Numerous New Yorkers cheered last week’s news that Amazon chosen Queens for its HQ2 project. In any case, others see the move one major demonstration of corporate welfare. Given the prevalence of that second view, some point of view is required. Since while considering Amazon’s arrangement a giveaway might be convenient, it’s likewise deceptive.
First of all, New York’s incentives to Amazon by definition aren’t a handout. Approximately 85 percent, or $2.5 billion, of the entire bundle is performance-based, dependent upon the making of tens of thousands of employments and sizable investments in the local community. The money would originate from a pre-existing economic development budget, also, not funds that generally go to public services like transit and schools.
This fact leads to another: The terms offered to Amazon are neither anomalous nor unprecedented. States and cities across the country routinely offer such packages to firms through existing economic-development budgets. Companies of all shapes and sizes seek them out, because incentives are often a major tiebreaker between two locales. The result is advantageous for both business and municipalities.
In the case of Amazon in New York, the benefits to the city include 25,000 to 40,000 direct careers with average salaries north of $150,000.
Then there are the 1,300 annual construction jobs over a multiyear period. All told, the jobs will yield more than $3.75 billion in employee earnings over 10 years, per the governor’s office, all of it injected into an area that’s historically relied on manufacturing.
The result is a deep revitalization of Long Island City’s job base and its transition to a technology-enabled economy. The ultimate impact will be $12 billion to $27 billion in direct economic growth. Taken together with the multiplier effect — each new high-tech job in a city creates five additional non-tech jobs, according to academic research — the benefits of the incentives package far outweigh the cost.
Words like “bailout” or “corporate greed” are therefore inapt. A more fitting way to think about the deal would be as an investment — one not just in our economy or land but our tech sector and talent pool.
It wasn’t just dollars and cents that attracted Amazon to New York, after all. The company was attracted to our world-class tech ecosystem. Amazon appreciated that ecosystem’s potential to flourish and benefit all New Yorkers.
A few metrics are telling. Right now New York houses more than 7,000 startups, which translate into more than 326,000 jobs and a collective valuation of $71 billion. Other figures show that we have the quickest hiring timetable for engineers (on average 24 days) and more than 100 tech incubators focused on cultivating local talent. Venture capital funds grew 41 percent in 2017 alone.
For a company like Amazon, numbers like these are proof that New York has the capital, people and potential to support a fast-growing tech company.
For all this, we can thank public officials and an education system that has fostered a broader culture of skills-based learning in New York. Gov. Cuomo has made a $30 million commitment to computer-science education, and Mayor de Blasio has likewise created several programs supporting female entrepreneurship, not to mention guaranteeing computer-science education in all public schools this decade. Former Mayor Bloomberg, meanwhile, helped launch Cornell Tech in 2012, when New York was budding into the tech incubator it has since become.
The result was a total package, including incentives and an environment that Amazon couldn’t pass up.
Yes, financial terms were a part of this, but they were neither outlandish nor without requirements. Yes, some will worry about the influence of a major company moving in, but given our city’s vibrancy, there can be no doubt that Amazon will become part of New York rather than the other way around.
In the end, 25,000 good jobs were going somewhere in North America. I, for one, am glad they will be here in New York, and appreciate our mayor and governor for making it so.