I want to follow up on this post about Amazon announcing that they’re bringing jobs to New York. There were two major critiques of AOC’s victory lap:
Amazon promised 25,000 jobs, this announcement is 1,500, so this is not a win. This one is easy for anyone who knows the history of these IDA (Industrial Development Authority) deals. The job promises are over a period of time (in this case, apparently, 10 years), and the promises don’t have to be kept. Amazon apparently promised 700 jobs the first year, so 1,500 is arguably better than what the original deal would have yielded.
The most important point is that whatever Amazon promised in return for $3 billion in tax breaks, these deals don’t have any penalty for companies that don’t create the promised number of jobs, so Amazon could have promised 100K jobs, delivered a small fraction of those, and paid no New York taxes for years.
Amazon is taking office space in a complex that is the recipient of tax breaks so it’s not as big a win as it could be. This one seems to be reaching, since these IDA deals are almost ubiquitous for large projects, so it would be hard for Amazon to find space that wasn’t the beneficiary of some deal or other. And, at least an IDA didn’t shell out $3 billion more in tax breaks to get Amazon to come to town.
There’s something more important than the details of the Amazon deal itself – there’s the toxic environment surrounding these IDA tax breaks and the Hunger Games lotteries that they engender. When Amazon announced the deal, all of the well-paid development marketers for our area (the Chamber of Commerce and other booster entities), fell all over themselves to show that they were competing for Amazon’s HQ2. The local paper dutifully wrote stories taking the bait, showing how, if you look at the Amazon deal in just the right way, Rochester could qualify. When Amazon chose NYC, these stories took on a tone of self-flagellation about our inadequacy and failure.
What’s taken for granted in all of the publicity around HQ2 is that this is the way business is done. Business isn’t a large corporation choosing to site a facility somewhere that has a good pool of technical employees, good housing and good transit. Rather, its a contest to see which locales can cough up the most tax breaks and other goodies to entice the corporation to come to their town. I can’t hate the player here–Amazon just took the usual IDA game and brought it to another level. But let’s give the politicians and activists who opposed the Amazon deal in NYC their due, because it would have been pretty easy to sit on the sidelines and treat IDA-style development as just part of doing business.
By the way, I’m writing from the perspective of Rochester, which is awash in IDA deals, and there’s been a pretty significant backlash against them here. Some of that backlash is driven by examples of IDA deals that yielded almost no new jobs, or money that was supposed to go to new, risky businesses that instead go to fund expansion of existing businesses like the nicest health club in town. After those deals were exposed, some of the relatively timid local politicians here are opposing them, or at least calling for reform. That’s huge in an environment where these deals used to be announced with big fanfare for the politicians involved, after which they failed in obvilion.
In short, these deals are generally bad for taxpayers, and they don’t generate many new jobs. As voters become more educated about them, they will become politically unpopular. It’s good to see some Democrats leading on these issues, despite the flack they received.