My Take: It might take a generation for New York to recover from the loss of Amazon’s HQ2.

September 27th, 2019

I know that the news cycle has moved on to other national and world events, but we are still noodling on the Amazon HQ2 debacle. Here’s the issue in a nutshell: In November, after a nationwide search for a location for its second headquarters, Amazon announced NYC would be the place. Gov. Andrew Cuomo and NYC Mayor Bill De Blasio called it one of the biggest economic victories for the city, ever.

I was surprised when NYC got it. But I was even more surprised when it was lost. It all fell apart and Amazon cancelled its plans in the face of some very loud public and political backlash. At GetFive, we’ve mostly been writing about policy decisions relevant to the HR community coming from the right. Here’s a doozy from the left.

What was the problem with the deal? Not everyone was excited by the prospect of 40,000 new jobs over the next two decades with an average salary of $150,000 (why?) nor were they supportive of the $3 billion in government subsidies Amazon would get from the deal. One argument said the city could use that same $3 billion for other things like affordable housing and public transportation upgrades, but that smacked of economic naivete. They’re shocked, just shocked that a city is offering incentives to locate there, when that’s been business as usual since the 1930s. And it’s not like the city has that same $3 billion sitting around that it could suddenly use instead of giving those breaks to Amazon. That’s not how it works. The way it works is this, as reported by the WSJ: Amazon would have generated $9 in tax revenues for every $1 in tax breaks they got. So opponents of the deal didn’t save the city any money. They lost it.

Critics of the HQ2 deal also weren’t cognizant of the fact that Amazon’s entre into New York would do much to solidify us as the second city of technology in this country. NYC needs more than Wall Street to secure its future. With the expansion of Google, Facebook and LinkedIn, NYC was on its way to being a tech powerhouse, and Amazon was icing on the cake. New York’s future can’t rest on its past, and as Columbia historian Kenneth T. Jackson wrote in the New York Times last week: “A city that rejects economic opportunity will lose its status as the center of the business world.” Very true.

Think about all the one-car plant or one-coal plant towns that somehow are injected into the national political discourse. Broad economic policies – like tariffs, quotas and fuel economy standards – are influenced and shaped by the fate of a single car plant at times. Compare that to the deal between New York City/New York State and Amazon, which was almost entirely about sharing the benefits of economic growth and new tech jobs. Not herculean, uneconomic efforts to save a few jobs in order to gain many votes. 

As it is, NYC lost the favorable long-term economic impact associated with putting all of these coveted “new collar” jobs here in the city. But the hard left, which is dividing the Democratic party, claims it as a win.

What did they win, exactly?

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