Amazon.com is building a packing and shipping warehouse in Salem and planning to hire more than 1,000 full-time employees.
Amazon.com is poised to receive more than $3.7 million in property tax breaks for its new Salem packing and shipping center, but experts say that’s a relatively small cost for taxpayers considering the larger, long-term benefits the area will receive.
The online retailer’s 1,000 new jobs means more personal spending, a surge in income tax collections and — after a three year tax break period — fresh property tax revenue where there had been none. The land hadn’t been on property tax rolls before because it was once state-owned farmland for the Oregon Department of Corrections.
But Jeffrey Michael, a public policy professor at the University of the Pacific in California, questioned whether Amazon needed a tax incentive to place a fulfillment center close to Interstate 5 in Salem.
“These are growing fast and locating on the periphery of every major consumer market in the U.S., so an incentive was certainly not necessary to get one, or maybe even two, of these to locate in the Willamette Valley,” Michael said in an email.
In June, Amazon announced plans to build a similar packing and shipping center in Troutdale just east of Portland.
A Marion County estimate puts the annual tax bill for Amazon’s $90 million, one-million-square-foot building in the Mill Creek Corporate Center at more than $1.23 million a year. But the county can’t start to collect for three years because the company qualified for an enterprise zone tax abatement.
“We gave away three years of something we’re not getting,” said Chad Freeman, president of the nonprofit Strategic Economic Development Corp., which promotes enterprise zones in the area.
Curt Arthur, managing director of Sperry Van Ness Commercial Advisors, agreed. “The land is generating nothing right now, and has generated nothing for years, so I look at something like enterprise zone benefits as a great recruitment tool that genuinely costs us nothing,” he said in an email.
“It takes nothing out of our pockets as a city or a county because we don’t receive any revenue from it, and haven’t for decades,” Arthur said. “It simply delays the timing on when the benefits begin to come in.”
Arthur estimated the center’s annual payroll could exceed $30 million. That’s figuring that, with 1,000 full-time employees, 900 of them could earn average wages of $13.75 an hour, 50 supervisors could make $20 hourly and 50 in management could make $35 an hour.
“That’s a lot of tax revenue,” he said.
Employees will then buy homes, pay property taxes, shop, buy insurance, groceries, need doctors and dentists, and so forth, Arthur said.
“It’s a trickle-down effect that has substantial benefits for the entire business community,” he said.
Amazon coming to Salem won’t likely entice a bunch of residents to shop online more than they already do, “so I think the overall impact throughout our community by adding 1,000 jobs far outweighs three years of property tax abatement or any threat against existing businesses,” Arthur said.
Amazon is also hiring for a new shipping center in Sacramento, California.
It is “bombarding the radio waves with advertisements for labor,” said Michael of the University of the Pacific.
Amazon’s shipping centers in northern California have created more jobs than what the company first announced, he said.
There’s a significant impact on the market for labor, and local businesses might see new sales because of Amazon employees. Some could see themselves competing with Amazon for workers, Michael said.
E-commerce and Amazon are affecting traditional retailers all over, wiping out retail positions, he said.
“The fulfillment center will probably displace a lot more retail jobs in Portland than around Salem, so it is most likely a net employment gain in Salem,” Michael said.
Then there’s the question of robots replacing workers. Amazon uses robots to help workers and move products.
Robots are a key part of Amazon’s buildings, said Marc Wulfraat, founder of MWPVL International Inc., a supply-chain consulting firm based in Montreal, Canada.
“The robots basically move goods to the person so that the person doesn’t have to travel, so it’s not like they’re automating the building completely,” he said.
Before the days of robots helping out, a worker would need to walk for long stretches a day to get products. “It was a heck of a job to walk 12 miles on concrete every day,” Wulfraat said. “Your knees kill you. It’s a young man’s job.”
Reach Jonathan Bach by email at firstname.lastname@example.org or by phone at 503-399-6714. Follow him on Twitter @JonathanMBach and Facebook at https://www.facebook.com/jonathanbachjournalist/.
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