Recently Amazon announced that they would not move forward with their plans to build a second headquarters (HQ2) in Queens, New York, stating that they require a positive and collaborative partner in making this work. Although Amazon polls showed that over 70% of New Yorkers supported the deal, there was much opposition from unions, state legislators and state representatives.
Labor groups demanded that every job be unionized, environmentalists wanted green policies put in place, state legislators wanted more transit put in place and housing groups wanted more affordable housing.
Those opposed to this deal also believed that the positions created by the new HQ2 would not be filled by local residents, instead outsiders would move to the area and fill these roles and the cost of living would increase, raising the rents so high that it would no longer be affordable for low-income residents.
Along with these issues, there was also a major sticking point regarding a $3 billion tax incentive, citing that this was way too much in subsites for the $800 billion dollar company.
Many NY politicians, even from the same party had contrasting opinions on Amazon’s presence in Queens. I for one, feel this was a missed opportunity for the economic growth of New York and for the revitalization of Queens. I don’t see how this would be a loss for New York. It’s like looking a gift horse in the mouth – are no jobs are better that jobs?
Amazon was set to build a $2.5 billion dollar campus, putting over 1300 construction laborers to work almost immediately, and an estimated 107,000 direct and indirect jobs spilling over into the local community in the coming years.
Additionally, having a tech company in New York would help them expand their business portfolio from mainly financial institutions and put the East Coast on the map as a “tech” state, driving other big tech companies to New York.
New York has the highest corporate income tax rate (17.21%) and the worst economic outlook of all 50 states according to the 2018 American Legislative Exchange Council report, Rich States, Poor States. It also has one of the highest personal income tax rates (12.70%).
New York has been trying to lure new businesses to their state, and Amazon would have generated $27.5 billion in city and state revenue over 25 years!
With New York being the most unionized state in the country, the pressure was on to unionize the Amazon warehouse in Queens. Amazon currently has no unions in any of their warehouses across the United States and feel that they can best address their employees concerns or issues. I feel Amazon (or any corporation) has the right to decide this on their own, which they did and were faced with backlash from union organizers. According to Glassdoor, Amazon employees give the company an overall rating of 3.8 out of 4. Amazon also increased its minimum wage to $15.00/hour, higher than the federal minimum wage. Based on this, I feel like Amazon has a good working relationship with its employees and pays fair wages. Unionizing can create higher annual labor costs for corporations and union workers are subject to high union dues which can have a negative effect on low-income residents in this community.
There is no doubt that New York needs to improve and expand its infrastructure – with or without Amazon. Amazon is committed to $600 – $650 million towards infrastructure improvements and will also provide money for low income programs, but it is also the responsibility of the state to have low income housing already in place if they were so concerned about this.
New York will be missing out on:
- 25,000 jobs, with an average salary of $150k
- Tens of thousands of additional indirect jobs
- $5 million towards workforce development
- A non-profit training center on campus to mentor and recruit locals
- $10 million expansion of the JobsPlus program near the largest public housing complex in the country, Queensbridge Houses
- A $3 – $5 million commitment from the state geared towards training residents for careers in IT, cybersecurity and web development
- Fund streets, sidewalks public open spaces, parks and transit infrastructure utilizing payment in lieu of taxes
- $60 million towards a 600 seat school & Long Island Rail Road stop
- $46 million towards sewer and water main upgrades
- $180 million in new spending for overall improvements
- Over $25 billion in tax revenues over the next twenty years.
It appears that one of the downfalls in getting support was not going through correct channels to get this deal approved. Gov. Andrew Cuomo and Mayor Bill de Blasio did not involve the local community and other lawmakers, but instead tried to fast-track the deal to override local regulations. This also led to incorrect facts about the $3 billion in tax subsidies.
Some stated that NY could use the $3 billion to build up communities on their own – not understanding that without Amazon the $3 billion does not exist!
New York does not have $3B that they were pulling from one “pot” to put into another “pot”, this was money that would have materialized if Amazon kept its promises on job creation and economic development.
The estimated $3B in tax breaks offered to Amazon would have resulted in $27 billion in tax revenue over the next 25 years for the state of New York.
At the end of the day, I don’t understand why the state of New York even submitted a bid to be considered by Amazon if they did not have their ducks in a row to make it work. Corporate tax incentives are necessary because New York has the highest income tax in the country, and they need to be more competitive to entice large companies to move or expand in their state.
There are rumors that the deal may not be entirely off the table and that it may be re-negotiated. I truly hope that this is the case, and that lawmakers can come to an understanding and show their support for a company that will help spur the economic growth of the state.
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