Published: Wed, November 14, 2018
Markets | By Noel Gibbs

Amazon delivers news of HQs in NY and Washington DC

Amazon delivers news of HQs in NY and Washington DC

Neither New York nor the Washington, D.C., area have trouble generating jobs for their more highly skilled residents, but both struggle with higher-than-average unemployment, higher-than-average poverty and limited social mobility. The company plans to employee more than 25,000 people at each location.

"We are witness to a cynical game in which Amazon duped NY into offering unprecedented amounts of tax dollars to one of the wealthiest companies on Earth for a promise of jobs that would represent less than 3% of the jobs typically created in our city over a 10 year period", the politicians added.

Amazon says one of the key factors in its search for the new headquarters was the ability to attract talent.

"It's ambiguous for the winners, not good for the "losers" and not good at all for the nation", said Mark Muro, a senior fellow at the Brookings Institution.

Amazon is placing one headquarters in Long Island City (in the borough of Queens in New York City) and another in Crystal City, Virginia (in Arlington County). If each location gets 25,000 jobs, that would make it smaller than Seattle's, which houses more than 40,000 workers. Taiwanese manufacturer Foxconn, for example, received $4.8 billion in subsidies for a plant in Wisconsin on which it broke ground this year. Nonprofit groups like Per Scholas, a Bronx-based job-training program, and Pursuit (formerly C4Q), a Queens technology training center, were involved in the pitch to woo Amazon. Without a concerted effort, it's unlikely that many of these residents will be in line for an Amazon job paying $150,000.

In a series of tweets Monday night, Ocasio-Cortez criticized the tax breaks NY has offered Amazon and questioned whether the company plans to pay high wages, provide benefits, and hire from the existing community. "A$3 ccess to an educated workforce and high-quality public amenities are what drive business location decisions - not the presence of low or regressive taxes", the Institute on Taxation and Economic Policy said in a statement. That includes a cash grant of $23 million over 15 years based on the incremental growth of existing tax on hotel rooms. Virginia's is the 26th, just above the $750 million deal Solar City secured to build a factory in Buffalo in 2014. The job creation tax credit is available to all companies in the city.

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Crystal City on the other hand may find it tougher, with just 3,100 units under construction and no major development projects over the last two years.

Most important, Amazon simply isn't that big a "get".

"New Yorkers have real unmet needs from their government", New York State Sen. "We are proud to have a partner in Amazon that shares that vision".

"The only things they're useful for are the companies that get them and the politicians who get the credit", he said.

While the incentives offered to Amazon are sizable, some of the other locations hoping for the nod had offered more. "For us, it's an opportunity to bring in fresh tech talent, who may not have had that opportunity but are talented and ready to go", she said, adding that NPower plans to increase its size by 50 percent next year.

The announcement concludes a 14-month long national frenzy, in which communities went out of their way to capture Amazon's attention. That would support almost 50,000 jobs in the state, Fuller said, in addition to those at Amazon.

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"That's an terrible lot of money", said Aaron Jodka, research director at real estate firm Colliers International in Boston. "It isn't as overwhelming as people think it's going to be".

The financial incentive package NY offered includes performance-based direct incentives of over $1.5 billion, based on the company creating 25,000 jobs in Long Island City. The inflow of those workers could burden schools and transportation systems.

Though the details vary in each deal, in all three cities, Amazon is planning to invest heavily in expansive, energy efficient office space. The auto factories that once filled the Midwest have migrated to the South, where labor unions have held less sway.

"We're talking about the single biggest economic development deal in the history of New York City", he said.

"These two markets definitely can absorb this kind of employment shock - and they have some time to prepare for it", he said.

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