Spent time at the new Southwest Little Rock @Amazon site on Vimy Ridge Rd. These hundreds of jobs will be a major boost for our city and the first of several Amazon economic opportunities here. They spoke highly of the Little Rock workforce which is a key part as we #UniteLR. pic.twitter.com/KEZk657jAJ
— Frank Scott, Jr. (@FrankScottJr) May 14, 2020
I was struck by differing tones from two prominent Little Rock politicians in two days about global giant Amazon, which is soon to open a distribution center in Southwest Little Rock and has under construction a giant “fulfillment center” at the Little Rock Port.
In time, Amazon will bring thousands of jobs to Little Rock on top of big capital expenditures. What’s not to like? Little Rock Mayor Frank Scott Jr. is understandably happy to spread the news
It’s not all good. Many Amazon workers have issues, in the U.S. and elsewhere. And, please, don’t think our work ethic or something special in the water brought Amazon to Little Rock. The company is filling a hole in its nationwide system, which has dozens of these giant distribution centers. Boss Jeff Bezos certainly appreciates a right-to-work-for-less state like anti-union Arkansas, but he’s been successful in fighting unions everywhere in the U.S. Europe is another story, as the New York Times reports today. Workers in unionized Europe have the power to push back on working conditions.
But on to our second politician. That would be Democratic Sen. Joyce Elliott, opposing Republican French HIll’s bid to be re-elected to 2nd District Congress.
Her campaign issued this statement today:
Recently, Amazon announced it was cutting worker salary and overtime pay policies. With last month’s announcement of a massive Amazon facility coming to Little Rock, Senator Joyce Elliott expressed support for the workers hurt by this policy.
Elliott stated, “The economic downturn from this crisis is far from over. Amazon can’t pull the rug out from under its workers now.
“Many people have already spent their $1,200 CARES Act check. Now Amazon workers are losing the certainty that came from this increased monthly wage and overtime pay. Ordering items online has been critical to containing the spread of COVID-19, and the workers who make that happen at Amazon should be compensated fairly for what they do.”
You think the crisis has hurt Amazon as it did, say, Dillard’s, which had to close all its 285 stores and took a nine-digit loss in the first quarter of the year? Not if their boxes in my recycle bin are any measure. Sheltering at home, my primary human interaction is the Amazon Prime delivery person hitting the front stoop with a box.
Here’s the larger issue that Frank Scott and other cheerleaders overlook and I promise regular reminders: Retailing is a zero-sum game. Where one retailer picks up business another loses it. Remember what Walmart did to small-town American retailers? Building an Amazon center doesn’t increase the market demand for socks.
Amazon is playing Walmart’s game, but on a grander scale thanks to the Internet (and Walmart is feverishly trying to match). That coming Amazon center at the Little Rock Port is nothing more than a gigantic retail store except that shoppers may not enter to browse. They must browse online. Purchases will be delivered from the Little Rock store. Every single roll of paper towels, dog dish, sponge, T-shirt, computer gadget or jug of Tide it delivers (to name a few of my recent Amazon acquisitions) is a purchase that was NOT made at a local retail store. Reduced business ultimately means reduced jobs, store construction, media advertising and more.
Everything shipped from the Amazon center will carry the sales tax that applies in the destination of the goods, so the city loses nothing. But other Little Rock retailers do. Some of them are small businesses; but big ones suffer, too. As Jeff Bezos has reportedly said, “Your margin is my opportunity.” He found a way to profit at margins even smaller than those that created Walton billionaires. How? He need not build retail stores supplied by warehouses — just a warehouse shipping direct to buyers. No parking lots. No greeters. No cashiers. No store assistants. Robots in place of stockers.
Retail is NOT zero-sum individually. It’s a plus for Bezos. A minus for everyone else. Do you think a Dillard, a Walton or the helpful guy from your Kraftco/Fuller/Ace hardware store will join the mayor at the ribbon cutting for the port facility? Donald Trump certainly won’t.