Updated Study Drives Home Amazon’s Negative Impact on Economy

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On Wednesday, September 28, the American Booksellers Association and Civic Economics released a full update of the “Amazon and Empty Storefronts” study, originally released at Winter Institute 11 in February 2016. While the initial study showed the overall negative impact that Amazon has had on Main Streets across the country, the new numbers, from 2015, the most recent available, show that this impact is only growing worse — and significantly so. 

“The updated study again shows that — whether it’s in dollars lost in sales and property tax revenue, far fewer retail storefronts serving local communities, or significant job losses — Amazon has a massive, overall negative impact on the American economy,” said ABA CEO Oren Teicher. “We need to come to grips with the fact that every American consumer is paying a high price for Amazon's growth.”

Profiles of Amazon frequently tout the online giant as a jobs creator, a reputation that oftentimes helps the retailer garner generous tax subsidies from communities in exchange for opening distribution centers. But while Amazon might be perceived as a jobs creator, the reality, according to the newly updated study, is quite the opposite.

The original study showed that from 2014 to 2015 Amazon sales jumped by 26 percent from $44.1 billion to $55.6 billion. In 2014, Amazon sales produced a net national loss of more than $1 billion in revenue lost to state and local governments. Just one year later, the update shows that overall revenue losses jumped by 18 percent to $1.2 billion.

Even more telling, Amazon sales produced a net loss of 222,000 retail jobs in 2015, an increase of 29 percent over 2014, when it produced a net loss of 172,000 retail jobs. (It should be noted that Civic Economics’ Amazon employment estimate for 2015 is lower than for 2014. Civic Economics explains that this is the result of better data availability rather than any productivity change on Amazon’s part. In 2014, Amazon distribution employment was estimated to be 134,000, but with the new methodology, it should have been 96,000. As a result of that change, the estimate for the net loss of retail jobs in 2014 is 172,000.)

“When this unprecedented study was released last year, the numbers were sobering in that it showed clearly how Amazon’s retail dominance negatively impacted the American economy,” said Teicher. “Now, a year later, the new numbers bear out that the deleterious effect of this retail dominance has only grown. The figures in the updated study, especially when compared to last year’s numbers, should make it clear to both state and local policymakers that supporting healthy local economies is a far better prescription for long-term economic growth.” (For the complete study, executive summary, or individualized state summaries, click here.)

For the study update, Civic Economics focused on two broad classes of impact: Fiscal (relating to public revenue) and Land Use (relating to development patterns at the local level). The report looks at calendar year 2015, the last year for which reliable data is available. Online sales, the authors note, have only grown since then.

To determine impacts, Civic Economics quantified Amazon sales at the state level to uncover how much sales tax went unpaid at the state and local level and how the shift from Main Street stores impacts property tax revenue. Nearly half of all states still collect no sales tax revenue from Amazon sales, and others collect only partial sales taxes, producing a nationwide sales tax gap of $704 million, a 13 percent increase from $625 million in 2014.

Amazon’s $55.6 billion in sales is the equivalent of more than 39,000 retail storefronts or 133 million square feet of commercial space, which might have paid $528 million in property taxes and employed 222,000 workers, the study noted.