A recent study published by the Economic Policy Institute (EPI) might have communities rethinking the costs and benefits of investing in Amazon warehouses.
The report announced that US state and local governments have offered Amazon a total of over $1 billion in tax revenue to lure Amazon warehouses to their communities. Amazon has expanded their operation from 10 warehousing centers in 2000 to approximately 100 centers across the nation today. Why are cities investing so heavily in Amazon locations? Warehouses can employ anywhere from hundreds to thousands of people, which is fairly enticing for cities that have high rates of unemployment or lack a diverse economic base. Not to mention the attractive contributions that Amazon provides to communities where their employees live.
But, the new EPI’s report argues that the job growth generated by Amazon warehouses is merely an exaggerated perception. Many cities may notice the percentage of warehousing sector employment increase (30%), but Amazon warehouses are not a silver bullet to significantly boost the overall employment rate. In fact, the report discovered that in some counties the total employment rate had actually decreased since Amazon warehouses opened.
The release of the study comes at an interesting time. Last fall, Amazon announced their search for a second headquarters (HQ2). Over 200 cities applied for the bid. The new headquarters was estimated to generate over 50,000 jobs and add $5 billion to the local economy. Cities offered amazing and enticing planning strategies to competitively attract Amazon to select their proposal; many offered millions of dollars in tax incentives, promises to invest in rapid transportation modes, and some even offered to de-annex land for Amazon, and the list goes on. But latest EPI report raises questions about these incentives and enticements; it joins a small but growing chorus of people who expressed concerns about offering Amazon deals that may be too good to be true.
The EPI Report urges local communities to slow their roll on handing out tax incentives to Amazon and to stop looking for such short-term solutions. Their advice to cities? Focus on long-term strategies and more traditional investments to spur economic development—specifically, invest in efficient transportation and quality public education.