AOC, Gianaris And Other NY Politicians Should Apologize To American Workers For Amazon Pullout

In a decision with massive consequences to the labor market, Amazon announced yesterday that it is pulling out of it’s plans to build HQ2 in New York as a result of unwillingness to cooperate from key politicians in the state.  Criticism, from the likes of Congresswoman Alexandria Ocasio-Cortez and State Senator Michael Gianaris, has centered around the $3 billion in tax deferments and subsidies that Amazon would receive over a decade, dependent on the creation of thousands of new high-paying jobs in New York City.

Congresswoman Alexandria Ocasio-Cortez, in a classic example of what hip-hop artist Drake would refer to as trigger fingers [turning to] Twitter fingers, took to her favorite medium after the news broke proclaiming victory for the local workers in “defeating the power of the richest man in the world.” She followed this up by noting the $3 billion was subsidizing those 25,000 jobs and would now be available to fund more worthy activities. The issue with this take is that the incentives were based on future expected payouts that now don’t exist—there is no secret $3 billion money pile that can be reallocated. It’s a lazy take that spreads misinformation, displays a stunning lack of economic knowledge, and takes a highly complicated and nuanced issue and boils it down to a black and white soundbite shouted from atop a proverbial high horse.  

The freshman congresswoman, however, is hardly the only one at fault. In reality, she was scarcely involved in the deal. The fallout is far more tied to local politicians such as Michael Gianaris and activist groups who were unyielding in their public criticism and adopted an uncompromising stance on necessary approvals and future work even after the announcement.  

However, the misunderstanding of the deal structure, especially given the reach of Representative Ocasio-Cortez’s platform, is problematic because it underpins a larger problem that is becoming pervasive in American politics: the rise of the pandering populist.

Politicians on both sides of the aisle are jumping on populist narratives. The rising one on the left has become the villainization of Amazon, Bezos and the billionaire corporate class as a whole. The largest issue with this movement, especially in how it’s played out in NYC, is that this populism isn’t actually representative of the majority. In a classic case of the squeaky wheel getting the grease, populist politicians are embracing simplified narratives to score political points with short-term decision making replacing the long-term will of the people. Amazon cites a 70% favorability amongst New Yorkers that want Amazon to enter the city in their statement announcing the pullout. A third-party poll by Siena College Research Institute further confirms the will of the majority citing 56% as in-favor of the corporation entering the city. Catering to the loudest voice, in lieu of supporting the democratic will, has profound consequences if not addressed.

What impact will this decision have on the workforce in NYC?

• Direct Job Creation: Amazon had projected out 25,000 Amazon jobs over the next decade with average salaries ranging from $100,000 to $150,000. In addition to corporate hires, the company was to immediately hire 1,300 blue-collar construction workers and invest $5 million for workforce development initiatives locally with job training sessions and job fairs. The estimated taxes from the direct hires alone are well over a billion dollars, and this is before accounting for additional consumption, housing spend and local community growth from the newly created jobs.
• Indirect Job Creation: The impact of the immediate infusion of thousands of high-paying jobs in cities cannot be understated in how it affects local communities. The working middle-class is built on local entrepreneurship, service roles, and other jobs that are highly correlated with increased demand and consumption. For example, the service sector alone would have seen a boom in the need for more restaurants, hotels and bars. Studies indicated that the indirect consequences are as high as 80,000 additional jobs that would have been created. These jobs would have boosted local consumption, increased tax coffers, and provided further employment opportunity in a historically struggling community that has seen rents decline by double digit percentages and has one of the largest housing projects with mean wages below the poverty line.
• Network Effect Opportunity Cost: Someone like Amazon building a hub in NYC would have further bolstered the city as a technology hub and brought more technologists into the local ecosystem. Thousands of new technology-focused hires would have eventually led to hundreds of startups, creating a perpetual cycle of wealth generation and job creation and reinforcing NYC as a technology hub for the future. This “brain drain” will have severe opportunity cost consequences in reinforcing NYC as an innovation hub.

The consequences of this process go beyond NYC job creation. These issues are complicated with neither side being blameless. Amazon’s lack of transparency coupled with the optics of it demanding subsidies behind closed doors in a 200-plus city melee is problematic. Further, Amazon’s move impacts local communities through gentrification, long-term rent increases, and work homogeneity - issues that need to be addressed.

The problem, however, is that these issues never see the light of day as politicians pandering to the populist narrative often shut the door on nuance or discussion. A US News Article by Jared Brey quotes a local activist with Queens Neighborhood United as stating, “We pushed for no concessions from the start. We made sure to stand our ground.” The article goes on to quote Democratic New York State Senator Julia Salazar in describing the pullout as a “turning point for the ability of working people in New York to organize for their interests against the billionaire class.” These quotes are telling as they paint local politicians and activists as more focused on “beating the billionaire” than serving their community. Joe Nocera, in an article in Bloomberg, describes a call he received from a local community activist named Billy Robinson living in Queensbridge Houses, near where the headquarters would have been built:

“I want to know what plans do they have to replace the 1,500 jobs our community was going to get from the Amazon deal,” Robinson said. “Hell, I’d take half that — what plans do they have to create 750 jobs? What is the backup plan? You kicked the big bad company to the curb,” he said. “So now what are you going to do?”

The harsh reality for Mr. Robinson and other New Yorkers is that there is no back up plan. The rise of the pandering populist politicians, who seem to service a narrative more than the workforce, is a failure in governance and representative democracy. As the labor markets change dramatically, compromise, nuance, and the ability to work with corporate counterparts will be key to creating the best workforce outcomes.

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