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Amazon Is Thriving Thanks to Taxpayer Dollars

11 January 2018

From The New Republic:

As Amazon builds up its distribution network, it’s hit on a trick long practiced by the likes of Walmart: using the federal government to help pay its workers. A new study by Policy Matters Ohio found that more than 700 Amazon employees receive food stamps, or more than 10 percent of the tech giant’s 6,000-strong workforce in the state. Some of those recipients may be part-time help, but the fact that they need federal aid to survive suggests that they would be happy to work more. “Why is this giant, successful company offering such limited pay and hours of work that many of its workers need help buying food?” asked Zach Schiller, research director at Policy Matters.

Amazon ranks nineteenth among Ohio businesses in number of employees on food stamps, behind Walmart, McDonald’s, and Kroger. But Amazon is only the fifty-third-largest employer in Ohio, suggesting a higher rate of employees on food stamps than its counterparts. More important, Amazon has obtained at least $123 million in state tax incentives to place warehouse and data center locations in Ohio. This reflects a perverse form of double-dipping: Amazon gets a bounty to create jobs in Ohio, and then a good chunk of the jobs are so low-paying that workers have to seek federal assistance, providing a second subsidy for the e-commerce giant.

. . . .

In 2012, the company hired Michael Grella, a specialist in economic development tax credits. The company created an entire team just to seek out these subsidies, in a continuation of its strategy to work the tax code to its advantage—first by not collecting sales tax and offering an effective discount on every product, and more recently to lower the cost of building new shipping facilities.

If a city or state shells out millions of dollars to attract Amazon, the least it can do is ensure that the resulting jobs lift people out of poverty.

. . . .

Most of these deals go through a privatized economic development agency called JobsOhio, which doesn’t require as much transparency as a public agency about what taxpayers are getting for their money. JobsOhio continues to defend the Amazon deals as good for the state, claiming that full-time warehouse workers receive 30 percent higher compensation than the national retail worker average.

Link to the rest at The New Republic

PG did a quick check on Policy Matters Ohio, the source of most (maybe all) of the statistics in the OP.

Policy Matters Ohio is a non-profit organization which means it doesn’t pay state or federal taxes like Amazon does.

Policy Matters Ohio’s board of directors is packed with labor union officials (labor unions also typically don’t pay state or federal taxes) and lots of people who work for other nonprofit community action organizations, including colleges. In the larger scheme of things, this second group of organizations, which undoubtedly includes Policy Matters Ohio, also doesn’t pay state or federal taxes and is competing with Amazon for scarce government funding in Ohio.

Policy Matters Ohio has unpaid internship opportunities in its office on a year-round basis. PG couldn’t discover whether the government was providing food stamps or other benefits to any of its unpaid interns or employees.

Unions hate Amazon because the majority of Amazon workers are satisfied with their working conditions and salaries and vote against union representation when a union tries to organize them.

When PG was in college, one of his summer jobs involved working in a soft drink bottling factory (non-air conditioned), lugging cases of bottled pop around, so he understands a little about warehouse work.

He’s glad he doesn’t have to do that kind of work now, but he was very happy to have the job then, just like he was happy to have the many other jobs involving heavy manual labor he held during high school and college.

Given the number of people who apply for a job when a new Amazon warehouse opens and how hard it is to get hired by an existing Amazon warehouse, PG suspects most of the people who work for Amazon are happy to be employed there.

And again, Amazon pays a lot of taxes, unlike the majority of organizations that criticize Amazon.

Amazon

47 Comments to “Amazon Is Thriving Thanks to Taxpayer Dollars”

  1. I liked PG pointing out how black this kettle is, it seems they’re just upset that they’re not getting what they believe is their cut of Amazon’s profits (or in labor union cases a cut of the employees’ paychecks.) While the unions were needed when companies abused their labor force they themselves become abusive when they find they aren’t needed (I’ve seen/been stuck in it twice myself.)

    • Plus, I love the virtue signaling about low pay while offering only non-paying internships — exactly the move you make if you only want to attract rich students.

      “Money? Pay you money? We only want mission-oriented people here!”

  2. Richard Hershberger

    “PG did a quick check on Policy Matters Ohio, the source of most (maybe all) of the statistics in the OP…”

    This is textbook ad hominem argument.

    • It must be all the Fake News I’ve been seeing.

