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Amazon will receive almost $3 billion from New York. Will it be worth it?

Amazon has been on the hunt for a second headquarters since September of 2017. Cities all over the United States were more than willing to welcome the company. Amazon would bring fresh business, 50,000 jobs, and would impact the area around the new headquarters, creating jobs through increased demand. Amazon is capable of adding billions to a state’s budget. Many cities and states sold their cases to Amazon. They offered huge tax incentives, large swaths of land, and infrastructure improvements. City officials gave Amazon piles of data on their citizens, allowing Amazon to comb though it, either to make a decision, or to improve their own shipping and sorting procedures.

For Amazon, it was an easy win. They were going to build a new headquarters, regardless of whatever these cities offered. However, by making it a competition, they were able to get tax incentives from these cities, as well as a ton of data they wouldn’t have otherwise gotten access to.

While city and state representatives were happy, many in cities were not. Amazon hasn’t promised to hire from the locations they choose, which would minimize the number of new jobs Amazon’s presence would create. Furthermore, Amazon’s high paying jobs would attract people who would want to live close to work and be capable of paying higher rents. The end result would be gentrification of neighborhoods, with a city’s poorer residents pushed further from city centers. It could also increase homelessness in cities, a growing problem in cities with a large tech sector, like San Francisco, Amazon’s home city, Seattle, and New York.

A Tale of Two Cities (and Two New HQs)

Amazon announced their decision this month. They would not create one headquarters with 50,000 jobs. Instead, they’d create two headquarters with 25,000 jobs, each. One would be in Crystal City, a part of Arlington, Virginia. The other would be in Long Island City, a neighborhood in Queens, NYC.

Both locations worry about rising housing costs, gentrification, displacement, and homelessness. However, in New York, the issue is exceptional. The location of Amazon’s new headquarters will be near the nation’s largest affordable housing location, and these people, already struggling to get by, may be pushed out of their previously affordable homes.

Will the money Amazon brings to these cities be enough to displace the tragedy of displacing people from their homes?

The Good Amazon Can Do

“The upside was so huge — 25,000 jobs. We haven’t had a transaction like that in modern history.”

-Andrew Cuomo, Governor of New York

Governor Andrew Cuomo and NYC Mayor Bill de Blasio have been in crisis mode. Many are concerned about the displacement of current residents, the $3 billion in tax subsidies and money Amazon gets from New York taxpayers, and the fact that the deal did not involve local politicians, it was done without community participation behind closed doors. Cuomo and de Blasio, typically at each other’s throats about dire issues like the crumbling subway system in New York, teamed up to tackle criticism. They managed to ignore the concerns of their constituents though, speaking only of the good the Amazon deal could bring to New York. And, to be fair, there is a lot of good here.

New Jobs

“They don’t know that there are plenty of working-class people still in the neighborhood, people who would be very happy with a security guard job or a janitor’s job for $40,000 a year.”

-Jim Dillon, 69, Long Island City resident since childhood

First, the new headquarters will bring in 25,000 jobs with an average salary of $150,000. Even in software engineering in an expensive city like New York, that’s tremendous. Despite conflicting reports, neither Amazon, de Blasio, nor Cuomo have promised that these employees would be New Yorkers.

Current Amazon employees purchased condos in Long Island City before Amazon announced their HQ2 decision. Already, one brokerage firm that spoke with the Wall Street Journal confirmed sales of 150 units last week, 15 times greater than their usual sale volumes. This implies that Amazon will not hire exclusively from the surrounding area. Instead, they’ll bring in transplants, who will add strain to the city’s already crumbling infrastructure, push out low income native New Yorkers, and change the city’s personality and dynamic.

Indirectly Creating Jobs, Raising Incomes

Even if those 25,000 workers are mostly transplants, 25,000 highly paid employees will have a drastic effect on the city. They’ll need more restaurants and services in the area, giving a boost to small business owners, hair dressers, sanitation workers, plumbers, construction workers, and many other blue collar workers. They’ll increase demand for these jobs too, indirectly creating jobs. People who work around Long Island City (LIC) likely won’t be able to live in the formerly affordable housing located there anymore, but if they’re willing to commute to LIC, they’ll find new opportunities as well.

For those of us in the software development business, we could see higher wages, as competition from Amazon will drive up salaries. Knowing your employees could leave for Amazon and make over $10,000 than they do in their current position could drive tech companies into a bidding war. They’ll use salaries and benefits to retain top talent. For all software engineers in the industry, Amazon’s presence will lead to better benefits and wages.

