Amazon Warehouse Town Provides Support, Gets Little But Low-Paying Jobs In Return

Amazon preys on desperate communities whose original economic foundations have collapsed.

As if they werent already poor enough, it demands tax breaks and subsidies, in return for which it provides minimum wage jobs which often injure those who work for it. But citizens are fearful of Amazon leaving because they have nothing else. JL


David Streitfeld reports in the New York Times:

In the late 1990s Amazon leased a warehouse and converted it into a fulfillment center. Twenty years later median household income has barely kept pace with inflation. One in five people in the county lives in poverty, more than in 2000. A tax break (gives) 5% of Amazon workers’ paychecks, which would ordinarily be destined for the county and the state, to Amazon. The city gets no tax money from Amazon. The warehouse is just outside the town limits. Both the city and the county school systems recently raised tax rates because of revenue shortfalls. No one wants Amazon to leave, though. It is Campbellsville’s largest private employer.

In the late 1990s, the town of Campbellsville in central Kentucky suffered a powerful 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 percent before an unlikely savior arrived as the century was ending: a madly ambitious start-up 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 into a fulfillment center to speed its packages to Indianapolis and Nashville and Columbus. 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.

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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 exactly 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.

Brenda Allen, Campbellsville’s mayor, said: “Amazon has had a really good business here for 20 years. They haven’t been disappointed at all. And 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 percent of Amazon workers’ paychecks, which would ordinarily be destined for the county and the state, go to Amazon itself. The company netted millions of dollars from this incentive over a decade.

While 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 the 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.

“We were a company town with Fruit of the Loom, and we’re becoming a company town again,” said Betty J. Gorin, a local historian.

Amazon said it was not solely responsible for Campbellsville’s vitality. It pointed out other big local employers, including a hospital and a Baptist university. “Amazon is not the only barometer,” it said.

The company said it had spent $53 million remodeling its warehouse “to benefit employees.” The facility now includes a classroom for training workshops and, it said, “on-site college classes.” Amazon declined a request for a tour.

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Some cities and towns are now weighing the costs of Amazon versus the benefits. The nationwide total of all state and local subsidies for the company over 20 years is $2.8 billion, according to Good Jobs First, which tracks tax breaks for corporations.

Activists protested New York’s plan to give Amazon billions of dollars in tax breaks, causing the company to abandon its plans this year to move into Queens. (Amazon began opening new offices in Manhattan this month without any incentives.) Maryland residents rejected a proposed warehouse last summer, citing concerns about noise pollution, traffic and safety.

In Campbellsville, the relationship between Amazon and the citizens is facing some questions as it enters middle age.

“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 producing 3.6 million garments a week.

The money was good, especially for women and African-Americans who had few other opportunities. 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 570,000-square-foot modern warehouse and thousands of eager 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 percent payroll tax and a 4 percent 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.

The enthusiasm with which yesterday’s workers embraced tomorrow’s economy was a big story that drew national attention. Making underwear was not sexy. Selling things online was.

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 Mr. Bezos himself when he came to town, was promoted to management. These were years of turmoil at Amazon, as the dot-com bubble burst in the early 2000s. Pressure ramped up.

“I worked on the third floor,” Ms. Dishman said. “No air-conditioning. I would have people on the line pass out, constantly.”

As a manager, she said, she was too understanding, which was her undoing.

“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.

David Joe Perkins, who worked for Fruit for 24 years and then for Amazon, said he also took pride in being part of the e-commerce start-up.

“We treated it like our company,” he said. “I have personally worked with Jeff Bezos. I actually liked the guy.”

What Mr. Perkins did not like were Amazon’s managers.

“My manager called me into the office one day and said, ‘Dave, your performance is not what it needs to be.’ I said, ‘How can I improve?’ He said, ‘You don’t fire enough people.’”

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Several months later, Mr. Perkins was let go with little explanation.

Both Mr. Perkins, 64, and Ms. Dishman, 71, have Amazon Prime accounts. Ms. Dishman’s daughter works for Amazon as a data analyst. Ms. Dishman even thought about returning to the warehouse during last year’s holidays to earn a little Christmas money. She did not follow through.

Just about everyone in Campbellsville remains grateful to Amazon for coming and hiring people. Those workers take their paychecks and spend at least some of the money around town.

There are not as many workers as people think, though.

When Amazon arrived, it said it would employ 1,000 people full time within two years. That’s still the official total from the Kentucky Cabinet for Economic Development, a state agency, and in Mrs. Gorin and Jeremy Johnson’s two-volume history of the town, published this year. Team Taylor County, which solicits new industries for the community, puts the number of workers at 1,350.

Amazon said in October that the total was 655 full-time workers.

“I’m shocked,” Mrs. Gorin said.

Kelly Cheeseman, an Amazon spokeswoman, said the “head count started to shift” at the warehouse “around 2016 to 2017.” She said automation — the deepest fear of every community with an Amazon warehouse — had nothing to do with it.