    • PG does no such thing. It is intellectually dishonest.

      For instance:

      “And again, Amazon pays a lot of taxes, unlike the majority of organizations that criticize Amazon.”

      “Nonprofits are also exempt from paying sales tax and property taxes. While the income of a nonprofit organization may not be subject to federal taxes, nonprofit organizations do pay employee taxes (Social Security and Medicare) just like any for-profit company.”

      https://www.investopedia.com/ask/answers/08/nonprofit-tax.asp

      Therefore, the attempt to claim that the nonprofit is somehow evading taxes it owes fails completely.

      “Amazon pays a lot of taxes.” The article just pointed out the huge tax exemption Amazon received from the state of Ohio.

      The remainder of PG’s response fails to demonstrate that any of the facts mentioned in the article are in error.

      To quote Carl Sandburg, “If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell”

      • A textbook ad hominem argument is made in courtrooms and in all parts of the legal profession every day. An essential element in cross examination is testing the “credit” of a witness. I did not see any allegation from PG that a non-profit is avoiding taxes other than by reason of their sanctioned non-profit status. However, the non-profits concerned seem to have no problem with attacking Amazon’s sanctioned concessions. PG performed a valuable service both by pointing out the hypocrisy of those concerned, and their own interests in making these allegations. Like a judge or jury in legal proceedings, it is up to the reader to decide what credibility the allegations have.

        There does not seem to be any dispute that Amazon, like a lot of other enterprises, receives tax concessions. The real question seems to be whether it should receive such concessions. Personally I believe that the concessions Amazon receives are far more in the public interest than the non-profit status of these organisations.

    • This is textbook ad hominem argument.

      No, this is an experienced lawyer casting doubt upon the credibility of a witness. When one side adduces evidence from a sogenannte expert, the other side may call into question that expert’s credentials and bias.

      Well done, PG.

      • Richard Hershberger

        “No, this is an experienced lawyer casting doubt upon the credibility of a witness.”

        In place of presenting an argument against the factual claims. In other words, a textbook ad hominem argument. This is often appropriate in a courtroom. A lawyer is not there to tease out the truth, but to represent his client’s interests. So if you are going to raise this defense of the argument, I want to know who is the client?

        • In place of presenting an argument against the factual claims.

          It’s perfectly reasonable to bring an additional set of factual claims into a discussion. We are not limited to responding to claims by disputing the facts of the claim.

          Many who challenge a company’s practices rely on moral authority to support their position. By highlighting that the protesters themselves freely engage in the very same behavior they criticize, the protesters lose the pretense of moral authority.

          When an organization demands someone else adopt a given norm, it’s reasonable to ask if they believe enough in that norm to embrace it themselves. If not, it is then reasonable to ask, “Why not?”

  3. Amazon ranks nineteenth among Ohio businesses in number of employees on food stamps, behind Walmart, McDonald’s, and Kroger.

    — but we’re going to single them out anyway. There are various reasons why someone might have a part-time job rather than a full time job and they are more likely to be the employees reasons than Amazons. By offering these jobs Amazon helps people get a firm hold on the employment ladder.

    • While I think the OP is ridiculous, you’re lifting this quote out of context. The whole quote is they are 53rd in number of employees but 19th in the number of employees on Food Stamps. The implication being that that is disproportionately high.

      • And it is disproportionately high because, among other reasons, Amazon retail is seasonal and they rely on contractors, temps, and part timers to supplement their core full timers.

        Look at the list and you’ll find retailers make the bulk of the 19 ahead of Amazon.

        Not every business runs on a cadre of 9 to 5 white collar keyboard jockeys

        • Comparing Amazon to Retail employees is fairly disingenuous. Yes, they are in the retail business, but the vast majority of their employees are either white collar “keyboard jockeys” or warehouse employees. There are some seasonal positions that open in the warehouse, but that’s not the bulk of their employees, by any stretch. And Amazon has a significantly higher percentage of full-time employees in local area than any Retail store would have.

          Again, I think the premise of the article is ridiculous. Amazon is a corporate entity, providing thousands of jobs each year that didn’t exist before they moved in. Not just their own jobs, but the infrastructure jobs associated with having them move in to your area. They provide incredible value to the economy. And I think companies should pay what a job is worth, which should be decided by supply and demand, not some sort of social engineering or misplaced sense of “fairness.” So don’t take what I’m saying as a defense of the original post, or an attack on Amazon. I just find the defense posted here fairly weak.

