Tuesday, November 13, 2018

House Wins

Well no one was more surprised than I when I heard Nashville was one of the chosen ones for a hub office of Amazon that until today did not exist.  With the promise of 5000 jobs that are largely logistic and customer service based that would mean that these are not the 150K plus as promised as that is nearly 3 times our current average wage at 45K.   Such salaries would require highly skilled and highly educated individuals that simply are not in the region; nor are the schools producing said individuals within the next two years to have the skill set required to take on such highly paid gigs.  It appears that Amazon  will be literally poaching from themselves to even fill any of the first tier jobs.   It is impossible to believe that Amazon  would require or be able to fulfill what is close to 60K in jobs spread over the Northeast  over the next few years.  And if they plan on H1B1 Visas for gigs think again or have they not met Resting Dump Face? Again these are jobs over time and here in Nashville we have heard that tune before, paid the price and the company (HCA) moved the goal line. Don't think Amazon won't do it again.  But in the next three to five years this city will do nothing to actually improve the city but jump to Bezos beck and call not a problem.

Again huge tax breaks spread over years with no definitive start date planned I assume Amazon will start to establish the office when the Nashville Yards site is completed, tentatively scheduled now for 2021.  Recalling that Amazon does also want to establish its own fleet of air and vans akin to Fed Ex and UPS this would put them in range of the FedEx headquarters in Memphis.  There is no space here to build near the airport but Memphis which has seen its airport decline with regards to international travel would be perfect place in which to expand and build said fleet.  Again Cleveland or Pittsburgh (whose airport is amazing) would have worked as well but nowhere near poaching territory of Memphis which Amazon will undoubtedly do in order to get this plan off the ground.  Why do you think Bezos chose Seattle in the first place other than no income tax - its proximity to Microsoft.  And Delta is nearby in Atlanta which again is another regional opportunity that cannot be lost when a man sees no boundaries to his potential growth.

As for the Nashville infrastructure well good luck with that.  I will be long gone and thankfully so before this monstrosity hits the fan and rents, traffic and the ever present need for sidewalks, transit and schools will be addressed.  Given the state of red here, wages will be lower and in turn no demand for collective bargaining as they were clear in their statement that the inter-state relocation's allow for this office to grow in place.  In other words no need to worry that in the long run money will be made but the trade offs in exchange are always in favor of the house and as the rule in Vegas goes - House always wins.

This from Investor's Business Daily:

Sure, New York might gain 25,000 Amazon jobs for its half of HQ2, in exchange for a "great incentive package." But that won't even make a dent in the exodus of other businesses and jobs. From 2010 to 2017, for example, 1 million New Yorkers migrated to other states.
A study by the Upjohn Institute for Employment Research found that states offered a total of $45 billion in various types of business incentives, but the incentive deals didn't correlate with "current or past unemployment or income levels, or with future economic growth."
The deals themselves rarely live up to the hype, and typically cost a fortune for each job created.

Lost Jobs, Lost Taxes

Washington state, for example, gave Boeing $8.7 billion in tax breaks after it threatened to build its 777X somewhere else. Boeing did build the jet there. But the state still lost more than 20,000 Boeing jobs.
North Carolina paid a relatively small sum of $240 million in 2004 for Dell Computer to open a manufacturing plant there. Less than five years later, Dell closed the facility.
The tax-incentive game is also hugely unfair to existing businesses. Michigan spends almost as much in tax incentives as it brings in through corporate income taxes. That means that most businesses in the state are, in effect, subsidizing the lucky few.
State governments would do their taxpayers and their economies much better if, instead of offering up special tax breaks for a select few big companies, they cut taxes across the board and created a climate that was welcoming to all businesses, big and small.

Nashville did not need this to make itself grander than it believes it is.  The type of worker for this position I have to wonder and they will earn more than the average here which will require all employers to raise wages in which to compete; however, with that comes a massive cost of living increase that the average worker will not sustain.   Medical bills and costs rise, the rise of tuition as the public schools here are dumpsters, and of course colleges as with it comes the hoard seeking advanced degrees in which to raise their wages. Add to this the cost of food as it is taxed here and the incidentals are as well, and  finally the big one - property taxes.  There is no way that the average wage will be 150K annually  as it will kill the trades that exist.  But if they do pay as such, the downtown core will finally become a downtown and the hospitality trade will continue to thrive but with fewer employees as who will work those low paying jobs?  Again that could be resolved with immigration but this is a red state and our Government will be building that wall. But if anything does come out of this   the absurd golf carts, pedal bike taverns and other hokey bullshit that clog streets and are an eyesore will likely not and for that alone it will be a good thing.

