Amazon is a company for the 21st century, but New York is stuck in the past.
The more than $1.5 billion in direct tax breaks and grants the state is offering Amazon to create jobs here — $48,000 a job — would be fine if this were 1978, not 2018. Back then, Gotham’s biggest problem was the loss of hundreds of thousands of good-paying jobs, as companies and people fled a failing city. It’s the opposite today: We have more jobs and people than our subways, parks and schools can handle.
After a yearlong beauty pageant during which Amazon auditioned dozens of cities to locate a second headquarters away from its home base of Seattle, we won! Long Island City, Queens, will be home to half the new headquarters; northern Virginia will be the other half. That means at least 25,000 new jobs for Gotham, which Amazon says will pay an average of more than $150,000 apiece. (Beware of “averages” — if the company is like a bank, a few extremely highly paid individuals will skew the average up.)
For most cities, this would be a big deal. Boston, for example, a generally healthy city with a big tech center, has nearly 1.7 million private jobs; it has gained 200,000 jobs in the past 10 years. Adding another 25,000 jobs over a decade — the amount of time Amazon has to hire folk here — would be a 13 percent boost over that trend. San Francisco has 2.1 million jobs; it has gained 300,000 over the past decade. An additional 25,000 would be 8 percent.
New York, on the other hand, has grown at such a fast clip since the 2008 recession that it’s not a stretch to say that the city, as a whole, will barely notice these new jobs.
New York City is inching close to the 4 million private-jobs mark — a record, and 700,000 more jobs than we had a decade ago. If Amazon had added these 25,000 jobs during the past decade, it would have increased our new jobs by just 4 percent.
All new jobs are good jobs — and critically important for any one job-seeker.
But it’s not worth $2 billion in lost tax money. New York doesn’t need to dangle these incentives to get these jobs. Google has hired 10,000 people in New York without massive subsidies. Gov. Andrew Cuomo and Mayor Bill de Blasio, offering plenty of goods of his own, don’t grasp that fact; they think it is still the New York of 40 years ago, which lost 700,000 jobs over a decade.
Will the state and city lose money on the deal? Probably not. Amazon’s workers — if all goes as planned, which things rarely do — will pay about $4 billion a year in state and city income tax over a decade. And they’ll likely consume little in services: Relative to what they pay in income, property and sales tax, this youngish group won’t need much in public schooling, fire, police and homeless services.
But a city can’t call itself progressive with such a giveaway to the rich — especially when our public services are going wanting. Subway ridership in Astoria and Long Island City has already increased from 23.6 million annual riders in 1998 to 33.5 million annual riders in 2016; commuters wait for packed trains to go by before they can struggle on.
Sure, Amazon has pledged to put some of the money it would have paid in taxes toward a new “infrastructure fund” for the neighborhood — but the rest of us lowly taxpayers don’t get to decide exactly what to spend our tax dollars on.
Allowing Amazon to have an outsize role in payments “in lieu of taxes” subverts democracy; voters, through their elected officials, should decide how to spend all tax revenue for the benefit of the city as a whole.
Most importantly, though, the state and city shouldn’t be using its tax policy to pick winners and losers. Amazon gets these tax breaks because of its sheer size and power. Smaller companies are at a disadvantage — including the smaller companies that must compete against Jeff Bezos’ behemoth.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.