Pratt Center

October 17, 2017

Point-Counterpoint: Should New York City Host Amazon's New Headquarters?

This Opinion article appeared in City and State NY on October 17th, 2017.

Amazon has put out a call for cities to offer space and financial incentives for its second headquarters, which, the company says, will someday employ 50,000 in 8 million square feet of new office space. Cities across the United States and Canada are now bidding for that prize and it appears New York City is no exception.

Amazon’s projection of 50,000 jobs sounds like a big prize but New York might do just as well without it. That number is over 17 years or less than 3,000 jobs per year. New York has actually been adding an average of 23,500 jobs quarter since 2009. While capturing Amazon might be a big public relations benefit there would be a cost in financial incentives that would have to be paid by other businesses. New York would gain greater economic stability by adding 100 businesses employing an average of 30 people without the cost of any tax benefits or incentives.

Plus the challenge in New York City is not creating new businesses; it’s helping them grow. New York is a great naturally occurring incubator. But we have a commercial space shortage that has led or is leading to zoning changes in East Midtown, the Garment Center, downtown Brooklyn and Long Island City and possibly East New York, the latest neighborhood to be proposed as a new office hub. Adding 8 million square feet for Amazon is not going to address our existing shortage.

Finally, the de Blasio administration has committed itself to pioneering a model for more equitable economic growth – i.e. providing good jobs that are accessible to New York’s extraordinarily diverse workforce – and it is hard to see how Amazon is going to advance that unless the city extracts commitments from the company to engage in new ways with the existing communities.

While capturing Amazon might be a big public relations benefit there would be a cost in financial incentives that would have to be paid by other businesses.

There are some big obstacles to Amazon fitting into an equitable growth model. First, there is the skills mismatch and the lack of an infrastructure connecting our young adults to tech firms. A report by the Center for an Urban Future found that blacks and Hispanics make up only 9 percent and 11 percent of the tech workforce. Another study by CUNY’s Labor Market Information Service determined that people with college or graduate degrees held approximately 75 percent of the jobs in Brooklyn’s tech sector. But the high school graduation rate for blacks and Latinos in New York City is 65.4 percent and 64 percent respectively and only about one-third of these graduates meet CUNY college admission standards.

Creating jobs in high tech can exacerbate the growth in income disparity, which is already leading to the extraordinarily rapid changes and displacement we see in many neighborhoods. A study by Richard Florida showed that cities that “successfully” emphasized creative class strategies saw wage gains wiped out by increased housing costs for most of their residents.

Finally, Amazon may just be an online Walmart, creating few new jobs when cities factor in the loss elsewhere in their retail sector, what Greg LeRoy at Good Jobs First calls “retail churn.” Their warehouse jobs, for example, are generally non-union and pay less than $15 per hour.

If City Hall submits a bid, it should insist that Amazon work with our schools and community groups to maximize the synergy with and benefits to New Yorkers and neighborhoods. It should seek commitments on job quality and resident employment. It should work with schools to create new infrastructure to increase awareness of the array of opportunities opening up and build pathways into those careers.  City Hall has begun to assemble some of the building blocks of this infrastructure, such as the Tech Talent Pipeline and Coding For All, but many more blocks are needed and Amazon should help deliver them.  For example, the city could ask Amazon to commit to at least ten paid internships for high school students for every 100 employees and to work with teaches to develop curriculum and even co-teach classes to ensure that our students learn both the most relevant and current practices and substance for their future work environment.

Finally, the city and Amazon need to acknowledge how 50,000 new high tech office jobs may impact on housing in a city already facing a shortage and contribute to a fund that underwrites services to protect and create affordable housing.


Read the full article here.