Ethan Orr's Opinion: Amazon brings jobs, but at what cost?

Several weeks ago Amazon announced the opening of a new fulfillment facility in Tucson. City leaders were “thrilled” with the announcement, and we should be thrilled when jobs and investment come into our community. But we should also ask the question, is all growth or development “good” growth?

Having worked in economic development for years, I observed that most companies relocate based on geography, workforce and cost, and that the company that moves here for an economic incentive will leave here for a better economic incentive from a competitor city.

What is needed is a consistent and streamlined approach to working with companies and treating existing companies with the same respect that we do newcomers.

Supporting our existing local businesses and workers and improving our overall fundamental economic attractiveness will over time produce a greater return on investment than chasing individual companies with incentives. An analysis of 294 major U.S. cities from 1972-2012 found that cities that scored the highest on the Metropolitan Economic Freedom Index (MEFI) also had the highest number of new firms locate to the region. This means that low property taxes and less wage restrictions for businesses lead to economic growth.

One of the most perverse distortions of the free market is crony capitalism, the government protecting large companies from competition by creating regulatory barriers to entry or creating tax breaks and subsidies for individual companies with no clear economic benefit for the taxpayers.

Since 2000, Amazon has received over $1.115 billion in tax subsidies from 129 cities in the U.S. However, in terms of job creation, Amazon creates only 14 jobs per $10 million in sales while independent (aka local) retailers create 110 jobs per $10 million in sales. Local businesses create over seven times the number of jobs per dollar of sales, pay more in taxes, and keep more of their revenue in the local economy.

Unfortunately, government inadvertently enables large companies to exploit their workers and then pass the cost of low wages onto society though expanded welfare and Medicaid programs. According to a study in 2018, 1 out of every 3 Amazon employees in Arizona received SNAP benefits (food stamps).

Nationwide, the average wage at an Amazon fulfillment center is just $1,000 above the poverty line. The cost of allowing large multinational corporations to exploit our workers is borne by all of us.

There are three effective ways to improve the working conditions at an Amazon fulfillment center: competition, education and unions.

Southern Arizona is the perfect transportation nexus. We are in the ideal geographic position to expand the number of transportation and logistics jobs in our region, and by using Foreign Trade Zones, which allow us to partner with other countries to manufacture goods without tariffs, we can partner with Mexico to recruit manufacturing jobs.

This will result in competition for workers and lead to rising wages. Additionally, giving workers the time for and access to education, and additional vocational training, will allow them to climb the economic ladder.

The same study that found that low property taxes brought companies to a city also found that high rates of union membership helped keep companies in that city.

America works best when Americans work, and the restoration of the American economy begins with finding ways to support workers and families with meaningful, high-paying jobs.

Historically, unions have been a major proponent of increased wages and improved worker safety. Typically where unions have fallen short it is when union leadership abuses individual worker rights or when unions focus on political issues outside of improving working conditions.

As a free-market capitalist, I value the exchange of value and the freedom to contract. I also support the workers’ constitutional right to freely assemble. Arizona, along with 27 others, are right-to-work states, meaning that a worker can join a union, and then if that union does not provide value, that worker can freely leave and continue to work for their employer. This forces the union to treat their members more like customers, provide value, and still speak with one voice.

When unions negotiate for worker benefits, governments don’t have to. United States labor law places unions and management in an adversarial position. However on many issues workers and management are on the same side of the issue, for example both want to work for a profitable and safe company. In Europe, labor unions are given more flexibility to work with management so that both can focus on improving worker conditions and on making the company more profitable.

At the fulfillment center, Amazon tracks employees via GPS and monitors bathroom breaks to the second. This treatment can be dehumanizing and is one of the reasons that I, as a Republican, support Sen. Marco Rubio, R-Fla., in his call to allow Amazon workers to unionize, as long as we build in safeguards to protect the rights of individual workers. I challenge the Democrats on our City Council to do the same.

As a community we should expect better of our leaders. Instead of focusing on large corporate interests, let’s focus on local businesses and workers. The city can do this by supporting adult education facilities and by reducing the taxes and regulations on small-business owners. As a region we should expand our economic development districts, including our foreign trade zones, and work to expand the Port of Tucson.

Amazon deserves a voice, and I am glad that our mayor and council are listening to Amazon and its lobbyists, but I am also asking them listen to the voice of the hundreds of small-business owners and the thousands of workers who, if we support them, will make Tucson a more vibrant and resilient city.