As Amazon booms, retail jobs shift
FALL RIVER — Hundreds of people flocked to the Amazon job fair here early this month: store clerks, security guards, technicians, an EMT, an iPhone repairman, even a manager at a hospital — some unemployed, many not — ranging in age from teens to retirees. They were lured by the prospect of a full-time job with benefits at a company so successful it has obliterated jobs across the retail landscape.
Amazon the job killer is also creating jobs at a staggering pace, mostly in its massive warehouse and delivery operations. But will there be enough for the workers displaced by its vast success? Are people better off packing and shipping boxes than selling suits and skirts?
The Internet has roiled industries throughout the economy, and its impact on traditional retail has been seismic. Brick-and-mortar stores have seen their prospects erode precipitously in the past year. Sears, Macy’s, JCPenney — once mighty chains — are on the ropes.
But this revolution may be less about eliminating jobs than redefining them. Michael Mandel, chief economic strategist at the Progressive Policy Institute in Washington, D.C., says that e-commerce is creating more jobs than traditional retailers are losing.
When jobs in warehouses, known as fulfillment centers, are counted, e-commerce companies have added more than 400,000 jobs since 2007, while brick-and-mortar retailers lost the equivalent of 140,000 full-time jobs, according to Mandel’s analysis of Bureau of Labor Statistics data. E-commerce warehouse workers also earn 31 percent more on average than their in-store counterparts in the same geographic area, he found. And unlike traditional retail, many of these jobs are full time, with benefits.
“E-commerce is a job creator, not a job destroyer,” said Mandel, who says he’s the first analyst to consider warehouse workers as part of e-commerce. “It’s a win for consumers, who get more convenience. It’s a win for workers with a high school education, who have access to more jobs at higher wages. And it’s a win for retailers that expand into online sales. The only one it’s not a win for is shopping mall owners.
“A retail apocalypse? Nah. It’s an evolution.”
Amazon has more than 382,000 full-time employees in the United States, 125,000 of them at its fulfillment centers, and its nationwide job fair Aug. 2 was intended to bring in 50,000 more, the majority full time. In Massachusetts, where the company has 3,000 employees and is looking to hire 700 more, job seekers at the warehouse in Fall River waited hours for a chance to tour the facility and apply for a job.
Lenny Betances, 32, a CVS manager in Long Island, showed up in a tie, with his resume. The father of three, who did supply chain work in the Marines and previously worked at a Target distribution center, was hoping his logistics experience could help him land an operations manager role. And what better place to do that than at an Amazon warehouse the size of 20 football fields?
“You just have to keep up with the times,” Betances said. “I shop online for everything.”
But how stable these fulfillment center jobs are remains to be seen, as automation threatens to displace even more workers. Some online shopping warehouses rely heavily on seasonal and temporary workers, who don’t have the protections that full-time staffers do.
Also, online retailers are so much more productive than brick-and-mortar stores that they need fewer people to get the job done; one online employee generates more than four times the sales revenue that a traditional retail worker makes, according to J.P. Morgan research. Three-quarters of online sellers have four or fewer employees, according to the US Census.
Another cautionary note: Many workers aren’t able to move seamlessly from traditional retailers to e-commerce. Struggling sectors such as clothing and department stores are dominated by female employees, who may be less likely to go into physically taxing warehouse jobs, noted Anastasia Christman, a senior policy analyst at the National Employment Law Project. And people in lower-income, urban communities who once worked at shops in their neighborhood — many of them people of color — may not have a ready way to get to the mammoth e-commerce warehouses located outside city centers, Christman said.
Of the Massachusetts residents who left retail jobs in the first quarter of 2016 and were able to find work, more than a third found another retail job, but the next biggest group — 14 percent — transitioned into lodging and food service, according to census data. “They may be moving into jobs that could potentially have even worse wages and working conditions,” Christman said.
Despite the online onslaught, many traditional retail establishments are going strong, and e-commerce may even bolster in-store sales. While online shopping accounts for just 8.4 percent of total retail sales, according to the census, more than half of those who buy something in a store check their options online first, according to Deloitte.
Amazon, which began as an online bookseller, and whose swift rise led to the demise of many independent book shops, is now looking to fill the void it created by opening book stores in Dedham and Lynnfield, among eight stores nationally so far, with five more to come.
“It’s another way to reach the customer and test what resonates with them,” Amazon chief financial officer Brian T. Olsavsky told investors earlier this year.
It has also started opening physical locations for college textbook pickups, as well as groceries, and its acquisition of Whole Foods makes its brick-and-mortar footprint bigger.
Increasingly, companies are creating hybrid models, in which customers order online and pick up in a store. Several companies with robust online grocery businesses, such as Walmart and Kroger, use these “click and collect” systems, said Francoise Carre, research director for the Center for Social Policy at the University of Massachusetts Boston.
Workers who remain at stores may get more training to adapt to this new regime, learning, for example, how to help customers order a product online on the spot if the store doesn’t have it.
And some in-store skills can transfer to online roles, said Jeffrey Neville, a vice president at the Boston-based retail consultancy BRP Consulting. A clothing salesman at Nordstrom, for instance, could become a stylist for the online clothing service Stitch Fix, while in-store employees who order products and stock shelves can do the same for online warehouses.
Today’s fulfillment centers are much more automated than warehouses of the past, but they are moving toward the use of “helper robots” that work alongside people, rather than replacing them, Neville said.
Mandel, the Progressive Policy Institute economist, argues that these jobs are turning “unpaid household labor” — like consumers driving to the mall, picking out a pair of shoes, and waiting in line to buy them — into paying jobs. And as people increasingly expect same-day or next-day delivery, and are willing to pay, more fulfillment centers will open, and more jobs will be created, he said.
“It looks a lot like the industrial expansion of the early 20th century, on the distribution side instead of the production side,” he said.
Even though the US economy is considered close to full employment, the 30,000-plus workers who lined up at Amazon’s job fairs were a clear sign that there is great demand for full-time jobs with health insurance, retirement plans, tuition reimbursement, and wages that the company says are nearly a third higher than in-store jobs. At its warehouses, nearly 15 percent of Amazon’s entry-level managers started in hourly jobs, according to the company.
Amazon would not disclose how many job-fair hires have been made.
Tony Phillips, a 45-year-old Warwick, R.I., resident, spent 25 years in the hospitality industry before going to school for facilities management and was recently laid off from a plumbing apprentice job. A regular retail job wouldn’t cut it, he said. He came to the job fair in Fall River because he wanted a job — any job, and the possibility to move up — at the thriving online company.
“If they had a stripper pole, I’d do it,” he said. “Just get me in the door.”