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An Amazon warehouse town dreams of a better life, Retail News, ET Retail


Prime anchor: An Amazon warehouse town dreams of a better life By David Streitfeld

CAMPBELLSVILLE: In the late 1990s, this central Kentucky town suffered a jolt when its Fruit of the Loom textile plant closed. Thousands of jobs making underwear went to Central America, taking the community’s pride with them.

Unemployment hit 28% before an unlikely savior arrived as the century was ending: a madly ambitious startup that let people buy books, movies and music through their computers.

Amazon leased a Fruit of the Loom warehouse about a mile from the factory and converted it to a fulfillment center to speed its packages to Indianapolis and Nashville, Tennessee, and Columbus, Ohio. Its workers, many of them Fruit veterans, earned less than what the textile work had paid, but the digital excitement was overwhelming.

Twenty years later, Amazon is one of the world’s most highly valued companies and one of the most influential. Jeff Bezos, Amazon’s founder, has accumulated a vast fortune. In Seattle, Amazon built a $4 billion urban campus, redefining a swath of the city.

The outcome has been different in Campbellsville, the only sizable community in Taylor County. The county population has stalled at 25,000. Median household income has barely kept pace with inflation. Nearly one in five people in the county lives in poverty, more than in 2000.

The divergent fates offer a window into what towns can give to tech behemoths over decades — and what they get in return. Campbellsville’s warehouse was among the first of what are now an estimated 477 Amazon fulfillment centers, delivery stations and other outposts around the country. That makes Campbellsville, with 11,415 inhabitants, a case study for what may happen elsewhere as Amazon continues expanding.

“Amazon has had a really good business here for 20 years,” Mayor Brenda Allen said. “We’re glad they’re here,” but, she added, “I really would feel better if they would contribute to our needs.”

In central Kentucky, Amazon has reaped benefits, including a type of tax break that critics label “Paying Taxes to the Boss.” In the arrangement, 5% of Amazon workers’ paychecks, ordinarily destined for the county and the state, went to Amazon itself. The company netted millions from this incentive over a decade.

Although that tax break has run out, Campbellsville itself still gets no tax money from Amazon. The warehouse is just outside the town limits. The city school system, which is its own taxing authority, does get revenue from Amazon. Both the city and county school systems recently raised their tax rates because of revenue shortfalls. (The city increase had to be rescinded for procedural reasons.)

No one wants Amazon to leave, though. It is Campbellsville’s largest private employer. Its online mall has given the town’s shoppers access to a paradise of goods.

Less visibly, Amazon shapes the local economy, including which businesses survive and which will not be coming to town at all. It supplies small-screen entertainment every night, influences how the schools and the library use technology, and even determined the taxes everyone pays.

But the relationship between Amazon and residents is facing questions as it enters middle age.

Prime anchor: An Amazon warehouse town dreams of a better life
“The needle has not moved in the last two decades on the quality of life in Kentucky, especially in places like Campbellsville. What does that tell you?” said Jason Bailey of the Kentucky Center for Economic Policy, a research and advocacy group.

He called the state “a fiscal mess because of tax giveaways to Amazon and other companies.” Kentucky has had 20 rounds of budget cuts since 2008, he said.

In 1948, a Kentucky underwear company set up an outpost in the basement of the old Campbellsville armory with five employees. This eventually became the largest single male-underwear plant in the world, with 4,200 workers.

The money was good. Fruit, as it was eventually called, built the first public tennis courts and paid the city $250,000 in 1965 to expand the wastewater disposal plant. Factory executives spurred the creation of a country club and the public swimming pool.

The easy times ended with the North American Free Trade Agreement, which took effect in 1994. Amazon’s arrival five years later offered a second chance. Campbellsville was more than 40 miles from the nearest interstate, but it had a modern warehouse and thousands of workers who knew how to hustle.

To woo Amazon, the local fiscal court passed the payroll tax measure, which opened up the state coffers. Amazon’s workers, like other employees in the county, would pay a 1% payroll tax and a 4% state income tax. But that money went directly to Amazon as a reward for bringing in jobs.

This type of tax break was first developed in Kentucky and is now widespread. Amazon’s incentives totaled $19 million over 10 years, including exemption from the state’s corporate income tax. The company said it had ultimately received “less than half” that amount, though it declined to explain the discrepancy.

Arlene Dishman began working at Fruit in 1970. She said she had earned as much as $15 an hour — the equivalent of about $100 now — sewing necklines on V-neck T-shirts. “You can’t hardly turn that money down,” she said.

Her starting rate at Amazon was just $7.50 an hour, but she relished creating a digital outpost in Campbellsville. “We felt responsible for a lot of the success of Amazon,” she said. “We were just so proud.” She became a trainer, worked with Bezos himself when he came to town, and was promoted to management. When the dot-com bubble burst in the early 2000s, pressure ramped up.

“I worked on the third floor,” Dishman said. “No air-conditioning. I would have people on the line pass out constantly.” As a manager, she said, she was too understanding.

“I had worked with these people for so many years at Fruit that when a situation came up that management was not liking, I had a tendency to take the workers’ side,” she said. She left after three years.

Amazon said the money it paid in wages was an investment in Campbellsville and that it had contributed “$15 million in taxes to Taylor County” over the last 20 years. It declined to break down the numbers.

Records and interviews indicate that Amazon paid about $350,000 in taxes this year to the city school system. The company paid the county $410,000 in property taxes. Good Jobs First, a group that analyzes tax benefits for corporations, thinks that is not enough.

“What has Amazon really done for the community?” executive director Greg LeRoy asked. “It’s not like it’s a tech lab, diffusing intellectual property or spinning off other businesses. It’s a warehouse.” Allen, the mayor, wants more money to pay the town’s bills. “The people in Seattle are getting rich,” she said. “They don’t care what happens to the people in Campbellsville, not really.”





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