Last week, Amazon chose New York City and Northern Virginia as the locations for the company’s second and third headquarters. To attract Amazon, New York offered a package of nearly $3 billion, while Virginia provided incentives worth close to $2.5 billion. In return, Amazon promised to create 25,000 jobs at each location, many of them high tech, at average salaries of over $100,000 and to invest some $2.5 billion in each community.
“We are going to get back about $9 for every dollar we spent,” New York Gov. Andrew Cuomo said.
In addition, Amazon will build a facility in Nashville that will eventually employ 5,000 people.
Amazon decided to choose two facilities rather than one so it could recruit more skilled workers and offer employees two choices of places to live.
Amazon CEO Jeff Bezos said: “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come.”
Virginia officials contend that their incentives will bring in about $3.2 billion in additional state revenue over 20 years.
“At the end of the day, they have to look at it for what it is: a once-in-a-lifetime economic opportunity that could transform that area of northern Virginia and could have ripple effects for the region,” said Todd Haymore, a former state commerce secretary.
Critics such as James Parrott, director of economic and fiscal policies at the Center for New York City Affairs, countered that “It is a lot of unnecessary subsidies. They want to be in New York City anyway, so why do they need to be subsidized at all?”
These critics argued that, instead of subsidizing Amazon, New York should be spending more money on subway repairs and public services.
The selection process took slightly over one year, and more than 200 cities initially applied. While the financial incentives offered by the winners were important, Amazon stressed that these communities provided other important assets — a supply of highly educated workers, an international airport within 25 minutes, a compatible cultural and community environment, sufficient housing, diverse populations and enthusiastic government officials, recreational and educational opportunities and easy access to mass transit.
Another plus for New York City was the newly established Cornell Tech campus on Roosevelt Island, very near where the Amazon’s headquarters will be established. This joint venture between Cornell University and the Technion Institute of Israel says it is “the first campus ever built for the digital age, bringing together academia and industry to create pioneering leaders and transformational new research, products, companies and social ventures.”
Tax-incentive packages for economic development have significantly increased over the past 25 years. According to the Brookings Institute, a leading think tank, states spend somewhere between $45 billion and $90 billion annually on corporate incentives.
Seattle residents say Amazon has been responsible for a “prosperity boom” there. Amazon estimates that its investments in Seattle from 2010 to 2016 have added $38 billion to the city’s economy. Since 2010, Amazon’s Seattle workforce has grown from roughly 5,000 to 45,000. The company has spent more than $4 billion on about 40 offices, helping transform dilapidated neighborhoods of tire shops and small warehouses.
I heartily endorse the incentives provided by New York City and Northern Virginia. Over the next few decades, these communities will benefit from the presence of a dynamic, enterprising company. Amazon has proven repeatedly that it will provide state-of-the-art, practical business services that benefit their communities. Attracting highly talented professionals will lead to a positive ripple impact of encouraging students to upgrade their tech capabilities.
Between high school and college, the only summer job that I could get was carrying out groceries at $1 an hour. Fast forward to today, when high school graduates can look forward to writing software for Amazon.
Originally published in the Sarasota Herald-Tribune
