On Amazon’s HQ2: Finding gray areas in the HQ2 debacle

Print More

The fight over the new site for Amazon’s HQ2 had cities begging and pleading with Amazon, offering massive tax incentives to make themselves more appealing to the company. My own city, Buffalo, put forward $500 million in tax breaks and offered $700 million in local tax incentives, but those numbers seem inconsequential in the face of Amazon, which hit a market cap of $1 trillion six months ago. And still it continues to expand; acquisitions like Whole Foods have added new arms on the tech giant, reaching farther and farther into American households. 

But the plan to build new headquarters in Long Island City, Queens, sparked massive local resistance. Concerns voiced by residents highlighted a long-festering problem for New York: the exodus of tenants who, with the influx of economic growth, could no longer afford apartments in their neighborhoods. While Mayor Bill DeBlasio said that he would commit to affordable housing for low-income New Yorkers, that promise has yet to be realized. In addition, New York State unions voiced concerns about the fact that Amazon is not a unionized company, even though Amazon agreed to provide thousands of union positions in construction. Amazon, which frequently makes headlines for its abysmal working conditions, appeared to be a threat in a state with the most powerful unions in the country. The third issue was the large amount of money that was offered to Amazon by New York, a figure in the realm of $3 billion. Many argued that cities should not have to sell themselves to Amazon in hopes of landing the HQ2 contract and that it was insulting to offer such a corporation money. Residents of Long Island City also rightfully feared gentrification due to rising housing prices that would have resulted from an increased demand for housing when Amazon moved in. New York has done poorly at addressing gentrification in the past, passing over an essential concern for families living in neighborhoods yet untouched by Wall Street. 

But – and hear me out – New York needs those jobs. The city’s growing problem is diversification, or rather, the lack thereof. New York essentially has three industries: real estate, tourism and Wall Street. HQ2 would have brought another sector to the city, one sorely needed to diversify New York’s economic portfolio. 25,000-40,000 jobs would have been created. An Amazon training center, despite its own issues, would have provided opportunities to lift low-income New Yorkers into higher-paying positions. It’s also important to consider that New York didn’t actually give Amazon anything money-wise. That $3 billion figure that’s been tossed around was made up of tax relief, not government subsidies. True, $3 billion is a lot – but New York would have made $27 billion in tax revenue in exchange. Does it feel like a slap in the face to all of the residents of Long Island City, where the poverty rate is 16.8 percent, to offer such a company $3 billion in tax relief? Absolutely. But $27 billion is a lot of money that could have been used to enrich Long Island City and fund progressive policies throughout the state. If you want progressive policies, like New York’s Excelsior Scholarship program, to continue to evolve and be created, there has to be a solid tax base.  

Would Amazon’s HQ2 have solved problems or created immediate fixes? Absolutely not. The deal had flaws; I’m not denying that. In no way should people have to decide between the neighborhoods they love and making ends meet. But New York needs tech sector jobs because the city  is becoming dangerously dependent on three industries. While concerns about rising housing prices should have been addressed, and the amount of money offered to Amazon in tax relief was a hard pill to swallow, the monetary reward for New York was nothing to be scoffed at. I’m not suggesting that the deal was perfect; it was anything but. It is, however, incredibly important to realize that this is not a one-sided issue. Chalking this up as a total victory for unions and the common man who stuck it to corporate America overlooks many of the practical ramifications of having HQ2. Long Island City just lost up to 40,000 jobs and $27 billion in tax revenue. This is not a win, nor is it a loss. It’s just complicated.

 Rebecca Kuo ’22 is from Buffalo, N.Y.