GE just scaled back their new headquarters plan in Boston, and is refunding $87 million to the state as a result.
I wonder if, as Amazon got further into the planning, they realized the cost was going to be far more than anticipated, so they are using “local politicians” as an excuse to back out. I don’t see how the local politicians could have realistically stopped it if Amazon was determined.
If the state’s projections of $27.5 billion in new revenue over the 25 years of the deal were accurate, that’s a pretty good return for $3 billion in incentives, the majority of which would have been borne by the state and not the city.
25,000 jobs @150K average gives you $300+mil per year in revenue just in direct income tax, forget about the multiplier effect.
If true, that sounds like a poor planning/analyis on Amazon’s part. Regardless of NY, I hope they are better than that in both planning and analysis. They had more than a year to plan and analyze.
Not really. It’s giving Paul a discount to move into town, and build onto vacant land/empty warehouses.
I think that you answered your own question, with:
These are low-tech and less skilled jobs that do not exist today. Sure, they may not come with a living wage or with health care. But, isn’t a low wage job (with a chance to learn some skills) better than no job? The proposed corp HQ was right next to one of the largest public housing projects in NY. Surely, some of those folks will be hired for maintenance and other unskilled needs.
I think that is the wrong question. As HQ2, Amazon would also be hiring accountants, tax folks, marketing peeps, HR, and all kinds of support staff, such as maintenance, security, cafeteria workers, etc. But, yes, most of the techies will likely be from OOS. Which itself is probably a good thing since the state had a net loss of residents last year. (With net out-migration, the state/city budgets will be in big trouble.)
btw: NYS currently gives ~$500m/yr in refundable tax credits to Hollywood for filming in the state. How many think they’ll get hired for a TV show?
I think this may have been a done deal had they involved more local decision makers. It seems that the governor and mayor got together and did the deal in secrecy.
It probably didn’t help that there is fallout from the big deal in Wisconsin with Foxconn. Its panning out to not be as advertised.
If 150k is the average, that could mean half at 30k, the remaining 12,500 employees at 300k. I don’t buy it. Even google isn’t starting every…single…new hire at 150k. It only gets worse, from there, if more are lower. It would mean a smaller proportion at a nutso high salary. Don’t be misled by “average.” Play with it.
And 25000 are not going to put every dime into local spending (no vacations away, no goods or services not made locally, no chunk into retirement or that 2nd home elsewhere, etc.) The only thing we can assume (and maybe not) is that their tax dollars go in. And then what? The city/state, busy putting in those utilities, is suddenly going to fix broken down schools in another part of the county or state? Better local transpo for all? Accessible health services everwhere?
Obviously, I think some of the math is short sighted.
I was surprised to learn in this article that some unions had initially supported the move. The devil is in the details…
@notrichenough - Gianaris now has the power to scuttle the whole deal, and Cuomo is railing about the new democrats in the state Senate, which is odd since he is supposedly a democrat too, but lol, politics is strange. I think Amazon saw the writing on the wall.
Today’s NYT had an interesting comment on those topics:
In other words, the issues concerning housing, transport/subway and COLA and (and schools) already exist and locals don’t see them being addressed effectively.
Some of the problem was with perception - the idea that the gov/mayor secretly negotiated without letting others know.
The 25,000 jobs at Amazon brings other non-amazon jobs to the neighborhood - these employees need to eat lunch, they will buy stuff at the local bodega/drug store/etc., will take more uber rides to get places, etc. That is part of how economics work.
There is a large talent pool in the tri-state area that Amazon would have pulled from, maybe not people down the block in LIC, but a commute away in other areas of NY, NJ, CT. So it would be an overall boost to the local economy (defining local as tri-state area).
Once objections came up, the city/state needed to work on getting the deal with Amazon to be sweeter or appear sweeter. Then maybe Amazon wouldn’t have bailed.
25,000 jobs is a lot for Amazon to say they will absorb at other locations. They never wanted two HQ2s in the first place, which may be why they feel they can absorb 25,000 jobs esleswhere so easily.
Local transportation was an issue. All three tri-state airports are frequently rated as the worst in the county.
