- Amazon will receive more than $2 billion in incentives from the two states.
- The company plans to create a total of 50,000 jobs at an average wage of $150,000.
- The announcement has caused controversy, raising concerns about rising rent prices and potentially lost resources in communities surrounding the upcoming developments.
Amazon announced Tuesday its plans to split its second headquarters between New York City and Northern Virginia, ending a year-long competition in which more than 230 cities offered billions in incentives for a chance to host the retail giant.
One part of the headquarters will be built in Long Island City in Queens, the other in Arlington, located in the metro area of Washington, D.C. Amazon will invest $5 billion across the new offices and will eventually hire more than 25,000 employees at each location.
Amazon said the average wage of jobs at both new offices will be $150,000.
The company plans to receive $1.525 billion in incentives for its New York City headquarters, and $573 million in incentives for its Arlington offices. Those incentives come mostly in the form of tax breaks. In other words, New York will effectively pay $48,000 for each job created over 10 years, while Virginia will pay $22,000 for each job created over 12 years.
Amazon estimates these tax breaks will be offset by tax revenue generated from its new offices during those same periods: $10 billion in New York and $3.2 billion in Virginia.
The two new offices will supplement Amazon’s existing headquarters in Seattle. On Tuesday, Amazon also announced the upcoming opening of an operations center in Nashville that will hire about 5,000 employees.
Gov. Ralph Northam of Virginia said Amazon’s move was a “big win” for the state, adding that the partnership would include “investments in our education and transportation infrastructure that will bolster the features that make Virginia so attractive: a strong and talented workforce, a stable and competitive business climate, and a world-class higher education system.”
On Monday, New York City Mayor Bill de Blasio celebrated the development, but stopped short of confirming the move.
“We’re talking about the single biggest economic development deal in the history of New York City,” he said
De Blasio went on to reassure critics who argue Amazon’s move will hurt local communities, saying the city is “working closely together to make sure Amazon’s expansion is planned smartly, and to ensure this fast growing neighborhood has the transportation, schools, and infrastructure it needs.”
But incoming Rep. Alexandria Ocasio-Cortez, who represents New York’s 14th congressional district, was less optimistic, writing on Twitter that the community’s response was “outrage.”
Another primary concern is how the sudden influx of tech and executive jobs will affect housing prices in areas that have already seen soaring rent prices in past decades.
“New York and Washington are like other big cities, facing housing poor and rent poor populations,” Greg LeRoy, executive director of Good Jobs First, a national policy group that advocates corporate and government accountability in economic development, told NBC News. “People are spending bigger chunks of their income renting and this is going to only make pressure for housing affordability worse.”
Others have noted how U.S. states and cities waste billions of dollars each year trying to woo big companies into planting down roots, such as Derek Thompson, who likened Amazon’s year-long competition to a gaudy national beauty contest. He wrote in an article for The Atlantic:
“Every year, American cities and states spend up to $90 billion in tax breaks and cash grants to urge companies to move among states. That’s more than the federal government spends on housing, education, or infrastructure. And since cities and states can’t print money or run steep deficits, these deals take scarce resources from everything local governments would otherwise pay for, such as schools, roads, police, and prisons.”
Some residents in Queens have more immediate concerns: traffic.
“Long Island City is congested as it is already,” Queens resident Joe Conde, 40, told USA Today. “I don’t know how on earth more people can fit. I guess it could be good to bring more jobs, but the traffic is already bad enough around here with all the construction and new residents.”
Amazon said hiring for its new offices will begin in 2019.