It’s time to revisit one of our favorite topics, the evolution of wages in ecommerce. It is often claimed, falsely, that the entry of Amazon and other large ecommerce firms into local labor markets lowers wages. For example a recent op-ed in the Chicago Sun Times argued that “Amazon’s dominance drives down local wages for warehouse workers, general retail workers and delivery drivers.”
But basic economics tells us that the only way that can be true if ecommerce reduces labor demand. But in fact, the shift to ecommerce has been a massive boost to job growth, both nationally and in most states and large metro areas. The reason? When you order something online, you are creating work for fulfillment center workers and delivery drivers. In other words, the many hours you formerly spent driving to the mall, parking, walking through the mall, standing online to pay, and driving home have now been shifted to the paid labor market.
On a national level, the number of jobs in the retail sector is actually slightly up since February 2020, when the pandemic started, while jobs in delivery and fulfillment have risen by more than 800,000. These new jobs are concentrated in the category entitled “production and nonsupervisory workers,” which tend to be less-educated workers. (These figures are based on PPI tabulations of data from the Bureau of Labor Statistics).
The same is true if we take a longer-term perspective. Over the past ten years, the number of jobs in warehousing (fulfillment) and local delivery has gone up by 1.7 million, while the number of jobs in retail has risen by about 400,000. Once again, these new jobs are concentrated in the category entitled “production and nonsupervisory workers.”
This gain in labor demand has pushed up real wages in ecommerce industries. Over the past ten years, the real hourly wages for production and nonsupervisory workers in warehousing (fulfillment) has risen by 15.4%. That’s compared to a 9.8% increase for private sector production and nonsupervisory workers overall.
To put it another way, the 10-year real wage gain for production and nonsupervisory workers in the warehousing industry—where most Amazon and third party fulfillment centers are counted–is significantly higher than the real wage gain for similar workers in the private sector overall.
Real Wages Rise in Ecommerce Industries
| 10-year change in real hourly wages for production and nonsupervisory workers* | |
| Private Sector | 9.8% |
| Retail (including physical stores) | 11.6% |
| Delivery (couriers and messengers) | 14.7% |
| Fulfillment (warehousing) | 15.4% |
*BLS CES data downloaded November 20, 2023
What about in the Chicago area in particular, which was the subject of the op-ed mentioned above? Over the past ten years, the number of retail jobs in Cook County has dropped by about 10,000. But the number of jobs in local delivery and warehousing has increased by 21,000, for a net gain.
The positive trend in labor demand is even stronger for the Chicago metro area. Over the past ten years, the number of retail jobs in the Chicago metro area has dropped by about 14,000. But the number of jobs in local delivery and warehousing has increased by 63,000.
Not surprisingly, with that much demand, employers are having to offer higher wages, not lower wages. Amazon is offering a starting wage of $19.50 per hour at its West Humboldt Park fulfillment center in Chicago By comparison, BLS data for the Chicago metro area shows that the average wage for retail salespersons in the Chicago metro area was only $17.49 an hour, way below the starting wage at the new Amazon facility. Similarly, the average wage for “stockers and order fillers” in the Chicago metro area was only $17.80 per hour.
Finally, no discussion of wages would be complete without considering the very important aspect of safety. Amazon’s own analysis shows that in 2021, the “recordable incident rate” at Amazon warehouses in the United States was 7.6, higher than the 6.7 rate for large establishments in the general warehousing industry as a whole, as reported by the BLS (this figure measures the number of injuries and illnesses incurred at work relative to hours worked).
But newly-released data from the BLS show that the safety gap has disappeared almost completely. Amazon’s warehouse incident rate dropped to 6.9 in 2022, according to the company’s calculations, while the incident rate for large establishments in the general warehousing industry ticked up a bit to 6.8 in 2022. While no single number can fully describe the safety picture, the trend is encouraging. Combined with the strong job and wage performance of ecommerce facilities nationally and in the Chicago area, that’s good news for local workers.
