The opposition to Amazon is a major red flag showing the dysfunction in today’s work force. Those who have not built the skills to enter a technologically advanced work force are at risk for being left behind, for now, politicians just protected their failing ecosystem.
by James Pieri, February 16th, 2019
A ‘Timeline of Events’ appears at the bottom of this article for anyone who needs to review what happened and when.
Amazon setting up shop in New York was going to be a 25 billion gallon water well dug in the middle of an area slowly becoming a desert. Once you hit water, you wouldn’t have been able to control the water from spilling everywhere and nourishing the ground. But Politicians were afraid of what the water would do to the dust, so they stopped the well from being dug.
For some time Amazon had been searching for a location to put a second home. This was a pretty big deal. It reminded me of LeBron James’ off-season leading up to “The Decision” in 2010 where he revealed what team he was signing with. Every team knew that if they signed him, they were guaranteed to be a contender for the championship. Much in the same way, whatever city woo’d Amazon, would be the beneficiary of quite a substantial economic windfall.
This “Who Will it Be?!?!?” media exposure hurt Amazon. A quieter approach might have been more prudent.
Cities around the nation threw themselves(and their money) at Amazon in an attempt to lure them into increasing their cities “tech street-cred” by calling their city “home.” With Amazon’s new headquarters was going to come a lot of high paying jobs which would have poured money into that area’s economy.
Amazon ultimately decided on creating two new sites, one in Virginia and one in New York. That was, until Amazon decided to pack up and leave New York like many non-New Yorkers do when trying to “make it” in the Big Apple – quick, and bitter.
Why am I writing about this? Well, I live close to New York City, and I was excited to hear Amazon planning to move in. For someone like me who has a pretty tech-laden background without working in a tech-savvy industry, I was looking forward to the talent this new campus was going to bring to our area.
I followed this story closely, and I was genuinely interested in it. Politics is not something I discuss much of, and usually is not something I get involved in, but this, for me, was as politic-y as I get.
The Blame Game
Usual political tiffs include Republicans versus Democrats in a tug of war. But not this… This political episode was Democrats versus Democrats. The politicians who setup this deal were New York State Governor Andrew Cuomo who is a Democrat and New York City Mayor Bill de Blasio, also Democrat.
The most outspoken opponents of Amazon moving into New York were
New York State Senator Michael Gianaris and Representative Alexandria Ocasio-Cortez, both Democrats.
Jodi Seth, the head of Policy Communications for Amazon was quoted as saying, “It was that the environment over the course of the past three months had not got any better. There were some local and state elected officials who refused to meet with Amazon and criticized us day in and day out about the plan.” (NBC)
Governor Cuomo blamed State Senators, “A small group [of] politicians put their own narrow political interests above their community — which poll after poll showed overwhelmingly supported bringing Amazon to Long Island City — the state’s economic future and the best interests of the people of this state,” Cuomo said. “The New York State Senate has done tremendous damage. They should be held accountable for this lost economic opportunity.” (NBC)
As I’ve said, I followed this story pretty closely as I was genuinely interested in what was going to happen. Amazon promising 25,000 jobs to this area was really something that would have had a profound effect on the region I live in. Not only would these 25,000 jobs have brought an immediate benefit in our area for Amazon, but in time, those people leaving Amazon would have filtered out to the rest of the companies who work in the area, like the one I work for. The effect of this would have been felt for decades. Further, the financial impact this would have had on the area I live in would have also been felt by me. Housing prices, foods prices, everything would have been impacted.
In everything I’ve read, people I’ve spoken to, and chat’s I’ve engaged online with – there seems to be a major disconnect.
The opposition to this deal boils down to one major sticking point: The tax breaks and incentives given to Amazon would have totaled roughly $3bn dollars. Representatives felt that Amazon, which is valued at almost $1 trillion dollars, didn’t need the tax breaks.
New York, in particular, Queens, could use some upgrades. Infrastructure, public transportation, and a horrendous housing crisis are all items local representatives have cited as having an immediate need of funding – instead of a new headquarters for Amazon. They aren’t wrong.
But they are confused.
This issue isn’t as clear cut as people have made it sound. The State of New York wasn’t just going to cut a check to Amazon for $3bn and say “Welcome to the Neighborhood!” That’s not how it works. But it seems, that’s how some people think it works. The tax breaks and incentives Amazon would have received would have been over time, and would have been in place of Amazon paying for things. Further, this is how business is done, and has been done for a long time – and this likely won’t change.
Companies build headquarters and campuses for their offices where State Governments give them the biggest incentives to be there. Whether it be tax breaks for building somewhere, or rebates for hitting milestones in developing a service – major corporations go where they are lured, and they are lured to, or away from, based on the almighty dollar.
Sad? Sure. But this is the way it is. Companies are not in the business of losing money, never have been and never will be. They will operate where they find the biggest incentive to do so.
The Good, The Bad, and the Sad…
Under this deal, Amazon would not have not paid a dime in taxes for a few years. They would have also received rebates or credits for the building of their campus. This is the bad.
As big as Amazon is, the money they were not required to pay in taxes would have amounted to quite a large sum. But this was the lure. This was the deal New York State Government felt would bring Amazon in. Sadly, this was all some Politicians saw. All they saw was what was given to Amazon, and not what there was to be gained.
The good would have been the jobs. Not only the 25,000 high paying ($115,000+) jobs brought to the area that didn’t exist before, but the income taxes New York would have seen on those salaries, the rent and home sales these people would have needed, the food they would have purchased, the cars they would have bought, the money paid for their children to attend schools, the public transportation they would have used on the weekends, and the list goes on and on.
