The Real Price of Wooing Amazon
As Karl Marx might put it, there’s a spectre haunting Queens, and it’s the spectre of Amazon. As anyone with a pulse and a healthy fear of corporate monoliths already knows, the mega-retailer just closed a deal with New York’s Office of Economic Development to locate its new headquarters in a borough already beset by cheek-and-jowl luxury and poverty. In the grand tradition of paying the world’s wealthy to become even wealthier, cities across America vied for the privilege of giving the company tax breaks, subsidies and other kickbacks for locating there, from the high-school-election sort of fare (a Pittsburgh eatery offered free sandwiches to all Amazon employees) to the overly-earnest (Kansas City’s mayor personally left 1000 5-star reviews of different Amazon products, mentioning his city’s allure in each one) to the patently absurd (Stonecrest, Georgia offered to rename itself Amazon; Calgary offered to fight a bear for Bezos; and Tucson attempted to deliver a 21-foot Saguaro cactus to the company Seattle headquarters).
The desperate wooing underscores the power Amazon has to make or break the economy and functions as a sort of throwback to the days of sycophants petitioning the king.
But for New York, bagging the corporate beast has a real price tag: $3 billion in corporate subsidies, a waived land review process, and the creation of an “opportunity zone” on the East River, where Amazon can enrich itself tax-free for years to come. Oh, and a helipad, of course. In return, Amazon promises to invest $5 billion in the site and create 40,000 jobs at an average salary of $150,000 a year, and generate a projected $27.5 billion in revenue over twenty-five years.
But as the mayor and governor crow about the deal, critics insist they will soon be eating crow, warning that the jobs created will displace and lock out current residents, compounding the city’s already extreme homelessness and housing woes. Housing and homeless activists criticize both Mayor De Blasio and Governor Cuomo for pulling a rabbit out of a hat for Amazon while refusing to free up the budget for the most basic necessities for everyday New Yorkers. For example? De Blasio’s refusal to designate 30,000 of his 300,000-unit affordable housing plan for the homeless, or Cuomo’s dismal record on creating 20,000 units of supportive housing across the state.
For these residents—and for the many low-income residents of Queens—Amazon is not a savior, it’s a destroyer, threatening to wipe out the small amounts of stable housing the city has left.
To appreciate their concern, one need look no further than Seattle—the site of Amazon’s original headquarters. After relaxing regulations and offering kickbacks to lure the company in, Seattle saw its housing prices soar—and its homeless numbers right along with it. (To be fair, Amazon is not the sole factor in that uptick, but it is a major one.) Originally expecting 18,000 new employees, the city got 45,000—plus 250,000 other new arrivals attracted by the contact high of the tech boom. This put a strain on streets, social services and the city’s housing stock, which in turn led to bidding wars over homes and doubled rents, which all led inexorably to displacement and homelessness. In just one year, the city’s one-night homelessness count jumped from 8,522 people to 12,000. Reeling from the unintended price tag that comes with “prosperity,” the city worked with housing advocates to pass a head tax for each of Amazon’s employees, which would then be diverted toward affordable housing. Since the company grossed $2 billion in the first quarter of 2017, it seemed like a fair way to pay for the damages it had caused. But—now snugly settled into its headquarters and the economic fabric of the city—Amazon showed its true colors, putting its giant war chest into defeating the measure. A short time later, the City Council—caught between the damage done by Amazon and the city’s economic dependency on the company—bowed to the pressure and repealed the tax.
De Blasio and Cuomo would do well to consider Seattle’s example before Andrew becomes Amazon Cuomo and Newton Creek becomes the Amazon River. When fantasizing about the economic orgy they believe is in the offing, they should consider the price tag—both the advance subsidies and the bill that will inevitably come due—of their own imagined fortunes.