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WASHINGTON, DC: February 01, 2018. A report from the U.S. Economic Policy Institute (EPI) concludes Amazon fulfillment centers do not boost overall employment in the counties where they open - undermining the case for providing large tax breaks and incentives to lure Amazon facilities to a particular place.

Last month the company announced it had chosen 19 U.S. cities plus Toronto, Canada from 238 locations across the U.S., Canada, and Mexico as possible sites for its second headquarters.

Amazon employee picking with roboticsA final decision on which location will be the recipient of US$5 billion in investment and 50,000 jobs is expected later this year, according to the company.

Analyzing data for counties in 25 states containing Amazon fulfillment centers, the EPI discovered that while the opening of a new center leads to a 30 percent increase in warehouse and storage employment in the surrounding county, it does not lead to an increase in overall employment in the county and, in some case, the data suggests leads to a reduction in overall employment.

"Amazon has received over US$1 billion in state and local subsidies to open its fulfillment centers at taxpayers' expense, but does not increase overall employment in the county," said EPI economist and report co-author Ben Zipperer. "If policymakers instead invested in public services - particularly in early-childhood education and infrastructure - that would be a much stronger recipe for long-term economic development, rather than giving tax breaks to national employers like Amazon."

Meanwhile Amazon has reported a 31 percent increase in 2017 net sales to US$177.9 billion; a 2.0 percent decline in operating income to US$4.1 billion year-on-year; and net income of US$3.0 billion – up from US$2.4 billion in 2016.

Pictured: Amazon employee using robotics to pick items in a fulfillment center.

"As cities and counties compete to host new Amazon facilities and its new headquarters, policymakers should be cautious about giving away the store," added co-author Janelle Jones. "Instead of pre-committing to giving away public funds to attract employers, communities should demand a concrete demonstration that an employer's arrival will make their region a more prosperous place for working people," she added.

The two authors suggest jobs created in warehousing and the storage sectors are subsequently offset by job losses in other industries, or that the employment growth generated by Amazon is simply too small to be meaningfully detected in the data.

The EPI is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. 

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