Fix Our Broken Subways and Bring in New Transportation

The subway system in NYC is atrocious. It’s so bad that many places of employment are no longer strict about arrival times because it’s simply impossible to be on time every day. Sometimes, about once a month, your 30 minute commute will change into one that’s an hour and a half long, and there will be no warning ahead of time.

One of the toughest thing to do is move around outside of Manhattan. To get from parts in Queens to parts in Brooklyn, you may need to ride three trains, taking well over an hour to make a journey that’s 15 minutes via car on New York’s packed roads. That could change after Amazon has set up in Queens.

BQX, L, J, Z, M, N, W, 7, F, and G

https://twitter.com/maxlinsky/status/1064522817411211266

No, that’s not a dyslexic alphabet. Those are the train lines that could benefit from NYC investing in Long Island City. It’s quite a few. The Metro Transit Authority (MTA) is shutting down the L train next year for repairs from Sandy. Yes, Hurricane Sandy, which hit New York in 2012, caused damages that we’ll only repair 7 years later. That’s how hard it is to get money for the MTA.

.@MTA I’m waiting for a Brooklyn bound Q at 55th and 7th. The app says at least 2 trains should have come by now — and still nothing 😞 will a train be arriving anytime soon?

— Emily Varga (@emvarga_) November 19, 2018

The governor of New York, Cuomo, and the mayor, de Blasio, don’t see eye to eye. As a center for commerce and tourism, and therefore a huge source of income for the state, the city needs decent infrastructure. The state benefits from investments in NYC. But to get the budget the MTA needs from the state is like pulling teeth by hand from a starving alligator. The people making important decisions about public transport in NYC are the people wealthy enough to never need to rely on it. As such, they do nothing.

However, we’re going to add 25,000 workers to an area of New York that is extremely underserved by the surrounding and crumbling train lines. We also now have a great business reason to put in the BQX, a streetcar that will go from Astoria, Queens, down into Brooklyn. Traveling from northern Queens to Brooklyn will take only about 30-45 minutes. It’ll also pass right by the new Amazon HQ2 building, making it perfect for commuters. Rather than putting all of those Amazon employees in LIC, we can spread them out in Queens, Manhattan, and Brooklyn with improvements to the surrounding train lines and the BQX.

What Needs to be Done?

The lines need more trains so there are shorter waits at stations. We need this for public safety and reliability. Because the MTA is so untrustworthy and the stations are frequently unpatrolled, women in the city are reluctant to use the service at night. This would involve increasing the speed of trains on the railways, which means more inspections, more frequent cleaning, and updated switches in the stations and at stop points along the railway. This would take a massive investment from the city as well as the state. It would pay off in no time, ridership is higher when the trains are working properly and businesses are more willing to come to NYC rather than Hoboken thanks to our transit system, but getting the state to commit to these improvements has been impossible. Amazon might change that.

Amtrak

Outside of New York City, there’s, apparently, the rest of the United States. The rail system for transport between cities is primarily Amtrak. This connects a few major cities in the U.S. by train. Obviously it’s not enough, or we wouldn’t need so much air flight to make short trips in the U.S., but, for many, it’s helpful. Some people commute to NYC from Philadelphia or New Jersey. Others get to their Washington D.C. jobs from outside of the district. Those people are left using a defunct train service that’s actually more dangerous than flying.

If Amazon employees increase ridership from outside of New York, these railways could be improved. That means America might finally have more usable railroads, at least on the east coast. For everyday commuters and those of us who only use these trains to visit friends and family, the upgrades would be a godsend.

The Bad Amazon Will Do

Raising the Cost of Living

“It won’t be [good] for the people at Queensbridge. My husband is going to lose his business space because of this. And we may not be forced to move, but our taxes are going to go up to the point where I’m not sure we can stay.”

– Diane Hendry, 28-year resident of Long Island City

The most obvious issue is the rising cost of living. New York City is already a tough place to live. People, even in tiny, 300sqft, old, run-down apartments, pay over $1,000/month in rent. In some neighborhoods, a small studio apartment may cost over $3,000. Rising rent costs are already pushing many New Yorkers further into the boroughs. While a six-figure salary may have afforded you a place in Manhattan just a decade ago, the same salary, even when adjusted for inflation, now puts you out in the edges of Queens, Brooklyn, Northern Harlem, or the Bronx. Amazon’s about to make this much worse.

