something government administrators, urban planners, and policymakers should not only praise but actively work to incentivize as a way to reinvigorate less affluent communities.
Bessemer is just a microcosm of numerous political debates on the influence of large corporations on the modern American economy, the appropriate conditions for low-skilled workers, and the influence and relevance of labor unions. What is not open for debate, however, is the fact that large private capital investments in places like Bessemer will provide jobs and greater economic security that has been missing from these communities for so long.
Economically, Bessemer is a community that would greatly benefit from the presence of large corporations, such as Amazon, in their community. The town is routinely ranked as one of the most deprived communities in the country. The U.S. Census reported 25.8% of Bessemer’s population live below the poverty line and the town’s median household income is only $32,301. Nationally, the poverty rate was only 10.5% while the national median household income in 2019 was $68,703. Taken together, it is readily apparent that Bessemer is a community in desperate need of jobs, the type of jobs Amazon has been able to offer.
Despite initial predictions, the actual number of jobs created well exceeded the estimate of 1,500. By January 2021, it was widely reported Amazon employed almost 6,000 people at its Bessemer facility.
This significant increase in employment not only provided more jobs for Bessemer’s residents but also resulted in an additional $1 million in educational property taxes each year that would ultimately be used to hire new teachers and purchase thousands of new textbooks for the local school system. The net result of Amazon’s investments in Bessemer has not only been more jobs for a community that desperately needed them but a better-funded public school system that will ensure students receive better education.
Aside from the significant number of good-paying jobs Amazon brought to Bessemer, it also created a job multiplier effect that created jobs well beyond the company’s facilities. Economic studies have suggested the multiplier effect of every Amazon job created between two to four additional jobs in other areas of the local economy.
Amazon’s Bessemer facility also encouraged other large companies to build facilities in the town, providing further jobs for the local community. Carvana, for example, announced in 2019 plans for a $40 million distribution center that would create 450 jobs while FedEx pledged in 2020 to build a facility that would employ 258 people. Lowe’s also announced plans in late 2020 to open a distribution center in the town that would create around 200 jobs. For a community like Bessemer with an unemployment rate of 7.6%, well above Alabama’s average of only 4%, the arrival of Amazon has heralded jobs for a labor force in need of economic security.
Amazon’s investment in Bessemer is also likely to have significant benefits to Alabama’s wider economy, an important fact to remember considering the state is routinely ranked as having one of the weakest economies in the country. When it was announced Amazon would be investing in a fulfillment center, the Birmingham Business Alliance and the University of Alabama estimated the site would increase the county’s economic output by $203 million, increase the county’s Gross Domestic Product (GDP) by $123 million and the state’s GDP by $137 million.
Given the historical economic struggles of towns such as Bessemer, the arrival of large corporations such as Amazon is something that should universally be welcomed. Not only do they stimulate job growth in their facilities, but they also support external job growth that further increases the economic dividends for the community. While this shouldn’t give any company a free pass to mistreat their workers, it should serve as a reminder that the casualties of any conflict between a company and unions could well be the most vulnerable members of society, a group both sides profess to support.
Edward Longe is a research associate at the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.org or follow us on Twitter @ConsumerPal.
