The Economics of Amazon

I recently read an article entitled, "Campers help Amazon keep up with holiday rush" on KSL.com.  This article presents the fascinating life of transient workers.  As the holidays approach Amazon requires the additional help of temporary and seasonal labor.  On Black Friday 2012 customers ordered 26.5 million items from Amazon.   Essentially, during the holidays consumers place increased demand on retailers such as Amazon, and Amazon does all they can to supply that demand.  To meet the external demand amazon has a greater demand for labor.

In all, Amazon will hire 70,000 seasonal workers this holiday season.  Temporary laborers are incentivized to fill this demand through decreased costs of living and increased flexibility to move. Furthermore, Amazon even pays for the cost of campsites for employees.

Amazon has warehouses in Kentucky, Kansas and Nevada.  These warehouses are located in smaller towns with lower costs of doing business.  However, these small towns do not have the population to support increased seasonal demand.  These small towns benefit as additional temporary laborers increase the population and demand additional quantities of services such as groceries and entertainment.

Increased holiday commerce has significant effects upon our economy.  As additional goods are purchased and funds spent it seems that nearly all aspects of our interrelated economy are stimulated.



Dave Tufte said...

JRich: 94/100 (capitalize Amazon everywhere)

What does this have to do with ManEc? How does it apply a concept from the text? Here's some examples.

In the first paragraph, consumer demand for Amazon's products shifts right. What does Amazon's supply look like? (Hint: what happens to P?) Amazon's supply then shifts the derived demand for labor to the right.

What does the supply of Amazon's temporary labor look like? When the derived demand shifts in this market, what happens to its P? How is that related to the incentives offered?

Your third paragraph seems contradictory. At the start you're saying that small town can't handle the change. But at the end you're saying they benefit. How can both be true?

The last paragraph has no meat on its bones. You say "Increased holiday commerce has significant effects upon our economy." How so? If you're not going to explain that, why say it? I can say the same thing about the last sentence: is the economy stimulated by Amazon purchases, or are Amazon purchases the result of stimulation?

Judy said...

In this case as the revenue of Amazon (the buyer of labor) is expected to increase therefore Amazon will need more labor to deal with the temporarily increased demand for their products. It’s a good way to hire temporary staff by giving them incentives and providing economical accommodation which in return will also increase the demand for basic items of the daily use and entertainment at the places where such temporary hires will be staying.
This seasonal increase in demand has a chain impact i.e., at 1st it affected the labor demand and its mobility and then it also emerged the economic activities in the towns where the temporary staff of Amazon was staying. This is just one example, but in fact such seasonal rise in demand would have resulted in subsequent economic activities and resultantly the flow of income in the economy would also have been improved for sure, because an increased demand always gives rise to increase in national income.
Another thing is worth noting that what will be the impact on economy when the reason for this increased demand is over?

Dave Tufte said...

Judy: 47/50 (generally, this comment does not read well)

I like the economics in this comment.

Blogging works well as a casual way to improve students' writing. But the problem on my end is how do I get students to read what I wrote. No knock on the poster (JRich), but there's no way for me to know if they got anything out of the comment I wrote.

But I think Judy did. She's jumped on my leads and filled in some of the blanks to make this thread more informative.