          • For that matter, in the context of Ohio, almost ALL of Amazon’s employees are warehouse workers. Less than one in a thousand is anything else, while with all those other retailers on the list, the vast majority don’t have warehouses in Ohio. They are mostly customer service employees on a retail store floor. This isn’t even apples and oranges. Its apples and dominos.

          • I generally agree with your points but remember that Amazon warehouse staffing fluctuates with the season just as retail staffing does. The purpose of thoss jobs is to feed Amazon’s retail pipeline and the demand for those employees will be a function of retail demand.

            The issue here isn’t the nature of the job (retail floor vs warehouse floor) but the varying staffing level.

            Amazon routinely adds tens of thousands of workers for the holidays and lets go a majority of them after the season. It is unlikely a month or two of warehouse labor would disqualify those temps from government assistance. So those employees would remain on government rolls while working for Amazon. Or Walmart or Costco or whatever.

            • Unless they take the chance and choose not to report it, that’s exactly how food stamps work. You have to fill out an income statement every six months to determine eligibility. But, at least in Ohio, you are required to report an income change as soon as it happens. They deduct the amount of food stamps you receive based on the amount of extra income you earned the previous month. Then you report the change again the following month, when you are no longer doing the seasonal work, and your benefits go back up. If you make enough extra, you’ll be removed from the program, and have to reapply after your temp work ends.

              If you fail to report additional income, they find out when you file your taxes, and you can be penalized and removed from the program entirely. I know this from personal experience as my family was removed, in Ohio, for not reporting extra babysitting income my wife made over a one month period. She was suspended from receiving any State benefits for one full year, and we had to pay back the money we “stole” before we were considered eligible again.

              This was under the table cash for my wife. What you’d expect. A couple hundred dollars over the course of the month. But the family we were babysitting for was also receiving aid from the state, and reported the cost of babysitting as an expense.

              The same thing happens when you don’t report income to them, and then file a state tax return. It better match what you’d been telling them all year.

            • They add tens of thousands of workers across the country. Not in Ohio, which is the location of this discussion in question. And I doubt the increase in warehouse personnel is greater than 5% of total employment, based on the hiring calls I saw my last few years in Ohio. Amazon hired 200 seasonal workers for 4 warehouses in Charlotte last year. Its not nearly enough to skew those averages much.

              Its also worth noting that its almost impossible to BE employed and receive food stamps as a single person in this country. You have to make less than $1000 a month. So, when we are talking food stamps, we’re talking families.

      • Ashe Elton Parker

        Maybe this disproportionate number is an indication that Amazon is willing to support employees in ways that most other companies are willing to. Last I heard, Wally wasn’t willing to pay for someone to go to college to improve their job prospects and possibly eventually get a better paying job with another employer. Amazon isn’t afraid of being used as a stepping stone for such employees like some others (like Walmart) are.

        If you don’t agree with that, there’s also the fact that Amazon generally treats their employees far better than companies like Walmart, so it would naturally attract those who are on gov’t assistance like food stamps and in housing projects. Walmart pays minimum wage, and the one where I worked at for about a year or so regularly scheduled me to work past an evening time I’d deliberately entered as my limit due to transit ending–I needed to catch that last train north in order to avoid having to walk through a dangerous area late at night (and I’m not the only employee the managers jerked around like that). I’m fairly certain that if any Amazon manager has the ability to work around such requirements for an employee, they’d be happy to do so because it’s part of Amazon’s corporate policy to treat their employees well.

        So, in my opinion, the disproportionate number of employees on gov’t assistance at Amazon is mostly because they know they’ll be well-treated and have the ability to eventually work their way out of gov’t assistance somehow, so Amazon attrtacts such workers.

        • Trust me, the people I see leaving the local Amazon warehouse (warehouses make up over 70% of all Amazon employees) at 5:30 every day as I drive by are not using Amazon as a stepping stone, based on their demeanor and grooming. They’ve found a steady, stable gig in a world and culture that has no place for them, otherwise, and they either don’t have the capacity, or the interest, in “bettering” themselves (I say this facetiously, because there’s absolutely nothing wrong with who they are now, they’re better off than 95% of the rest of the world). There are far more employees waiting for a ride, or the bus, than their are cars in the parking lot. This has been true since the place opened up two years ago.