“We regularly balance capacity across the network,” Ms. Cheeseman said. In November, Amazon said full-time workers had risen to 700.

Amazon said that 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 further.

Records and interviews indicate that Amazon paid to the city school system about $350,000 in taxes this year. The company paid the county an additional $410,000 in property taxes.

Good Jobs First, the group that analyzes tax benefits for corporations, thinks that is not enough.

“What has Amazon really done for the community?” asked Greg LeRoy, the center’s executive director. “It’s not like it’s a tech lab, diffusing intellectual property or spinning off other businesses. It’s a warehouse.”

Ms. 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.”

In the 1970s and 1980s, life in Campbellsville revolved around Fruit. Townspeople learned not to be near downtown when the plant let out at 4 p.m. and traffic briefly became overwhelming. When Fruit shut down for the first two weeks in July every year, the town was so dead that other industries in the area scheduled their vacations for the same time. Fruit officials were active in the Chamber of Commerce, civic clubs and associations.

Amazon is not like that.

“Amazon is everywhere and nowhere,” Mrs. Gorin said. “This town runs on Amazon, but their employees are not in positions of political power.”

Amazon is linked into the community in other ways that often end up benefiting Amazon. In 2016, the company donated 25 Kindle Fire tablets to Campbellsville kindergarten and first grade classrooms. It also donated $2,500 in “content.” The town schools are increasingly buying supplies from Amazon for a total of about $50,000 in the last fiscal year, records show.

“We want to do business with those in our community, those paying local taxes,” said Chris Kidwell, finance director for Campbellsville Independent Schools. “It’s kind of a good-neighbor policy.”

The county school system, with 2,800 students, is dealing with state budget cuts. One way it has made up some of the shortfalls is by selling corporate sponsorships. Taylor Regional Hospital bought the naming rights to the health services room; Campbellsville University did the same for an education center. Amazon is not a corporate sponsor.

“We’re proud to have them in our community, and we would be proud to have them as a corporate sponsor,” said Laura Benningfield, the assistant superintendent.

Last spring, the local library was the recipient of a $10,000 gift from Amazon for science and technology education. Amazon planned to supply whatever the library wanted by ordering the material through its own site. As this article was being reported and Amazon was emphasizing what it had done for the town, the company just sent the library the cash.

“We’re on the receiving end of a blessing,”said Tammy Snyder.

the town librarian. The library, like other public institutions in Kentucky, is dealing with the state’s largely unfunded pension system. Proposed changes that involve the library’s paying significantly more “will bankrupt us,” she said.

Justin Harden, 35, said he had no illusions about Amazon. He and his wife, Kendal, recently opened Harden Coffee, a popular meeting spot, on Main Street.

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“If they can figure out a way to cut me out and take my business, they’ll totally do it,” he said. “They would destroy me, absolutely. But I am a 100 percent supporter of Amazon. I have five kids. We get stuff from Amazon almost every day.”

He paused, acknowledging his own contradictions. “That’s why they’re winning,” he said.

A pile of rubble on Campbellsville’s southern approach marks the ruins of the Fruit plant.

The property is owned by Danny and Sandy Pyles, commercial contractors who run an excavating company in nearby Columbia. They bought the textile factory with other investors a decade ago with the goal of building a retail complex called Campbellsville Marketplace.

The graffiti-covered shell was torn down, and a Louisville developer, Hogan Real Estate, cobbled together a deal. Kroger, the country’s largest supermarket chain, would close its two Campbellsville stores. It would then become the Marketplace anchor tenant with a 123,000-square-foot superstore.

Work was supposed to start within weeks. Then, on June 16, 2017, Amazon announced that it was buying the upscale grocery chain Whole Foods. Kroger shares slumped. Its deal in Campbellsville was put on hold, then abandoned. Hogan chased other possible anchors — Menards, Meijer, Home Depot — but none were interested. (Kroger declined to comment.)

“We used to talk about the Walmart Effect when you saw vacant storefronts in these small towns,” said Justin Phelps of Hogan. “Now it’s the Amazon Effect.”

Pyles Excavating is a good Amazon customer. The company needed a muffler recently for a track hoe. It would have cost $1,200 from a dealer. On Amazon, it was halfthat.

The internet has brought the world to our fingertips,” Mr. Pyles said.

The Pyleses recently bought out the other investors in the Fruit site. Their investment is now more than $2 million.

“It really is a great piece of property, but right now it’s a reminder of the day Campbellsville literally shut down,” said Sandy Pyles, the daughter of a Fruit worker and relative of many others. “It’s a sadness.”

They would like a Whole Foods there, but know the town is too small to support it. Mr. Pyles has another idea: an Amazon Go store. These are experimental outlets with no cashiers.

That would put local competitors who still needed humans at a disadvantage while adding hardly any jobs. But it would be an investment by one of the world’s richest companies in one of the towns where it began.

“Amazon is the future,” he said. “We’d like to be part of that.”