E-Retailers Play a Critical Role as America Physically Distances

Robert D. Atkinson April 10, 2020
April 10, 2020

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The U.S. economy has lost a higher percentage of jobs in the last three weeks than it ever has before. More than 16 million workers have been laid off, particularly in businesses that depend on face-to-face contact. Hotels, airlines, hair salons, gyms, restaurants, and many other industries are essentially on lockdown. And even with emergency assistance from the federal government like the Paycheck Protection Program and increases in unemployment insurance benefits, the macro-economic damage will be unprecedented. JP Morgan predicts a 40 percent drop in GDP and a 20 percent rate of unemployment.

But one segment of the economy that is still is functioning is e-commerce retail. Indeed, for many people, especially those with physical conditions that put them at a higher risk of dying from COVID-19, e-commerce is a lifeline. Whether it’s deliveries of essentials, like groceries and medicines, or deliveries of other goods that stay-at-home workers need, such as printer cartridges or laptops, e-commerce has become a critical necessity for tens of millions of Americans. And it’s not just the big guys like Amazon and Walmart; tens of thousands of smaller e-retail companies are providing needed products to Americans, either through their own facilities or through shared third-party logistics facilities that companies like FedEx and UPS operate. So let there be no doubt: e-commerce is playing a critical role of enabling tens of millions of Americans to comply with physical-distancing directives.

Moreover, these e-commerce firms—and the hundreds of thousands workers at their facilities—are not just helping consumers who are stuck at home, they also are enabling tens of thousands of other companies, big and small, stay in business, sell their products and services, and keep people employed. Without this e-commerce lifeline, the economic consequences of COVID-19 would be even worse, as hard as that is to imagine in the midst of this crisis.

A critical challenge for e-retailers is that while many office workers are able to work at home, most workers in the fulfillment sector don’t have that ability. So, to help protect its employees, Walmart is taking their temperatures, providing them with protective masks, and instituting physical-distancing measures. Amazon is doing the same. It is also is working on a coronavirus testing program, and in the meantime it has made over 150 process changes, including enhanced cleaning. Safeway, too, is providing masks to its employees, has added physical-distancing signs and floor markers at its distribution centers, and is implementing enhanced cleaning schedules.

In the midst of this, though, Amazon has come under attack, particularly from an anti-Amazon organization, Athena, which is demanding that it close warehouses where any worker has come down with COVID-19. What is ironic about this is that, before the pandemic, Amazon, Walmart, and other e-commerce retailers were widely attacked by progressives for using robots to eliminate jobs, even though going forward we will need more automation to boost economic resiliency. But in the current crisis, why single out Amazon? If the critics are going to be consistent, they should be calling on all logistics facilities in the country to close when a worker contracts the virus, regardless of how large they might be. There haven’t been any such calls, of course, perhaps because even the most strident opponent of large-scale e-retailing can understand that the entire sector falls into the category of “essential” work in these times. To be clear: shutting e-retailing down wouldn’t just crimp the bottom line of corporate giants, it would destroy millions of jobs in logistics centers and in the small, medium-sized, and large companies that rely on them—and it would be far more difficult for tens of millions of Americans to comply with stay-at-home orders.

It is important to understand that Athena’s campaign is only tangentially related to the coronavirus pandemic. Its objective was clear long before this moment—namely, to do as much as possible to reduce Amazon’s market share, because Athena is ideologically committed to a small-business economy, and Amazon threatens that vision. Athena implores all who will listen, “Small businesses are in freefall while Amazon exploits this crisis to monopolize our economy.” However, as Michael Lind and I write in our book Big Is Beautiful: Debunking the Myth of Small Business, the war on big retail is nothing new: It’s been going on since the 1920s and the rise of the A&P grocery chain. But the evidence is clear: Big businesses in general, and big retailers specifically, pay higher wages, provide better benefits, and injure their workers less frequently than smaller firms do. To be sure, logistics and retail companies, big and small, need to take measures to keep their workforce safe. But we should also be clear that closing down Amazon or this sector broadly would be a body blow to an already staggering U.S. economy and to the tens of millions of Americans who depend on these companies.