          Obviously this is not true across the board, but it is largely true, and self-evident when shift change rolls around.

          • A subset of warehouse workers are nomads by choice. It’s easy to get a warehouse job. Just walk in and demonstrate one can lift a given load. Warehouse turnover is huge.

            They drive RV’s or campers from one site to another. When they need money, they work in a warehouse for a few months, then take a few months off. It’s an interesting lifestyle, and I confess it has a certain attraction.

            I’m not sure why, but Amazon warehouse jobs are considered premium. Thousands apply. But, there are zillions of other warehouses in the country.

            (Yes, there are people who can’t afford an RV, camper, car, or lunch. That’s not the subset I am referring to.)

            • Again, I’m not complaining about what Amazon pays. Their starting pay in warehouses is better than almost anyone else’s warehouses. Which is why they are “premium.” There’s also the fact that Amazon is expanding like crazy, and building multiple warehouses all over the country, and even multiple ones in major cities. There’s actually room to move up the chain in Amazon.

  4. More importantly, those employed by Amazon are gaining valuable experience. Only those for whom the job is just a temporary stop-gap will fail to benefit from recent work experience, that can lead to a different, and better, job.

    • “So, in my opinion, the disproportionate number of employees on gov’t assistance at Amazon is mostly because they know they’ll be well-treated and have the ability to eventually work their way out of gov’t assistance somehow, so Amazon attrtacts such workers.”

      Government assistance is means tested. If Amazon pays employees more than the amount they receive from Ohio and/or the federal government, they can terminate their government benefits as soon as they begin working for Amazon.

    • “More importantly, those employed by Amazon are gaining valuable experience.”

      Yes, they learn how to obtain low-income goverment subsidies.

      The experience Amazon employees might gain and whether it will be of any use later on is completely speculative. It doez not relieve Amazon of the resonsibility to pay workers enough to support themselves without relying on government benefits here and now.

      • Terrence P OBrien

        It doez not relieve Amazon of the resonsibility to pay workers enough to support themselves without relying on government benefits here and now.

        Amazon’s only responsibility is to pay in accordance with current law. The pay rates are determined by supply and demand. We have a very large supply of unskilled labor. Many think we will be better off by increasing that supply.

        • One way is to bring in robots.
          Robots don’t qualify for government assistance so the issue goes away tout suite.

      • Are you saying that every single job in America should be able to pay a living wage based on the size of the employee’s family? So, a person with four kids should make more than a single person does for doing the exact same work, so that they can meet the wage that is above the food stamp threshold? Because that’s how food stamps work. Its based on the size of your family. To be above the threshold with four kids, you need to make $63,000. So, that’s what Amazon should pay a warehouse worker? What if that person has eight kids? Should they then make $103,000, which is the food stamp threshold for a family of 10? For doing the exact same amount of work?

  5. Terrence P OBrien

    Independent authors who collect food stamps should immediately raise their prices. Don’t wait for Amazon to do it.

  6. Interesting that they’re laying all this at Amazon’s door when it has nothing to do with them. Seattle is on of those cities that is on track for a $15/hr minimum wage. What businesses have found, however, is that, as wages go up, many of their employees want to cut their hours so they don’t lose their food stamps and other benefits.

    This is the kind of article that gets written when the writer has an agenda.

    • I was in a similar situation four years ago. I was offered a new job that would more than double our household income. I had been working three jobs to make around $25,000 a year and support my family of 6.

      We were managing to live within our means with assistance from Food stamps, and Medicaid for my children. The new job required us moving a few hours away to a much bigger city, though. We did all the math, and it turns out, we were going to be in a much better position if we just sat tight, stayed on food stamps, and continued to work three jobs at low pay. But I just couldn’t bring myself to do that. I was convinced that people who would make that choice were selfish, and a drain on society, and I wasn’t going to be one of them.

      So I took the job and we moved. Things got very, very difficult for us, even though I was making more than twice the money. We would have been much better off financially to stay on government aid. Which was eye opening. If I had it to do over again, I’m not sure I would make a different choice, but I’m darn sure that I understand now how someone COULD make that choice. My children have suffered for my pride.

