AMZN Amazon.com Inc

By Laura Stevens, Lauren Weber and Jim Carlton 

In California's Central Valley, Amazon.com Inc.'s warehouses have brought jobs to some of the communities hardest hit in the last recession.

The addition of two fulfillment centers over the past two years in Tracy, Calif., has helped push the local unemployment rate down from 18% in 2011 to 7.8% as of November in San Joaquin County, local economists said. Combined with two other regional facilities, Amazon has said it is adding about 4,000 jobs in California.

"It's been a huge boon to employment here," said Jeff Michael, director of the Center for Business and Policy Research at the University of the Pacific in Stockton, Calif. "A couple thousand jobs is very significant in these communities."

Amazon's plan to boost its U.S. workforce by 100,000 in the next 18 months -- or about 55% -- is good news for many areas currently struggling economically. But economic incentives, employee burnout and automation paint a more complicated picture.

The hiring initiative puts the Seattle-based retail giant on track to make it one of the biggest-ever U.S. hiring initiatives, on a scale with General Motors Co.'s job creation during World War II war, according to Michael Mandel, who studies job production as chief economic strategist at the Progressive Policy Institute, a think tank.

But Amazon's expansion is in a different economic context, where one industry is supplanting another.

As consumers increasingly move from in-store shopping to online, traditional retailers such as Sears Holdings Corp. and Macy's Inc. have been shedding thousands of brick-and-mortar jobs and shutting down stores. Meanwhile, Amazon, United Parcel Service Inc. and other companies benefiting from the boom in e-commerce have been hiring -- often for more physically strenuous jobs than helping out customers in stores, and typically in more industrial areas.

It can be difficult to retain those employees. "A warehouse job can be awful," said Andrew Gadomski, founder of recruiting and analytics firm Aspen Search Advisors LLC, who spent an earlier part of his career in logistics. "It can be cold, dark, and there's a lot of pressure, especially in the third and fourth quarter."

And the jobs sometimes come at a cost. Illinois is paying a corporate tax credit of about $1,000 a year each for some of the 7,000 jobs Amazon will have at its fulfillment centers near Chicago by the end of the year, said Eliza Forsythe, assistant professor of economics at the University of Illinois, Urbana-Champaign.

"When done right, these sorts of economic development deals will bring more to the state than they cost," she said, but it depends on the fine print of the deals.

The median wage for warehouse and storage labor jobs was slightly less than $14 per hour in 2015, according to Bureau of Labor Statistics data. Amazon has said that it typically pays its warehouse workers more than the minimum wage, and on average 30% more than at traditional retail jobs.

Amazon says it retained about 14% of its seasonal hires after the 2015 holiday season and thousands more this year, in part by offering perks such as prepaid tuition for warehouse workers who remain on the job for at least a year.

Amazon said some of its job creation will be focused on creating technology such as artificial intelligence, which experts say could actually replace human employees at some point. Amazon has been aggressive in automating its distribution centers, purchasing a robotics firm in 2012 and outfitting its facilities with more than 30,000 robots.

Currently, its warehouses with robots actually require a higher head count of humans to run them due to the increased efficiency, according to the company.

But it is possible that Amazon could eventually reduce the number of workers needed in its warehouses with technology.

The broad impact of technology on the labor market is a cat-and-mouse game, said Daron Acemoglu, an economist at the Massachusetts Institute of Technology. "We sometimes call it a race -- the race between the job-destroying capacity of technology and the job-creating capacity of technology," he said.

--Nikki Waller and Joe Barrett contributed to this article.

Write to Laura Stevens at laura.stevens@wsj.com, Lauren Weber at lauren.weber@wsj.com and Jim Carlton at jim.carlton@wsj.com

(END) Dow Jones Newswires

January 12, 2017 22:00 ET (03:00 GMT)

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