I read today that someone finally discovered that walking down 6th Ave S to the Adventure Science Center is faster than walking from the same starting point to our Farmer's Market. Well the Market is in desperate need of resuscitation and it is only a 5 minute walk from where the new Amazon offices will be located so again another positive or not depending on how you see this.  Again I am out of here as this is still deep red waters and that will not change despite the announcement.

Even cool blue waters like Los Angeles were relieved:

Cynthia Strathmann, executive director of Strategic Actions for a Just Economy, a Los Angeles nonprofit and one of the letter’s signers, said she is “very happy” HQ2 is going elsewhere. 
“Amazon is not known as a good employer,” she said. “We need employers where workers have some control over their working conditions 
This month, San Francisco voters approved a ballot measure raising taxes on companies with more than $50 million in annual revenue to pay for housing and services related to homelessness. In Mountain View, an initiative hiked business license fees on large companies to pay for transit infrastructure. Google will now owe as much as $3 million a year. 
Economist Amihai Glazer, director of UC Irvine’s Program in Corporate Welfare was skeptical of HQ2 benefits. 
“Amazon played cities against each other,“ he said. “But incentives often lead to winner’s remorse. Last year, for instance, Boston offered $145 million to General Electric [for its new headquarters] but the promised employment has not materialized.”king conditions.” 
In Seattle, she added, “We’ve seen the upward pressure Amazon put on housing costs. We’ve seen it with other tech companies in the Bay Area. City officials are dazzled by the prospect of business expansion without looking at the costs.”

Again I am all for growth but the bullshit associated with it, the lack of transparency and community engagement runs afoul of all the rhetoric Politicians use when it comes to governance.  They are in the back room making deals and they have little concern for what their constituents need in which to thrive.  It all falls down to the bullshit trickle down economics which by now is as laughable as the asshole who devised it, Arthur Laffer.

Here are the incentives for the HQ2 and Nashville site:

NEW YORK CITY – Long Island City
Incentives offered to Amazon:

— Performance-based direct incentives of $1.525 billion, based on 25,000 full-time, high-paying jobs created. This includes a refundable tax credit of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000.
— Cash grant of $325 million based on the square footage of buildings occupied in the next 10 years.
— Amazon will also apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program and New York City’s Relocation and Employment Assistance Program. There was no dollar figure immediately attached to this benefit.
City Benefits:
— More than 25,000 full-time jobs.
— $2.5 billion investment from Amazon.
— Facilities totaling 4 million square feet, with the potential to double in size.
— Projected incremental tax revenue of more than $10 billion over 20 years.

ARLINGTON, VIRGINIA – Neighborhoods close to Reagan National Airport
Incentives offered to Amazon:

— Performance-based direct incentives of $573 million based on 25,000 jobs created with an average wage of over $150,000.
— Cash grant of $23 million over 15 years based on the incremental growth of existing tax on hotel rooms.
City Benefits:
— More than 25,000 full-time jobs with average wage exceeding $150,000.
— $2.5 billion investment from Amazon.
— Facilities totaling 4 million square feet, with the potential to double in size.
— Projected incremental tax revenue of $3.2 billion over 20 years.

Incentives offered to Amazon:

— Performance-based incentives of up to $102 million based on 5,000 jobs created over 7 years with an average wage of over $150,000.
— Cash grant of up to $15 million based on $500 for each job created over the next 7 years.
— Job tax credit to offset franchise and excise taxes from the state of Tennessee of $21.7 million based on $4,500 per new job over the next 7 years.
City Benefits:
— 5,000 full-time jobs with an average wage exceeding $150,000.
— More than $230 million in investment.
— 1 million square feet of energy-efficient office space.
— Estimated incremental tax revenue of more than $1 billion over the next 10 yearsQ2 and Nashville site.

Very little  of these incentives are audited and when they are they are often shown to be lacking from their original intent or agreement.  Shocking, I know. Not really.  And while I am glad to see Nashville diversify from their low paying enterprises I am not sure this will be seen in the community for decades if ever. Again the strong arm of the red state looms large here and by that I mean the Church.   So culture and climate may change as we are undergoing that across the board but anyone who moves here in search of riches and fame may find better success behind the pulpit. This is where the prosperity pulpit thrives and it is one house that always wins.

And Amazon won big on this hand. They have massive data from many cities in which to work one against the other in the future to push for more and in turn the reality is that again this is all hyperbole but then again Amazon has already rechristened the Virginia location as "National Landing." Well it could be worse.

Nashville has again four years to do what they do best, nothing but the rich elite will win big and that is the one time the hand that deals the deck plays the deck and wins the deck.  Dealer calls this one.  This is the moment Nashville will shine and then finally elevate itself into a strong Tier B city.  Again I will be long gone and am grateful for that which this Carpetbagger took will be leaving in better shape than I arrived.  Well I still had to live here so that one levels off.  I fold I guess.  

No comments:

Post a Comment