That happened with Amazon, too. initially, there was going to be one HQ2 hiring 50,000 people. That got split in half and yet the promised money $3B remained whole. Doesn’t make sense.
Because so many large apartment buildings have gone up in the last few years, the subway is VERY overcrowded. Schools are bursting at the seams. People who live in the area thought Amazon’s arrival would make matters worse.
Apparently some politicians are confused about the math, and think this magical 3B is sitting around in an account, waiting to be spent on teachers salaries and local communities. Maybe it’s in a lockbox somewhere?
Hopefully someone will explain to them that a discounted rate of taxes in the future is different than funds that actually exist in the coffer. And now they get zero for the community as opposed to many billions (albeit less than they’d prefer).
IDK, doesn’t the city have to spend money to upgrade infrastructure to facilitate Amazon’s move? If they do, the city/state will have put up funds upfront. That’s money that has to come from somewhere. If Amazon is getting $3B tax breaks also upfront, it will be a while just to recoup. And if there’s nothing binding Amazon to stay, the city could end up losing all the money. It had happened somewhere involving a Chinese or Japanese company. It all depends on how the agreement is worded. I am guessing the agreement wasn’t very binding for Amazon since they split HQ2 in two pieces and still got all the incentives as if they were bringing 50,000 jobs.
It’s called financial literacy. Most people just hear sound bites.
I think one of the main drivers for Amazon to pick NYC was availability of talent. A lot tech company have moved to NYC area because it is much easier to attract talent. When I worked in CT for a short period, it was very hard for me to hire good (young) people. We had to pay up for people whereas I didn’t have to in NYC.
I saw several people being interviewed that said Long Island City (they were residents) really needed Amazon and the space they were taking was currently in pretty bad shape. They were very irritated that She Who I Can Not Tolerate and her cohorts drove Amazon away.
I think it’s not likely at all. Amazon wasn’t ever seriously considering anywhere outside of NY or DC. They just wanted to see what tax incentives they could extract from gullible local authorities and they were very successful at doing so. Look at how quickly they pulled out of NY when local officials balked at the tax breaks and look at how quickly they said they weren’t going to look elsewhere! The whole thing was a sham.
Regardless, let’s pretend that Amazon did decide to come to Chicago and open a new HQ with somewhere between 25k and 50k jobs. They couldn’t put it in the Sears tower - despite all the problems the Sears Tower has had finding tenants, its doing well now and doesn’t have nearly enough office space to benefit 25k-50k amazon workers. If Amazon came to Chicago, they would have to build a whole new campus. Suggested locations, in descending order of likeliness, have been the giant empty field southwest of Clark and Roosevelt, Lincoln Yards near Goose Island (i.e. demolishing the abandoned warehouses along the Chicago River), and the old US Steel site on 83rd street.
It would probably benefit us, but not nearly as much as U of I (or even Northwestern or Wisconsin-Madison). A huge new HQ would mean tons of jobs that have to get filled. The best source is a giant technical school that graduates tons of competent engineers every year, and preferably one nearby. That is not what we are - we have less CS majors than math majors. People still think you’re a bit odd if you go into software engineering - quant finance and grad school (lol) are more popular. I’m sure some UChicago alumni might find their way there since it’s right next door and will need to hire a lot, but I could see this being a huge boost to schools with larger CS programs that have a chance to establish a reliable pipeline with amazon (like the pipe from Berkeley to silicon valley that rocketed their CS program from merely excellent into the stratosphere).
I’d consider it a step down for UC if they aspired for their grads to go to work for Amazon. It would be the final sign that the “Life of the Mind” is dead.
My take on this (but with no insider knowledge) is that once Amazon got into this and really working out the details, they thought to themselves, “why are we going through the hassle of 3 different cities…we can do it in 2 and then gradually build out in other cities (like chicago)” and then - on top of that – all of the drama in NY…i think they didn’t want that and it also gave them the perfect cover to move out.
Not at the company decimating the publishing industry. Sure, it could be a boost to the public universities of the Midwest. But UC has never been training people like what Amazon is looking for.
