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I can try fleshing out my line of thinking a little more. Amazon, Walmart, et al. have put several industries out of business. The effect of the big box stores
by cepth 8y ago
I can try fleshing out my line of thinking a little more.
Amazon, Walmart, et al. have put several industries out of business. The effect of the big box stores and ecommerce sites on traditional retail is visible anywhere malls are failing.
Their distortionary effect on the number of people who need welfare occurs through 1) putting traditional businesses out of work and 2) placing its warehouses in areas where wages are depressed (sometimes due to their own competitive behavior). In the second case, wages are anchored at a lower level, and factors like hysteresis further depress potential earning potential.
I would agree that strictly speaking, you're correct that the burden on the social safety net is maybe reduced when workers take a low wage job at Amazon vs. being completely unemployed. But, Amazon and Walmart have collectively displaced hundreds of thousands, if not millions of jobs in industries like corner stores, grocery stores, bookstores, appliance shops, etc.
Regardless of whether you believe that Amazon type companies are responsible for displacing people from jobs, my argument is that someone who works at a legacy retail outlet is likely making a better wage. Amazon can swoop into areas where the labor market is depressed, and then offer a lower wage than is offered in legacy retail. They can offer a wage that might be considered not-livable, because the social safety net will make up the difference.
It seems pretty uncontroversial that Amazon's cost per unit of labor is lower than that of a legacy retailer. Do you see any reason why this isn't the case?