It’s not surprising that Amazon’s recent announcement that they are abandoning their plans to add 25,000 jobs in New York after a year-long and much anticipated competition for HQ2 has reopened the debate about economic development incentives. The move came soon after Virginia’s General Assembly had approved the incentives offered to Amazon for their new location in Northern Virginia. Critics in New York argued that the $3 billion package offered to Amazon, arguably the world’s highest-valued company owned by the richest man in the world, was detrimental to New York State taxpayers.
Those rejecting incentives are often against anything that benefits a large company, claiming that incentives such as offered in New York to any company that expands, regardless of need, unnecessarily subsidize already successful enterprises. And, it is true that best practice for economic development incentives includes a “but for” test – a company asking for incentives should prove that they would not be able to make the investment without the added financial assistance.
This need, often a very real challenge in a development deal, is behind project financing incentives such as Historic Preservation Tax Credits, New Market Tax Credits and Tax Increment Financing. These incentives go a long way to increasing investment in properties and communities that are in distress and have been proven empirically to have long-term local economic benefits.
The commentary around Amazon, however, has also tapped into to a rising anti-tech sentiment. Giants such as Amazon, Google, and Facebook have come under increasing scrutiny in recent years for their lack of diversity, for their ethics, for increasing housing costs in their communities and for killing jobs. The same folks who are terrified of autonomous cars, artificial intelligence and robots now don’t support tech at all.
This is short-sighted at best. Those of us in the innovation-based economic development community have been saying for decades that high-growth companies that start entrepreneurially can go on to become large employers, paying good wages, and supporting economic growth. Amazon, Google and Facebook, along with thousands of other tech companies that have emerged in the past 25 years, are the poster children for this economic development strategy, and have indeed created millions of jobs and billions in economic value.
And their success demonstrates another economic growth reality – that while each wave of technology displaces an old way of doing things and old jobs, many more new ones emerge. We don’t mourn the demise of buggy-whip manufacturing jobs while we welcome the advent of coding jobs or wind-turbine technician positions. What is also apparent is that many workers need training and assistance to blaze their own trail through this changing landscape, but that has also always been true.
So, if you don’t want Amazon in your community, so be it. But don’t extend that ban to the entrepreneurial and innovative tech (and non-tech) companies around you that can contribute a great deal to the vibrancy and quality of place where you live.
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