Working Communities Short-Changed by Distribution Center Agreements

Working Communities Short-Changed by Distribution Center Agreements

Riverside

A recent analysis of QVC Inc.’s West Coast distribution center in the City of Ontario by two UC Riverside researchers showed workers at the Ontario facility and others at similar distribution facilities across the inland region may be getting “the short end of the stick” when deals are made that allow warehouses like QVC to open in a community. 

Ellen Reese, a professor of sociology and chair of UCR’s labor studies program, and Juliann Allison, an associate professor of gender and sexuality studies, examined the 2015 operating agreement between the City of Ontario and QVC. The team’s findings were cause for alarm. 

According to their analysis, “The agreement, which established Ontario as a ‘point of sale’ for the retailer’s goods, allows the city to collect sales tax revenue from QVC. In exchange, however, the city agreed to return to QVC an astonishing 55 percent of that sales tax revenue up to $500 million—and 60 percent thereafter.” 

Not only was this aspect of the agreement concerning, researchers also revealed the agreement lacked transparency. It does not require annual public reporting, and there are zero built-in protections or benefits for workers and residents. 

What the researchers found in Ontario is similar to what they’ve seen with other companies like Amazon. Reese told a UCR Business reporter, “There’s fierce competition among cities to host these companies, and local governments often offer large subsidies in exchange for the opportunity.”

Despite the competition among cities that drives up incentives to encourage warehouse developers to select their city over others, UCLA’s Institute for Research on Labor and Development cautioned that agreements like the one between QVC and the City of Ontario, can contribute to “rising poverty levels and hollowed-out tax bases.” 

Despite these considerations, researchers stressed working communities have the power to push back against such bare-bone agreements and push for better benefits.

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