      • I was convinced that people who would make that choice were selfish, and a drain on society, and I wasn’t going to be one of them.

        If one will not take the first step, then they cannot take the second, third, or fourth.

      • I was convinced that people who would make that choice were selfish, and a drain on society, and I wasn’t going to be one of them.

        Those who will not take the first step cannot take the second, third, or fourth. There’s a tall building in Chicago with twelve commodes on each floor. I can proudly say I carried each and every one of them to their to their designated work station. My lasting mark on the city.

        • And managing comments are a bit more challenging than commodes.

        • If we had not gotten a LOT of help from our church, there would have been weeks after taking that first step that my four children wouldn’t have had food. Or clothes. I am no longer going to judge someone for not wanting to take that risk with their own children. Sorry.

          • Terrence P OBrien

            In the days before welfare, Medicaid, and food stamps, churches were very instrumental in helping people take that first step. They did great work. They still do, but there is a preference among many today for government to fill that role.

            History indicates millions took that first step with the help of their churches and local immigrant community. They didn’t have much choice, and they took it. Those who won’t take a step today can do so because of those who did take that step in the past

  7. Stories like this always conveniently overlook how much more taxpayers would be paying in public assistance if the low-wage workers at Amazon didn’t have those jobs.

  8. PG is essential all promotion of Amazon, all the time. So no surprise he would try to tear down non profit organizations who dare criticize this corporate monolith. Non profits that don’t pay taxes? Oh, the horror!

    • I make no secret that I like Amazon, Doctoroe.

      The principal reason is that, as a general proposition, Amazon treats authors well. Most other large businesses do not treat authors well. Because Amazon has made it easier for more authors to earn their living doing what they love, it has generated a lot of brownie points on my ledger.

      Has anyone done a study of how many authors trying to sell a book into the traditional publishing industry are relying on government assistance? Absent independent wealth or a working spouse/partner, that number is high.

      Aside from the main reason, treating authors well, IMHO, Amazon is an enormously creative organization which has provided strong competition to local retail monopolies or quasi-monopolies by offering better selection, price and service.

      The idea of non-profits is fine. However, a non-profit is a creature of state and federal law and not necessarily an organization full of virtuous people doing virtuous things.

      A little internet research provided this checklist for becoming a non-profit:

      – Write a mission statement for your chosen organization.

      – Find a group of trusted individuals to form a board of directors.

      – File an article of incorporation with your state. You can find this document on your state’s government Web site. There may be a small fee when you send in the form.

      – Write a list of bylaws for the organization.

      – Write to the IRS to request nonprofit status. Once you’ve been approved, you’ll need to apply for the same status through your own state. You may have to fill out other forms or register with other state-run offices depending on where you live.

      – Formally register your nonprofit organization with your state and apply for sales tax exemption.

      – Contact your city government to find out if you need a solicitation license.

      – If you’re going to be sending out a lot of mail, you can apply for a nonprofit bulk mail permit from your local post office.

      – Get insurance. There are many kinds of insurance for nonprofits, so do your research and shop around before you settle with one company.

      Here are some examples of purpose clauses for nonprofits:

      “This corporation is a nonprofit Public Benefit Corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for [public purposes, charitable purposes, or public and charitable purposes].”

      “Such purposes for which this corporation is formed are exclusively charitable and educational within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986.”

      • I am a big customer of Amazon, on several levels. I just think it is disingenuous to attack Amazon critics on the basis that they are nonprofits. Apples and Oranges. Amazon is a remarkable paradyme-breaker, easily on par with WalMart in the 1980s.

  9. In another telling of the OP, the date of the statistics seemed to be 2011, 6 years ago.
    Which isn’t to say the situation’s different now, but that seems a fair question, too.

    ETA: telling == another news story

    • That’s actually a fairly large deal, since Amazon has added a number of warehouses in Ohio since then. Which means they are likely larger than the 53 in employment.

  10. In terms of incentives, the original article seems to be coming firmly down on the side of “Large employers like Amazon should try to avoid hiring people on welfare or else we’ll give them bad press.”

    That seems counter-productive, both from a public budget standpoint as well as if you’re going to consider the interests of the poor people involved.

    Amazon isn’t the group of individuals who have the power to control if people will be on welfare/food stamps or not.

  11. So what’s better, full welfare or work whenever you can get it?

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