In 2017 Amazon’s revenue was over $177 billion, in 2018 they hit a trillion-dollar market cap, as of this writing, their stock is trading at $1,569.35 a share. This is one of the largest, most successful companies in the world, one that certainly does not need any sort of subsidies to grow. Yet, in order to “lure” One of Amazon’s new headquarters to Long Island City, Queens both the State and City of New York decided it is a good use of taxpayer money to lavish gifts on the online behemoth.
The total compensation package will be about $3 billion with about $1.7 billion coming from the state and $1.3 billion coming from the city. The deal is structured in such a way that the state will basically serve as Amazon’s landlord, leasing them 4-8 million square feet at a ridiculous $850,000 a year. For their part, Amazon claims they will create 25,000 jobs with an average salary of $150,000. The subsidies are tied to these jobs which means middle class and small businesses are subsidizing the largest company in the world’s top shelf workforce.
The thinking is that this money is well spent because it will spur jobs, but New York continues to burden current jobs with nickel and dime fines and fees. They will bang a truck for being double parked or for improper lettering, they will fine a merchant if a plastic bag blew in front of their store, they will force a restaurant to deal with 17 agencies before being allowed to open but there are billions of dollars for Amazon. Why is there nothing dedicated at the outset to fund mass transit, build more schools, attack the homeless problem, etc.? How are vehicles going to get in and out of this area.? Trucks must come in and out to make deliveries. whether they like it or not people are going to come in and out by personal car or ride share. The theory behind congestion pricing is put wall around manhattans and let traffic stay in Queens and Brooklyn, well if congestion stays in Queens and they want to add more that’s a problem. Build glitzy new offices with more density on already dense East River and the people from outer parts of Queens who have no alternatives will either suffer more traffic or pay a tax or both. Though there should be no further talk about how the MTA needs new revenue sources, clearly money is available, and the elected leaders think this is where it should be allocated.
Though it is certainly thrilling to have Amazon come to New York, and this development will present opportunities for various small businesses and entrepreneurs to capitalize on, it is frustrating how little respect elected officials have for “non-sexy” industries like trucking. Even though, there are 282,320 trucking jobs in New York (1 in 28) and the industry pays $15 billion in wages. Where is our subsidy?
Putting government subsidies aside, there are many New Yorkers who are deeply concerned about Amazon moving in, in the first place. Much of this has to do with housing. Homeless has doubled recently and the city spends close to $1 million a day on the shelter system. The dirty little secret about the city’s homeless population is that most work. These are not a bunch of freeloaders but hard workers who due to one unfortunate situation or another find themselves without a permanent place to live. 52% of New York City renters are currently cost-burdened so even the slightest uptick in prices will lead to an increase of an overburdened system. Home prices jumped more than 35% in Seattle after Amazon hit the scene. In the last five years Seattle home prices rose 73% and rents another 31%, according to Zillow data.
The shame of the subsidy situation is that it overshadows what should be an exciting time with Amazon spurring new jobs and development. Ideally, though, with Amazon serving as an anchor this is the perfect time to implement “value capture”. Instead of lamenting the state of transit, schools, and homelessness real leadership would have ensured that the public retain the increased value of new developments and invest in various needs. Amazon coming to New York should be a good thing but New York should not become another Amazon subsidiary.