Retailing is dead. Sales clerks are losing their jobs by the thousands. The employment picture for young people with only a high school education is going to get even worse. And all this is happening because of Amazon and its ilk, which are driving the shift among consumers toward e-commerce.
We’ve heard this story over and over in recent months: The echo chamber keeps repeating that retail apocalypse is upon us. And yet, according to one economist, Michael Mandel, it is all wrong. We have it backward.
Mandel is turning heads from Washington to Silicon Valley with a provocative and unorthodox argument: He asserts that the move toward e-commerce is creating more jobs than are being lost in the brick-and-mortar retailing industry—and that these new jobs are paying much higher wages than traditional retail jobs.
Mandel, chief economic strategist at the Progressive Policy Institute in Washington, contends that most economists are using the wrong job numbers to measure the e-commerce industry. He says that government numbers and conventional industry classifications don’t properly count all the jobs associated with e-commerce—in particular, the numbers miss large parts of the industry like fulfillment centers and distribution warehouses. As anyone who has noticed the growing volume of big brown boxes being delivered to people’s homes can imagine, facilities like that, which are tied to the e-commerce sector, are expanding rapidly.
Mandel has combed through the job statistics on a county-by-county basis and come to this counterintuitive view: From December 2007 to May 2017, by his count, the e-commerce industry has created 397,000 jobs in the United States, and this compares with the loss of 76,000 jobs in the traditional retail industry. And those jobs related to e-commerce, he says, pay about 30 percent more than the brickand-mortar ones.
“To be honest, this was a surprise to me—I did not expect this,” Mandel told me.
Then he added, matter-of-factly, “I’m just looking at the numbers.”
Those numbers have helped him shape an optimistic, feel-good thesis about what is happening in our economy that may be worth considering, at least as a thought experiment. After all, the Progressive Policy Institute, a Democratic-leaning think tank, says its mission is to “create radically pragmatic ideas for moving America beyond ideological and partisan deadlock.”
Viewing e-commerce as an engine of jobs—not just any jobs, but good ones that are spread around the country—would be a new paradigm, for sure. But it’s one that admittedly requires a healthy dose of skepticism.
“This could be transformational,” Mandel argued, contending that the rise of e-commerce could lead to “a reduction in economic inequality and geographic inequality.”
Mandel said that over the past quarter-century, “production gains were not shared with the workers.” But now, he said, jobs at fulfillment centers are “decent paying,” often full time and usually with benefits. And many of those fulfillment centers are sprouting up across the country in “places you haven’t heard of in a while.”
With a burst of enthusiasm, he added, “This could be the pendulum swinging back.”
Of course, Mandel’s view flies in the face of established economic thought—and perhaps for good reason: His arithmetic relies on certain unconventional assumptions.
“I’m highly dubious,” said John Challenger, president of Challenger, Gray & Christmas, an executive outplacement firm that maintains a monthly index of job losses across the country. “It does sound crazy to me.”
The warehouses that Mandel views as a source of job growth, Challenger said, “are being automated.” Is it possible Mandel is miscounting or perhaps double-counting? In truth, his argument relies to some degree on the assumption that many of the new jobs created in a category known by the government as “general warehousing” are tied to e-commerce. That may be a good assumption—but it’s impossible to know for sure.
Mandel justifies his assumption with an example of how convoluted the current method for counting e-commerce jobs is: Amazon publicly says it has 12,000 employees in Kentucky, but the Bureau of Labor Statistics reports only 2,640 workers in Kentucky in the e-commerce category. “By contrast, the general warehouse industry,” Mandel writes, “had more than 23,000 workers in Kentucky.”
All of which is to say that we may not have as good a handle on the demographics of the job market as we think.
© 2017 The New York Times
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