By offering, on average, $150,000 salaries, Amazon is going to flood LIC with extremely wealthy people. The apartments immediately in this area are, largely, not luxury apartments. Land owners will work hard to raise rents to keep up with the surrounding area. Once rent has pushed most of their tenants out, they’ll demolish the buildings, put in some high-rise condos, and charge three times what they were before. As a result, long-time citizens of the area, families, and people already struggling to make a living will be pushed even further away from their jobs and community. Rapidly rising rents are already a huge problem in New York. By moving to an area where New York currently has affordable housing, including Queensbridge, the largest public housing development in North America, Amazon will displace tens of thousands of people overnight.

Increasing Homelessness (And Doing Nothing About It)

Not everyone Amazon displaces will find a home, they’ll find themselves in the cycle of homelessness. Without easy access to a bed, shower, or clean clothing, they’ll have a hard time finding a job and getting off the streets.

Homeless people need public services to break the cycle. Homeless shelters feed, clothe, and prepare homeless people for getting back to work. Education programs help them find new and relevant jobs that they’ll be able to hold on to for years. These are vital services that are an obvious investment for the city. By spending just a little money to help these people get back on their feet, we ensure a city full of hard working and well educated New Yorkers. We can also improve the cleanliness of the city and improve tourism. Everyone benefits when New Yorkers are able to live their best lives.

Amazon hates programs like this. Conditions have been tough in Seattle, where the presence of Amazon and Microsoft drove many people out of their homes and on to the streets. As a result, Seattle tried to do something about their Amazon-driven homelessness problem. They had an easy solution: large employers would pay a little more in taxes. These large corporations could take the small hit of additional taxes, and the homeless would benefit. Amazon refused. They threatened to halt construction on a new high-rise building when the city announced the plan.

Seattle was forced to pull the plan off the table, and it’s homeless problem has only gotten worse. As long as Jeff Bezos, the riches man in the world, continues to dodge taxes, the same problem will happen wherever Amazon goes. The city becomes a slave to the large corporation.

Gentrification, Transplants, and a Loss of Identity

I was born in this great city, but I wasn’t raised here. New York’s too expensive, and my family struggled to stay fiscally independent. I was raised in the rural Pennsylvanian countryside. I grew up hearing about New York, but I didn’t visit the city where I was born until college. I loved it, it was everything I had hoped it would be. But, it wasn’t until many years later that, while looking for work, I ended up with a few offers in NYC. I took a programming job, and I’ve loved it ever since.

But, in technicality, I’m what native New Yorkers call a transplant. A few years ago, the culture of New York was new to me. Fortunately, I fit right in, but not everyone does. Some are happy to push people out of their homes, bring anti-immigrant views, and disrupt the culture of this city. Little family-owned bodegas are replaced by chain restaurants that people from rural areas are more familiar with. Coffee shops that have served their communities for years are replaced by Starbucks. Sometimes, that’s a good thing. An employee of one of those shops can get higher pay and benefits from Starbucks. But what about the owners, who lost their business and possibly their homes?

When we allow chain restaurants and businesses to come in and disrupt our city’s culture, we introduce new problems. People get displaced. Income levels change, some for the good, others, not so much. New York is in a delicate balance, and rapidly changing that balance can be problematic for the city. Infrastructure and people aren’t always prepared for those rapid alterations.

Data Mining

The final glaring issue with Amazon’s move to New York and Arlington, Virginia, is the fact that Amazon likely had their mind made up some time ago. Both locations are close to one of Amazon CEO Jeff Bezos’ homes. Furthermore, New York and Arlington didn’t offer Amazon the best benefits or the largest tax breaks. New York, potentially, is understandable, as there are many software engineers here already. We’ve got offices for Google, Facebook, Twitter, Tumblr, and many other large tech companies here. Hiring would be easy, especially with the high salaries they’re promising.

So why the long process when Amazon was inevitably going to move here anyway? Data mining. Cities handed over census data on their citizens for the hope of getting the headquarters in their city. They handed Amazon a treasure trove of data on the most populous cities in America, exactly the kind of thing a company interested in machine learning and deliveries would need. They gave Amazon an unfair advantage in the marketplace and betrayed citizen privacy. Now Amazon can keep all of this data and use it however they’d like. If you live in a large city, Amazon just got unprecedented access to your data for free.

What’s Next?

Politicians

New York Governor Andrew Cuomo and NYC Mayor Bill de Blasio have spoken at great length about the deal. They’re in damage control mode, with many New Yorkers unhappy about displacement and the massive tax incentives Amazon got as part of the deal. New NYC politician and democratic socialist Alexandria Ocasio-Cortez spoke out against the decision, criticizing New York officials. She pointed out that New York is in desperate need for new money to improve our crumbling infrastructure, congested streets, and stalled trains. Instead, we’re giving away $3 billion in tax money.

Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.

— Alexandria Ocasio-Cortez (@AOC) November 13, 2018

Kirsten Gillibrand, one of New York’s senators, stated she was “concerned about the lack of community input.” Local politicians, even those in Long Island City, were not involved in the talks. She also stated that a company like Amazon “should not be receiving financial assistance from taxpayers.”

Even conservative commentator Tucker Carlson sided with democrats. He complained that, “Jeff Bezos, who is the world’s richest man, will receive more than $2 billion in subsidies from you, the taxpayer.” He even specifically pointed to Alexandria Ocasio-Cortez’s statement, agreeing with the socialist, stating that she “has a very good point.”

With the exception of Cuomo and de Blasio, democratic politicians have spoken against the lack of local leadership, the extreme tax breaks, and the displacement of potentially tens of thousands of people with no public assistance. With enemies on both the left and right, Cuomo and de Blasio could be looking at a rough political climate during their reelection campaigns.

Future for New York

A new Culture

When I first moved to NYC, I lived in Astoria. I worked in Tribeca, so this was a terrible decision, but it was a nice apartment and I was near friends. Plus, there were some really great restaurants, bars, and brunch spots up there. If it weren’t for the commute to just about anywhere in the city, I would have stayed there.

Astoria is like a quaint little town that could exist anywhere in America. Admittedly, it’s a bit larger than most quaint towns, and has far more “main streets,” but it has a sort of small town charm, despite being in NYC. However, that could change. Even the northernmost addresses in Astoria are less than 10 minutes from Long Island City. Soon that incredible variety of businesses could be replaced by condo-style high rise buildings. The people living in that area now would be cast out.

Revitalizing and Displacing

Over the next 10 years, Amazon will add at least 25,000 jobs to NYC. Many of those jobs will be in Queens, potentially revitalizing an often ignored part of NYC (read: anywhere but Manhattan). It could force the city to improve the crumbling subway system and even add a streetcar to finally connect Brooklyn and Queens with reliable public transportation. Amazon could draw the tech sector out into Queens or Brooklyn, shortening commutes for employees who could never dream to live in Manhattan. For many New Yorkers, especially those of us in Tech, Amazon’s new headquarters could be a boon for the city.

But for many other New Yorkers, it’ll be heartbreak. They’ll lost their homes, families will have to find somewhere else to live, and the already dire homeless crisis in the city will become worse. New York has never been a forgiving place, but we help our own. This just isn’t what we do.

Neither side is wrong. That seems to be something that Cuomo and deBlasio continue to ignore. They’re right, Amazon may add billions to the New York budget over the next 25 years. It might force the city to improve infrastructure. But it will also displace many people, many families, who make New York what it is. That, on it’s own, makes it a truly horrible decision, even without the billions in tax breaks.

Future for Arlington

Virginian officials want to take a more laissez-faire approach. They won’t regulate Amazon, and hope that surrounding businesses will evolve to keep up with the increased demand. This won’t bode well for existing residents. They’ll find rising prices kick them out of their homes. They won’t get more hours, they won’t get more support. New York, in the long run, may fair better than Crystal City. At least we’ll have liberal politicians forcing Amazon to help pay for affordable housing, homeless shelters, and infrastructure projects. Arlington, Virginia, on the other hand, may change a lot.

Seattle

Seattle’s tech scene has exploded in the past few years, largely thanks to tech giants like Amazon and Microsoft. When Seattle wanted to combat their rising homelessness problem, they proposed a simple solution, but Amazon refused to help. Seattle had to abandon the plan, caving to Amazon’s whim.

A city’s people well be beholden to the profit margins of the world’s richest man, and one of the world’s richest companies. That’s the future for New York and Arlington, if they don’t rein in Amazon now. Looking at the recent history of the United States, including the Citizens United Supreme Court decision, I doubt America will rein in their corporations anytime soon.

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Want to learn more? Here are my sources and some further reading.

• Leslie Albrecht, MarketWatch
• Matt Binder, Mashable
• Joe Concha, The Hill
• Owen Daugherty, The Hill
• Lydia Depillis, CNN Business via Click On Detroit
• Dennis Green, Business Insider
• Michael Kimmelman, The New York Times
• Bryan Menegus, Gizmodo
• Sam Raskin, Curbed
• Eliza Relman, Business Insider
• Ben Fox Rubin, CNET
• Jenny Schuetz and Elizabeth Goldstein, The New York Times
• Nick Statt, The Verge
• Gaby Del Valle, Vox
• Chris Velazco, Engadget