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Its stock surged so much in mid-April—up by more than 30 percent on the year, as the pandemic was nearing its deadliest period—that Jeff Bezos’s net worth increased by $24 billion in the span of only two months. In late July, Amazon announced that its profit had doubled in the second quarter, with sales up by a stunning 40 percent from those a year earlier. (Photo by Nicolò Campo/LightRocket via Getty Images)

Its stock surged so much in mid-April—up by more than 30 percent on the year, as the pandemic was nearing its deadliest period—that Jeff Bezos’s net worth increased by $24 billion in the span of only two months. In late July, Amazon announced that its profit had doubled in the second quarter, with sales up by a stunning 40 percent from those a year earlier. (Photo by Nicolò Campo/LightRocket via Getty Images)

In a Devastating Pandemic Year, Amazon Was Its Biggest Winner

How the virus that battered the economy was a boon for Jeff Bezos.

Alec MacGillis

 by The Progressive

A book excerpt from the April/May 2021 issue of the magazine:

On the Saturday before Easter 2020, I set off on a drive from Baltimore, where I live, to Pittsfield, Massachusetts, where I grew up. There were stay-at-home orders in effect in Maryland, but I decided that a visit to my parents, whom I had not seen in several months, qualified as essential. I would stay elsewhere for the night, to keep a safe distance; we would go for an Easter Sunday walk.

If we were in a war against the novel coronavirus, then Amazon was our troop carrier.

I departed Baltimore in the early evening. Interstate 95, the perpetually clogged corridor of the Eastern Seaboard, was emptier than I had ever seen it. Digital highway signs overhead declared “SAVE LIVES NOW. STAY HOME.” I had never been in the vicinity of a war zone, but it occurred to me that it might feel somewhat like this—only the most essential or foolhardy travelers on the roads, the rest of the world hunkered down.

Except there were no troop carriers or munitions haulers in this war zone. Instead, there were trucks. The majority of the few vehicles on the road were tractor trailers, and the vast plurality of those were Amazon trucks. I counted two dozen of them on the hundred-mile stretch between Baltimore and southern New Jersey, where it got too dark to see logos. 

I had seen many, many Amazon trucks on my travels around the country over the past few years. I had never seen a concentration anywhere close to this.

If we were in a war against the novel coronavirus, then Amazon was our troop carrier. In this war, mobilizing to attack the enemy meant universal withdrawal and self-isolation, and Amazon was supplying that mobilization by bringing us everything at home, allowing us to stay there. All at once, it had become our civic duty, our cause larger than ourselves, to fulfill our needs online. An act of convenience that had once been tinged—at least for some—with misgivings was now infused with righteousness. By placing a one-click order, one was flattening the curve.

The boxes came, in great numbers. Often, they sat on porches or in garages for a day or two in case they’d been tainted with viral particles by their delivery handler. When this quarantine passed, the boxes were allowed into the home.

The orders were placed in such quantity that the company, famed for its peerless logistics operation, was for once having trouble keeping up. Amazon announced it was hiring 100,000 more workers at its warehouses, then a few weeks later announced it was hiring 75,000 more.

It told buyers and third-party sellers that it was deprioritizing orders deemed less than essential. In the most startling move of all, it briefly removed some of the web features intended to get shoppers to buy more from the site—Amazon was for once discouraging people from spending more money. The company had seen into the future, when it would truly be the Everything Store, the Be-All, End-All Store, but it wasn’t ready to carry it off. Not yet.

Such emergency measures were temporary. The usual buying goads returned, as did the nonessential items. It emerged that the company’s algorithms were in fact finding new ways to drive product makers to sell goods only on the site, rather than through other retailers. And as the peak of the spring 2020 national crisis passed, certain consequences became unmistakable. The pandemic had taken a series of related developments in American life and accelerated them to hyper-speed, like a film reel gone haywire.

The news organizations that had already lost the majority of their advertising revenue to Silicon Valley were now losing what little remained as a result of the halt in commerce. To try to survive, many furloughed their entire newsrooms, on rotating shifts, leaving them understaffed to cover first one huge story, the pandemic, and then another, the protests over George Floyd’s death at the hands of a police officer in Minneapolis. 

By August, things had grown so dire that one chain of papers, Tribune, announced it was shuttering its physical newsrooms for good at, among others, the New York Daily News, Orlando Sentinel, and The Morning Call, the Allentown newspaper that had broken the 2011 story about workers passing out from heat exhaustion at the local Amazon warehouse. 

