Amazon has announced its decision, years in the making and highly anticipated, on where to build its second headquarters, planning to split its “HQ2” between New York City and Northern Virginia. Locations all over the country have offered tax breaks and other incentives since the company said a year ago that it would spend $5 billion and hire 50,000 workers at a new location.

The bidding war has elicited criticism from some observers, who say that efforts to shower the company with taxpayer-funded incentives could offset the potentially modest economic benefits, especially since the headquarters will be split between two already large and prosperous, if increasingly expensive, metropolitan areas.

Alexandria Ocasio-Cortez, a Democrat and New York’s representative-elect, tweeted this week:

“Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.”

Amazon says its main headquarters in Seattle has boosted the city’s economy by $38 billion. Yet, this analysis ignores important factors on how Amazon has changed life for those already living in the city. Though Amazon has its roots in the Seattle area, its “Day One” tower was opened in November of 2016. In 2014, the average price to buy a home in Seattle was $434,100. This year, that cost has risen to $753,000, making Seattle the third most expensive city in the country in which to buy a home. Rents have spiked significantly in that timeframe as well.

Amazon occupies about 20 percent of Seattle’s office real estate, a higher portion than any employer in a major US city, and more space than the next 40 largest Seattle employers combined.

A presence on such a scale has not only made Seattle much less affordable for working people and long-time locals, residents say it has it has changed the culture and character of the city, led to problems with parking and transportation, and eroded the city’s middle-class.

Amazon’s HQ2 isn’t likely to change New York City as a whole in the same way – but it may have a significant impact on the surrounding neighborhood. While the city is certainly larger and its character perhaps more firmly entrenched than Seattle’s, Amazon’s choice of the Long Island City neighborhood in Queens is telling. Not unlike Seattle, Long Island City was a middle and working-class neighborhood until its relatively recent gentrification – one of the last remaining such neighborhoods in close proximity to Manhattan. Queens, more broadly, is among the most diverse urban areas on the planet, in no small part due to affordability.

Already, Amazon’s plans for office space in Queens are set to occupy two sites that were previously slated for construction of 1,500 units of affordable housing.

There would be a “right-way” to move into an area like Queens. Amazon could work with the city to preserve and create affordable housing, expand infrastructure, prepare for the effects of climate change, and generally listen to the needs of locals already living there. But Seattle’s experience suggests this is unlikely.

Even New York City mayor Bill De Blasio said Amazon “is very destructive to communities.” Yet, only hours later, submitted a proposal to Amazon offering over a billion in tax breaks and subsidies to a company already worth $1 trillion.

It’s not that Amazon hasn’t benefited Seattle in certain ways, or won’t benefit a place like New York City. But it is dangerous to overstate the benefits, underestimate the risks, and look only at the simplest data like number of jobs and amount of money earned. It’s doubly dangerous to bend over backwards offering taxpayer-funded incentives to bring Amazon to these areas.

“I’ll change my name to Amazon Cuomo if that’s what it takes,” said New York Governor Andrew Cuomo, during negotiations with the company.

This is the wrong way for local officials to approach these negotiations. New York City has plenty of offer Amazon, and officials like Cuomo have a responsibility to safeguard the interests of local taxpayers, rather than offering to provide Amazon anything it could possibly ask. As Bezos said himself this week, “one day Amazon will fail,” and at that point, cities like Seattle will wish they hadn’t sacrificed so much only to put all their eggs in one trillion-dollar basket.

One Response

  1. Joel Jenkins

    Amazon isn’t the only company driving up real estate prices but they certainly are a major factor. Seattle has Microsoft and Boeing among others, so its eggs aren’t all in one basket.


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