Amazon Holding Down Wages for Warehouse Employees in Small Towns

San Bernardino, a city located in the Inland Empire of Southern California, was excited to get an Amazon distribution center, but some worry the company, which is now the city's biggest employer, is holding down wages. "San Bernardino, the unemployment rate that was as high as 15 percent in 2012 is now 5 percent," Alana Semuels reports for The Atlantic. But "[t]he median household income in 2016, at $38,456, is 4 percent lower than it was in 2011." This phenomenon is not uncommon in cities with lots of Amazon jobs. "A report from the Institute for Local Self-Reliance found that Amazon paid 11 percent less than the average warehouse in the Inland Empire; a similar analysis by The Economist found that workers earn about 10 percent less in areas where Amazon operates than similar workers employed elsewhere," Semuels writes.

Cities competing for these distribution centers don't consider it possible to make demands of the online retailer, which could find other locations. "These places, often located in the outskirts of major cities, have lost retail and manufacturing jobs and, in many cases, are still recovering from the recession and desperate to attract economic activity," Semuels writes. In fact, they often offer Amazon incentives in tax deals and infrastructure built specifically for the distribution center. "If these places don’t get a new Amazon facility, they won’t instead get companies like Stater Brothers that are willing to come in and pay double or triple the minimum wage for jobs that don’t require a college education."

The company also encourages a high level of competition between its warehouse employees, Semuels reports. "They’ll run competitions such as a 'Power Hour' in which workers are encouraged to work as hard as they can for a prize. One recent prize was a cookie." Some in San Bernardino have tried to start unions, but those efforts have not gained traction. "Randy Korgan, the business representative and Director of the Teamsters Local 63, which represents the Stater Brothers employees, told me that his office frequently gets calls from Amazon employees wanting to organize. But organizing is difficult because people fear losing their jobs if they speak up," Semuels writes.