Economists on potential impact of planned Amazon facility in Sioux Falls

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SIOUX FALLS, S.D. (KELO) — People all over the region are weighing in on the potential impact of a story KELOLAND first brought you Tuesday night--Amazon is planning to build a facility in Sioux Falls. 

While officials are still not able to release many details about the project, we spoke with several jobs and economy experts about what the building plans KELOLAND News obtained could say about the economic impact of this Amazon facility.

“It is the kind of introduction that I think people will have opinions about because I think everyone has heard of it,” Joseph Santos, a professor at SDSU’s Ness School of Economics and Management said.

Professor Santos says the Amazon brand alone will have an economic impact in the region.

“When Amazon goes and does something, I think most folks watch how it does it, and so to the extent that other firms, competitors or others in that industry see Amazon as something to watch, I suspect it will lead those firms to watch this very closely and in the process of doing so…probably watch this region of the country as well,” Santos said.

But Santos says it’s hard to guess the overall economic impact without more details on the number and type of jobs this new two million square foot facility will bring.

“The big question, whether or not this sort of firm would invite that kind of cross-border labor migration, I don’t know. It depends very much on what folks are going to do inside that facility and what they’re going to be paid to do it,” Santos said.

“It’s just going to be a matter of do they like where they’re at? Do they like the benefits, do they like all of the opportunities?” Continuity Business Services President Doug Erickson said.

Erickson has worked with a staffing firm for years; he believes the brand name Amazon alone will help attract more workers from out of state, especially if the facility also brings some higher-level jobs.

“I’m sure they’re going to have to have IT and accounting and finance and HR, all of these different functions or some sort of departments, so you’re going to attract larger, higher-paying positions also with this,” Erickson said. 

“What the Economic Policy Institute finds is that opening an Amazon fulfillment center does lead to gains in warehouse jobs in a county but does not lead to gains in overall county-level employment,” Augustana University Professor of Economics Reynold Nesiba said.

Nesiba said the majority of the jobs in the new Amazon facility will likely be in the warehouse, but in the short term, just building the facility will also generate employment.

“There’s going to be an injection of new investment, a whole bunch of new construction jobs for quite a while putting that together,” Nesiba said. 

“It’s another one of those things where, if you build it they will come, I’m hoping that’s the case, I’m hoping it attracts more people who want to come to Sioux Falls and to South Dakota,” Erickson said.

Nesiba says a one million square foot amazon facility recently opened in Wisconsin, providing about 500 jobs, while a nearly two million square foot amazon facility in Tucson generated 1,500 jobs, so he would speculate the Sioux Falls facility would have the potential to generate anywhere from 500 to 1500 new jobs. 

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