Market Watch: The New York City / Amazon Fiasco
Amazon and the New York state parted ways on 14th Feb when the tech giant announced that it plans for scrapping the idea of opening a second headquarters in Long Island City. The statement from Amazon came after the company faced intense public backslash from a handful of local residents. While 70 percent of the New Yorkers were in agreement with Amazon coming to Long Island City, a small vocal group of local minorities made the richest man take a step back.
The search for the next headquarters of Amazon has been quite intriguing. With almost every state offering tax concession ‘deals’ and government aid to the company to come to their state, Amazon decided to make New York their new home last year in June. Since then, New York has become a battleground between the business-minded state government and the progressive local resident.
These local progressive organizations raised concerns about the state ‘paying,’ Amazon, in tax incentives to camp out in New York. Amazon didn’t pick the Empire State to be their next destination for no reason. Governor Cuomo and Mayor De Blasio worked for a deal which no company could say no to. To convince the e-commerce force to nail down their headquarter in Long Island City, New York offered Amazon $ 3 billion in “performance-based incentives” and subsidies over the course of a decade.
The company, in turn, promised to create more than 25,000 jobs with a median salary of $150,000 in the next decade. With a promise to invest $5 billion into the new headquarters, Amazon was supposed to create 1,300 construction jobs on an average of the 15-year construction period.
Governor Cuomo, the chief architect of this deal, said that Amazon coming to Long Island City would be “the state's largest economic development transaction in modern history.” Residents, angry with the state’s deal with Amazon on multiple grounds took their resistance to the streets. Amazon saw a growing backlash on social media when New Yorkers started the #NoAmazonNYC and #HQ2Scam which gained some of momentum.
Labor unions and progressive grassroots organizations took the fight to the streets with a number of protests to show their dislike about Amazon trying to plant its feet in one of the most densely populated areas in the world. Residents in Queens feared that Amazon coming to the Big Apple, might raise the living costs and drive them further away from the city and their livelihoods.
New York, being the most populated city of the country would be flushed with thousands of new residents driving the housing market to the roof. In the last seven years, since the opening of Amazon headquarters in Seattle, home prices have seen a steep rise of 83 percent and renters being asked to pay 47 percent more than before.
Activists were also concerned about Amazon making the job market highly competitive. Residents were concerned that Amazon moving in would dominate the job market in Long Island City driving unskilled labor towards the Long Island. Amazon also didn't want their workers to unionize, which became the cornerstone of the far left’s argument of how this could lead to unfair treatment in the labor market.
Freshman Representative Alexandria Ocasio Cortez became the face of the protest after publicly slamming Amazon of robbing New York. AOC, who believed that New York is paying Amazon in an attempt to woo the tech giant, campaigned hard to curb the deal away.
Residents and AOC demanded that if the state has $3 billion to give to Amazon in incentives, why doesn’t the state invest the same money to improve transportation, fund the New York City Housing Authority and uplift local entrepreneurs.
Governor Cuomo came forward to ease the confusion and explained that New York never intended on paying to Amazon but rather charge lower taxes when Amazon delivers on its promises of creating 25,000 jobs.
“When and if those revenues are realized, the government would effectively reduce their $1 billion payment by about $100 million for a net to New York of approximately $900 million. New York doesn't give Amazon $100 million. Amazon gives New York $900 million,” Gov. Cuomo wrote in his Op-ed.
While the far left is celebrating the victory for curbing away the biggest tech giant and refusing 25,000 jobs with a median salary of $150,000, AOC and her niche group of supporters came under fire.
Even the members of the Democratic party came forward to express their disgust about the situation. Governor Cuomo, 61, regarded the supposed loss of $27 billion in tax revenue from Amazon as the “greatest tragedy that I have seen since I have been in government.”
In the fears of driving the local housing market up and making neighborhood’s exclusive domain to the rich and educated, Long Island City activists might have swung the bat in the wrong direction. Losing 25,000 jobs and billions in tax revenue over the next few decades, residents can at least be satisfied with giving Jeff Bezos a run for his money.
Citibank that was supposed to move 1,100 of its workers from Long Island City to their Tribeca and New York offices to make space for Amazon, now, also hangs in balance. If Citibank decides to move forward with their plans, Long Island City might lose two of the biggest employers in the world to a handful of loud protesters.