In December, Tribune closed the offices of the Hartford Courant, the largest newspaper in Connecticut and the oldest continuously published paper in the United States.

The legacy retail companies that had survived the upheaval of the prior two decades were now careening toward extinction. JCPenney, Neiman Marcus, and J.Crew filed for bankruptcy. Macy’s temporarily shuttered all 775 of its stores and furloughed nearly all of its 125,000 workers; after its stock fell by 75 percent in two months, it was dropped from the S&P 500. Amazon’s Seattle neighbor, Nordstrom, announced it was laying off thousands. 

The toll was no less widespread among the country’s small independent businesses. All told, 25,000 retail stores were expected to go out of business by the end of 2020, a figure that nearly tripled the mass closure figures of recent years.

By late May, the five biggest tech companies—Apple, Facebook, Microsoft, Amazon, and Google’s Alphabet—had added a stunning $1.7 trillion to their combined market cap in just two months, a rise of 43 percent. 

Meanwhile, the companies that had for several decades been capitalizing on the trends reshaping the economy were growing larger and more successful in what seemed like the exact inverse of the economic hemorrhage underway all across the country. By late May, the five biggest tech companies—Apple, Facebook, Microsoft, Amazon, and Google’s Alphabet—had added a stunning $1.7 trillion to their combined market cap in just two months, a rise of 43 percent. 

The combined value of only these five companies was now a fifth of the S&P 500. And they were only going to grow larger: the five were sitting on a combined $557 billion in cash. They used it to finance new acquisitions and to raise their spending on research and development to nearly $30 billion—more than NASA’s entire annual budget—even as their smaller rivals were retrenching. 

“What is unusual at this moment is the extreme divergence in the health of different types of companies,” wrote the economist Austan Goolsbee, a former adviser to Barack Obama. “Many of the biggest are flush with money, while smaller competitors have never been in more precarious shape.”

The biggest winner of all was Amazon. Its first-quarter sales were up by more than a quarter over those the year prior—this, at a time when overall retail sales were plunging. Its stock surged so much in mid-April—up by more than 30 percent on the year, as the pandemic was nearing its deadliest period—that Jeff Bezos’s net worth increased by $24 billion in the span of only two months. In late July, Amazon announced that its profit had doubled in the second quarter, with sales up by a stunning 40 percent from those a year earlier. On the news, its share price surged yet higher—by early September, it was up by 84 percent on the year, more than double the rise of other tech giants. 

“Simply put, Covid-19, in our view, has injected Amazon with a growth hormone,” wrote one industry analyst in a note to investors. 

To handle the surge in business, the company had, between January and October, added more than 425,000 employees worldwide, bringing its total number of nonseasonal employees in the United States to 800,000 and its global total to more than 1.2 million, up by half from a year earlier and now behind only Walmart and China National Petroleum (and that tally didn’t even include the 500,000 drivers who were delivering its packages). 

To house these workers, the company went on a building and leasing spree, opening 100 buildings in September, on its way to occupying nearly 100 million additional square feet of warehouse space by the end of 2020, a roughly 50 percent increase. Its warehouses weren’t the only part of the company in high demand: its data centers were ramping up capacity for customers like Zoom, as hundreds of millions of daily human interactions shifted online.

The midsummer announcement of Amazon’s massive pandemic profits had come on the same day that the Commerce Department reported that the U.S. economy had shrunk by nearly 10 percent, the largest quarterly drop on record. In other words, Amazon was flourishing more than ever before at one of the lowest moments for the country as a whole: the fates of the company and the nation had diverged entirely.

Such a profound imbalance in fortunes had contributed greatly to the political convulsions of the era. And, as the dread year of 2020 neared its close, it was plain that one of the first orders of business facing the newly elected President, Joe Biden, and his incoming administration would be deciding how to address the divergence. The nation could hardly afford for it to grow any wider.

From Fulfillment: Winning and Losing in One-Click America, by Alec MacGillis, excerpted with permission from Farrar, Straus and Giroux.


© 2021 The Progressive

Alec MacGillis

Alec MacGillis covers politics for ProPublica. For more from Alec MacGillis on the roots of the working-class rebellion, read about the Great Republican Crack-Up, the original underclass and the Democrats’ bad election map.

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