The amount of money that would have found it’s way to the streets of New York would have been, in time, much more than the $3bn in breaks given to Amazon. And this disconnect needs to be publicized. Too many people don’t realize the financial impacts. Sometimes, you really need to try and see the forest through the trees.
These 25,000 people and their families would have spent a lot of that average $115,000 salary in the area just to live. The short of this is that the $3bn New York would have spent to lure Amazon would have been regained within just a few years. New York State as a Government would have been made whole, and the taxes, in time, would have made the deal worth it.
Yeah, Yeah, I know… they would have brought people from around the world, those jobs wouldn’t have been given to New Yorkers.
The money those people spent would have been in New York. And the income taxes those people paid would have been to New York. We’re not talking about 25,000 high wage earning people not spending a dime while they live here. That’s just not possible.
Which brings us to The Sad… and this is why I think the push to kill this deal was so strong.
Long Island City’s median household income is just under $55,000 per year. Which, for those of you who don’t know, makes living anywhere in New York City almost impossible. 25 Percent of Long Island City’s population is living below the poverty line. There’s a housing crisis that the city just can’t seem to get a hold on. These are real problems, and ones Amazon’s second headquarters would not have fixed, but most likely exacerbated.
Amazon’s headquarters in Long Island City, New York would have brought such a major force of gentrification to Long Island City that this financial shock would have given many of these people nowhere to go.
B…b….but the 25,000 jobs!?!?!
Yes, yes, you’re right, the 25,000 jobs that Amazon promised would have helped, in time. But the people in Long Island City right now likely would not have been given many of these jobs. There would be a number of low paying jobs associated with Amazon, and this would have helped some of these people, but the mere presence of Amazon would have priced these lower paying jobs out of a housing market that is already struggling. There’s already a housing crisis, this would have just made it so much worse.
Who is Right? Who is Wrong?
The problem with society today is someone always has to be right, and someone always has to be wrong. There’s no gray area anymore, and people have a hard time seeing the other’s point of view.
This situation, like all others, people try to boil it down to good versus evil, right versus wrong. But it’s not that clear cut.
The Real Root to the Problem
There’s an element of instant gratification to this situation that I think people overlook. New York had an opportunity to make a deal that would have brought them decades of economic growth and prosperity. But it came at a cost. The expression “you gotta pay to play” is absolutely true.
But there was another cost you couldn’t put a price tag on. The cost wasn’t clearly defined, but it would have happened.
Members of the lower classes of society would have immediately felt a negative impact. Pushed out. Priced out. These jobs wouldn’t have been for them. It would have forced a lot of people from the area who already had been struggling to live there. Some of them would have gotten jobs as a result of Amazon’s HQ, but they wouldn’t have been high paying enough to stay in the area.
So the question then becomes “What can you do for these people?”
Do they deserve to be defended? Absolutely. Do they deserve for their voices to be heard? Without a doubt.
But at what cost does defending them have, and when will that cost become too much?
Any company that moves into the area will likely be offered tax breaks and incentives to do so. Maybe not quite as much as Amazon was offered, but the economic impact won’t be as great either. Further, a lot of the jobs that would come with this imaginary company would likely require skills that many of the people in Long Island City don’t have.
So where do you go from here? You scared away Amazon, but they took all of their money with them. Yeah, you avoided the tax breaks and incentives, but it’s not like you just have a bank account with $3bn sitting in it?
So the question now is, what can you do to help the people of your community? How much time is there left? You caught the biggest fish in the sea, but decided it was too big, so you released it. What if no other fish come around? It’s time to address the real problems of the population – advanced skills that are marketable.
Timeline of Events
November 13th, 2018: A deal was reached between Amazon and representatives of the state of New York to build what has been referred to as “HQ2”, a new headquarters. Amazon’s additional location was expected to come along with an estimated $2.5bn investment in the development of this campus, which was to be in Queens, New York. New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio brokered the deal that would give Amazon about $1.5bn in tax credits and construction grants for NY State, and about $1.3bn in tax breaks from New York City. In return for those tax breaks, Amazon promised to create 25,000 jobs. (Day One, The Amazon Blog)
Jimmy Van Bramer, a city council member representing the area where the new campus was to be located opposed the deal. His argument is there should be no reason to provide tax relief to a company valued at so much. (The Guardian)
During December, New York City residents, with the majority of opposers hailing from Queens, began a very vocal campaign against the deal by holding rallies and protests. The leading concerns were the housing crisis that already exists, and the impact of gentrification and displacement the new headquarters would allegedly bring on. (Splinter)
December 12th, 2018: New York City Council held one hearing, with another planned for January, where council members had the opportunity to question Amazon representatives. City Council Speaker Corey Johnson was quoted as saying, “We have a crumbling subway system, record homelessness, public housing that is in crisis, overcrowded schools, sick people without health insurance and an escalating affordable crisis.” “Is anyone asking if we should be giving nearly $3bn in public money to the world’s richest company, valued at $1 trillion?” (The Associated Press)
January 30th, 2019: New York City Council held final hearing where council members had the opportunity to question Amazon representatives.
February 4th, 2019: Democrats in the New York State Senate find a path to block the deal, while not a guarantee to work, still posing a credible threat that could see Amazon getting the boot. (The New York Times)
February 8th, 2019: The Washington Post reports that while no specific plans to abandon New York were made, executives began having discussions on the topic. (The Washington Post)
February 14th, 2019: Amazon decides to abandon plans to build a second headquarters in New York. A statement made by Amazon: “After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”