HQ2: Amazon’s $2.4 Billion Expansion Surrounded by Activist Backlash

 HQ2: Amazon’s $2.4 Billion Expansion Surrounded by Activist Backlash

Amazon, following weeks of speculation surrounding the placement of their latest HQ2 facility, has decided to split its location between New York and Virginia while it’s paid for on the lavish dime of the United States taxpayers. On Tuesday, the mega-corporation announced their new employee hub (set to establish over 25,000 jobs within Queens and Crystal City), will receive over $2.4 billion in new government subsidies and investments, forcing the people to question why one of corporate America’s most successful companies is receiving a welfare check.

Instead of admitting to this safety net syphoning, Amazon has decided to frame their big government support as an example of “national competition,” buying into the conservative narrative that, unlike federal institutions, state and city governments can do no wrong when they’re given the choice to redistribute wealth to corporate giants when it’s framed as a free market success and localized liberty (when, of course, neither is true). 

These deals, which have since been made public, show their citizens will ultimately pay $48K per new Amazon job, at a time when the company is reporting record profit numbers and an increase in stock prices and buybacks. 

“We expect HQ2 to be a full equal to our Seattle headquarters,” said Amazon’s founder Jeff Bezos, currently the world’s richest man, in a statement from last September. “Amazon HQ2 will bring billions of dollars in upfront and ongoing investments, and tens of thousands of high-paying jobs. We’re very excited to find a second home.”

There was no mention of taxpayers providing a small loan of a few billion dollars.

Locals, community organizations and their populist politicians, see these deals as another example of crony capitalism entwining big government and business. Rep. Alexandria Ocasio-Cortez, the newly elected 29-year-old social democrat from Queens, argued the company has overburdened the working class by forcing them to pay for Amazon’s lavish tax breaks instead of local infrastructure. 

“Amazon is a billion-dollar company,” Ocasio-Cortez tweeted after the announcement was made. “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. Displacement is not community development,” she added in another tweet. “Investing in luxury condos is not the same thing as investing in people and families. Shuffling working class people out of a community does not improve their quality of life…It’s possible to establish economic partnerships w/ real opportunities for working families, instead of a race-to-the-bottom competition.”

The backlash arose following the original HQ2 proposals, which we’ve covered in the past, that suggested average taxpayers would be required to subsidize an expansion which could negatively impact the cost of living within their local districts. 

A 2006 investigation on income inequality published by economists Janna Matlack and Jacob Vigdor concluded that a “tight housing market,” where the cost of buying a standard house increases due to supply, demand and the surrounding economics of that area, results in “the poor doing worse when the rich get richer.” 

The exception to this is when this market becomes “slack,” referring to when rents can possibly decrease due to the amount of existing homes or reserved construction methods, which help sustain the economy for the average working class. “

In the right location,” writes Vox journalist Gaby Del Valle, “a big new Amazon office park could be a boon. And if greater New York City had the right housing policies, a big new Amazon office park could be a boon. The city doesn’t have either.” 

She cites an analysis from Zillow, a tech company based in Seattle, which found that while Amazon’s original main headquarters resulted in the creation of 45,000 more jobs for their city, which increased over 30 percent between 2013 and 2018, housing costs increased by over 73 percent within the same time frame — which was a worrying consideration for Amazon before the construction of HQ1. 

“There was a real worry about the Californian influx,” said Amazon’s general counsel David Zapolsky in his statement published by The Seattle Times, “[but] we’ve attracted the sorts of workers we hoped we would. People who want to live in cities, who want to walk to work, who want to be in a vibrant environment.” 

Since these comments, Amazon has instead taken to lobbying the government to kill taxes on large businesses that would have assisted in funding affordable housing programs for local citizens, programs which could have assisted their own workers based within the Seattle area. 

“Amazon’s reported selection of Long Island City for part of its expansion is likely to set off a new wave of housing speculation in Queens, where sales prices have already risen 5 percent over last year,” said Grant Long, the senior economist for the real estate website StreetEasy, speaking to Vox. “Amazon would be the latest in a long chain of large corporations to tap New York City’s deep pool of highly skilled labor, despite its high cost of living. This trend that has pushed up wages broadly but unevenly, exacerbating a housing affordability crisis that has transformed neighborhoods and posed challenges for middle- and lower income- families throughout the city.”

It’s not unreasonable for these activists to anticipate similar behaviour heading into not only New York and Virginia, but HQ2’s surrounding areas as well. A recent study from The Urban Institute found the “inner region” of residents near HQ2 could pay “more than one-third of their income in rent,” while a 2016 study published by the Center for Real Estate and Urban Policy at New York University found “more than half of all households were [already] rent-burdened.” 

How many times can Amazon repeat their actions until their worry is exposed as yet another fake non-response?

To date, Amazon has received more than $1 billion in state and local subsidies for creating warehouses across the U.S., reports Good Jobs First, a watchdog group committed to tracking government subsidies to big businesses. This follows a trend of public representatives, regardless of political party, buying fake job creation on the dime of the taxpayer rather than leaving this to be handled organically. 

Unlike social programs the likes of universal healthcare or the reconstruction of infrastructure, it seems only Amazon employees will enjoy the benefits their fellow neighbors will have burdened on their shoulders. 

“This is a company that is scientific about getting tax breaks,” said Greg LeRoy, the group’s executive director, speaking with the Bezos-owned Washington Post. “Most companies — 99.9 percent of them — go to great lengths to keep their search a secret, so this is a very unusual, highly public episode. What we’re about to see is a textbook auction for tax breaks.”

Since its inception, Amazon has brazenly used their corporate status to leverage local, state and federal government for the best deal. It was journalist Danny Westneat who uncovered the outstanding details about how these representatives used their taxable budget as Amazon’s piggybank of choice. 

Among the original 238 offers for HQ2’s placement were Chula Vista, California, which  offered the company 85 acres of free land (which was valued at over $100M) and also excusing all property taxes on HQ2 for 30 years (estimated $300M in value). Chicago, Illinois offered Amazon the ability to legally pocket over $1.32 billion in income taxes from their own workers, meaning the taxpayer, instead of funding their local roads and law enforcement, would be paying their bosses for the luxury of working at Amazon. Boston, Massachusetts even offered the anarcho-capitalist meme of a privatized task force for the company’s “safety,” though explained this would be would be used for “workforce coordination and affordable housing for all Amazon employees,” as decided by public-private commissions.

Instead, the winning details for the New York agreement and Virginia agreement seem to be the simple, vanilla promise of billions in free money, which were kept as a dark money secret until the deal was made. 

“We are witness to a cynical game in which Amazon duped New York 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,” State Sen. Michael Gianaris and City Council Member Jimmy Van Bramer said in a joint statement earlier this week, angered by the lack of transparency:

Amazon, ranked among the most influential companies in the world, bought themselves monopoly power through a system that amounts to localized tyranny. 

“These cities are apparently offering to pay Amazon to show up instead of the other way around,” Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, according to Vox. “When you reduce the entire consumer goods economy to a single pipeline, that means that all kinds of other companies are going to fall by the wayside. Now you have cities and towns that lack businesses, that lack the headquarters they used to have. Amazon is part of why that’s happening, because they’re killing off all these competing businesses.”

“Amazon now has very fine-grained data and information and, in some cases, future intelligence about [the 238 cities that submitted HQ2 proposals],” she continued, describing the future victories of this big tech institution. “They’re going to use this data to site all kinds of things: stores, warehouses, offices, tech centers. It seems to me that this is the most valuable thing Amazon has gotten out of this, even accounting for the billions of dollars in subsidies that they are likely to walk away with.”