The deadline for the nation’s desperate towns and cities to submit their bids for Amazon’s second headquarters has come and gone. Now hundreds of American mayors across the country await Amazon CEO Jeff Bezos’ final decision. To whom will he bestow his lucrative tech jobs? News sites will fawn over this blessed municipality, the next hub of economic prosperity, and the mayor in question will consider him or herself one very lucky public servant.
This may be wishful thinking, however. And the winner may learn that the victory is pyrrhic, at best. After all, Bezos didn’t become one of the richest men on Earth by being generous. While New York Mayor Bill de Blasio has promised to only use existing tax subsidies — not newly-created ones — to lure Amazon to the city, many other politicians are tripping over themselves to make sure the tech giant gets every break it can.
Most extreme might be New Jersey, where outgoing Republican governor Chris Christie has teamed up with the Democratic mayor of Newark, Ras Baraka, to offer a remarkable $7 billion in tax breaks to lure Amazon to Newark. This may not even be enough. Stonecrest, Georgia would de-annex 345 acres of land and rename the city Amazon. Frisco, Texas would has offered to give away 40 percent of its land area.
Some cities, as noted by Seattle Times columnist Danny Westneat, are literally willing to give Amazon sway over how taxes are spent and civic projects are developed.
On paper, Amazon’s upsides seem huge. An Amazon headquarters would house as many as 50,000 workers, many of them college-educated and entitled to high salaries, unlike the blue collar workers in Amazon’s competitive shipping warehouses. This has allowed the likes of de Blasio, a progressive Democrat, to cheerlead for Amazon, despite its reputation as an anti-union corporate behemoth worth almost twice as much as Walmart.
Amazon’s effect on the economy has also been profound: The retail sector, which employs many of the less educated workers who once filled the ranks of American manufacturers before they automated their workforces and fled overseas, is withering. For all the jobs Amazon has created, it has destroyed many others.
But Amazon’s business practices are only part of the problem. Given the amount of subsidies on offer, it seems unlikely any municipality will ever earn back the tax revenue being sacrificed to lure the company in. This means that taxes that could’ve gone to schools, roadways, public hospitals, and parks may be sacrificed so the city hosting Amazon can pretend, for a little while, it’s on the cutting edge.
Good Jobs First, the Washington D.C.-based subsidy watch group, analyzes so-called “megadeals” that involve massive tax breaks for corporations. If Amazon follows the precedent of similar deals like the $8.7 billion in subsidies over 16 years that Boeing received in Washington state, the organization estimates that a city would pay more than $600,000 per Amazon job.