Amazon Quest: The Price of Winning
We’ve written extensively about Amazon’s ongoing search for a second headquarters facility, and we’re addressing it again, even though the region’s only real submission — one involving property in Enfield — didn’t make the cutdown list.
That’s because this is a remarkable story on many levels, one that brings to the forefront a host of issues dominating the realms of economic development and urban planning today.
In fact, this contest shows just how blurry the line is when it comes to what a ‘winner’ and ‘loser’ is when it comes to this competition.
Indeed, when the list of the 20 finalists came out — Boston is on it, as is New York, Chicago, Dallas, Atlanta, and many other major urban centers — more than a few mayors representing cities not on the list were breathing a sigh of relief.
That’s because the tax-incentive packages being offered are of the nine- and even 10-figure variety. New Jersey offered a package totaling more than $7 billion, and other cities reportedly topped that figure. That’s the price of luring Amazon, its 50,000 jobs, and $5 billion in development spending, apparently, and many cities have no problem with paying it.
But should they pay it? We’ll get back to that in a minute.
First, though, why are the numbers so big, and why are so many communities willing to pay that much to the man, Jeff Bezos, recently identified as the richest man in the history of the world?
That one’s easy. Jobs, as we’ve said many times and in many different ways, have become a truly precious commodity, and they’ve become even more scarce as technology improves and more jobs are rendered obsolete by robots and software.
These jobs that Amazon will bring are those proverbial good jobs with good pay, and remember, it will bring 50,000 of them, supposedly. To get that same number of good jobs with good wages, a community would need 50 strong companies employing 1,000 people each (that’s three or four times the number of such companies currently in Western Mass.), or 1,000 companies employing 50 each.
We just did the math, but you can understand what’s behind that math — years, if not decades, of hard work and some incredible luck.
Landing Amazon is a development that could change the fortunes of a city like Newark, which explains why New Jersey officials are ready, willing, and apparently able to offer that $7 billion in tax incentives, although there may well be some buyer’s remorse if it triumphs.
Why? Because becoming home to Amazon’s second headquarters may require hundreds of millions of dollars in additional spending in new schools, better roads, new housing, and more.
Which brings us back to the question of whether cities and states should be offering those kinds of tax incentives. The popular, idealistic answer is a bold-print ‘no,’ with additional commentary that these billions of dollars should be spent on social services, transportation, healthcare, and more — or should be awarded to existing companies that are already part of a community.
The more logical answer is that many of these communities and regions don’t have any real — or easy — options for revitalizing cities or securing a steady stream of jobs for years or decades to come.
That’s why the Amazon contest is so compelling, and things are just starting to get interesting.