Advertisement

SKIP ADVERTISEMENT

Amazon to Add 100,000 Jobs as Bricks-and-Mortar Retail Crumbles

An Amazon facility in New York, part of a rapidly expanding network of distribution centers.Credit...Bebeto Matthews/Associated Press

Amazon’s new warehouse in Baltimore is a rare economic bright spot there, employing 3,000 people full-time in a city ravaged by poverty and a lack of opportunities for less educated workers.

And with Amazon’s announcement Thursday that it plans to hire 100,000 new employees in the next 18 months, the Baltimore facility and at least 70 other Amazon fulfillment centers across the country stand to be among the biggest beneficiaries.

Fifteen miles away in the suburbs, all that is left of Owings Mills Mall is rubble, demolition having started in the fall, after the last anchor stores, Macy’s and J. C. Penney, closed within months of each other.

The contrast between the two scenes is an example of what the economist Joseph Schumpeter termed “creative destruction,” the inevitable process in which new industries rise and replace old ones.

But creation tends to get more press than destruction, and the announcement from Amazon is no exception.

The company’s hiring plans are certainly good news. But to understand the forces roiling the American economy, it’s key to remember that online retailing has destroyed many times that number of positions at malls and shopping centers across America.

That’s not necessarily a bad thing over the long term. Greater productivity is essential for economic growth, and, according to the company, the 100,000 figure includes highly paid engineers and software developers in addition to hourly warehouse workers. But for people caught on the wrong side of that transition in the short term, it’s the equivalent of an economic hurricane.

“There are huge benefits to consumers from Amazon,” said Lawrence Katz, an economics professor at Harvard who studies labor and technological change. “But the workers they are hiring aren’t the same ones being laid off.”

Even since New Year’s Day, the traditional retail sector has absorbed more blows. Macy’s said last week that it would eliminate 10,000 positions, and the Limited announced this week that it would close all 250 of its stores, eliminating 4,000 jobs.

The Amazon announcement comes as the company is introducing automation that could one day cost jobs. It uses robots in many of its warehouses, though it says they work in conjunction with people instead of replacing them.

Moreover, with the rise of automation, the future of once-solid trades like truck driver and delivery worker is in doubt, threatened by the likes of driverless cars and drones. And that has prompted an intense debate among economists and some policy makers about just what society and especially government owes these workers.

One place to start, Mr. Katz said, would be for the government to provide more funding for retraining and also develop a wage insurance program to cover differences in salaries as workers migrate to new, lower-paid jobs from disappearing, higher-paid ones.

“The economy as a whole gains from creative destruction, but we don’t put many resources into training displaced workers,” he added. “That’s a real problem, and in practice, we need to do much more.”

The half-full glass in all of this is greater productivity — an economic force that has been otherwise lacking during the recovery from the Great Recession, said Michael Feroli, chief United States economist at J. P. Morgan.

Productivity in the retail sector, online and offline, jumped 3 percent in 2015 compared with a measly 0.8 percentage point for business over all, he said. The typical online retailer generates $1,267,000 in sales per employee versus $279,000 at bricks-and-mortar stores.

Along with making online retailers much more efficient, that difference also helps explain why Amazon is a stock market darling while Macy’s and J. C. Penney are laggards.

“You can’t complain about low productivity and then complain about job reallocation in the same breath,” Mr. Feroli said.

Still, a lot of jobs are being reallocated in a fairly short time, in an economy that has only begun to pick up speed recently for many Americans.

Mr. Feroli calculates that if it were not for online retailers, of which Amazon is by far the biggest, there would be 1.2 million more retailing jobs in the United States. There are 16 million retail workers in the United States, according to the Bureau of Labor Statistics, a figure that includes online sellers like Amazon and traditional stores.

In the last four years, traditional retailers have cut more than 200,000 jobs, according to Challenger, Gray & Christmas, a Chicago outplacement firm.

The seasonal bump in store hiring, a familiar economic story each fall, is also ebbing, according to Challenger. During the holiday shopping season last year, stores added 100,000 fewer temporary workers than in 2013.

“The number of jobs we are losing in retail outpaces the number being created in the sectors that are taking their place,” said Andrew Challenger, vice president of the firm. For example, transportation firms and warehouses are hiring, but not as quickly as bricks-and-mortar stores are laying off workers, he said.

Many of the jobs included in the figure Amazon announced on Thursday had already been disclosed by the company, which routinely reveals how many people it plans to hire in different localities when it opens new fulfillment centers.

The company has become far more vocal about telling its employment story over the past half-decade, which is partly a reflection of the rapid expansion of its network of warehouses devoted to packaging and shipping products to customers. The expansion began in earnest around 2011, when Amazon began hammering out agreements with state governments to collect sales tax from Amazon customers in those states.

At the same time, Amazon decided to make fast shipping a priority, something possible only if it opened more warehouses closer to where customers live.

The 100,000 hires it plans for the next 18 months represent a 56 percent increase in the 180,000 full-time United States employees it had at the end of 2016. Amazon has more than 300,000 full- and part-time employees globally.

That attention could be politically beneficial for Amazon as Donald J. Trump assumes the presidency. Last year during the presidential campaign, Mr. Trump singled out Amazon and its founder, Jeff Bezos, as having a “huge antitrust problem.” Mr. Trump suggested that Mr. Bezos was using his ownership of The Washington Post to discourage political scrutiny of Amazon.

But Mr. Bezos was among a group of technology-sector executives who met with Mr. Trump last month, and after Amazon’s announcement of its hiring plans on Thursday, Mr. Trump’s press secretary said “the president-elect was pleased to have played a role in that decision.”

Drew Herdener, an Amazon spokesman, declined to comment.

Amazon has said that its employment figures alone do not capture its full effect on jobs. On Thursday, the company said its marketplace business, through which independent merchants sell goods on the company’s site, sustained 300,000 additional jobs in the United States.

In the meantime, a new open-air shopping center is planned for the vast rubble-strewn site in Owings Mills, Md., where shoppers once flocked to Macy’s and J. C. Penney. The demolition should wrap up by spring, although no date has been set for the opening of the new mall, nor have tenants been announced.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: Amazon Will Add 100,000 Jobs as Bricks-and-Mortar Stores Turn to Rubble. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT