Amazon's sudden abandonment of its touted New York City project sends a message to companies and elected officials nationwide that it's not enough to promise to create jobs to win public support for new investments in cities already facing growth pains, analysts said.
Instead, business and political leaders need to focus as well on solving problems of gentrification that the new jobs will exacerbate, including housing costs, overcrowded schools and displacement of longtime residents.
The political dynamics in what one urban expert called the "disaster" in New York also highlighted the growing strength of the left wing of the Democratic Party. The emergence of a populist "Tea Party of the Left" led some elected officials to switch sides to oppose the Amazon plan and others to mute their support, according to political observers.
One consequence is that in an era of heightened concern about economic inequality and excessive corporate power, it will be harder than in the past to justify offering huge subsidies to wealthy companies as New York proposed for Amazon.
Amazon stunned New York and the nation this week by announcing that it was cancelling its plan to build a tech campus in the Long Island City neighbourhood of Queens with at least 25,000 jobs paying an average of at least US$150,000 a year.
The company cited local opposition, particularly from state legislators and city council members who threatened to kill some of the subsidies in a total incentives package of up to US$3 billion.
The withdrawal marked a sour end to the Seattle-based company's lengthy, much-hyped search for a second headquarters, in which 238 jurisdictions initially competed for a project that was originally supposed to create 50,000 jobs. In November, Amazon announced that it was splitting the prize - 25,000 jobs apiece to Queens and to Arlington, Virginia.
Amazon is not facing anywhere near as much opposition in Virginia as in New York. Virginia has already given final approval to up to US$750 million in state incentives, and county leaders say their interactions with the online retail giant have gone smoothly.
Arlington is more welcoming partly because it has been trying for years to lure a company to fill commercial office spaces left vacant by a Pentagon withdrawal more than a decade ago. State officials got bipartisan buy-in from Richmond legislators before unveiling the state's subsidy package. Labour unions are more powerful in New York than in Virginia, a right-to-work state.
Elsewhere in the country, the New York pullout could be a landmark event that changes how states and cities go about luring investments to metropolitan areas where the explosive growth of the tech economy is already causing strains, analysts said. Such stresses have already appeared in Amazon's home in Seattle, and in San Francisco.
Companies could be asked to accept smaller subsidies, or none at all, and to agree to do more to support affordable housing and local infrastructure.
"The reality of this economy is facing political backlash," said Amy Liu, director of the Metropolitan Policy Program at the Brookings Institution. "There are overall concerns about wealth concentrations and inequality. . . . There's just a lot less tolerance, particularly in the [urban] markets with concentrated wealth, to accept more of this growth or, worse yet, to subsidize it."
The collapse of Amazon's project in Queens led to an intense round of finger-pointing among the company, politicians who supported the project and those who opposed it. Opinion polls showed strong popular backing for the project in principle, but there was less support for the subsidies. Also, opponents were organized and vocal.
"This is a disaster on all fronts," said Richard Florida, a professor at the University of Toronto School of Cities. He said Amazon erred by picking a site in a part of the city filled with liberal sympathizers in unions and community groups.
"Jeff Bezos should stand up and fire the site selection team," Florida said, referring to Amazon's founder and chief executive, who also owns The Washington Post. "Anyone who is sentient would have said, 'You are putting this in a hotbed of activism.' Somebody didn't do their homework."
Amazon officials disagreed, noting that the level of opposition surprised many in New York, including top elected officials.
Amazon opponents celebrated their victory Thursday evening by dancing to the sounds of mariachis and a Caribbean drum group at a street party in Queens. They smashed open a piñata with Bezos' face on it.
"It was a barrio that beat back the billionaire," said Angeles Solis, lead organizer for Make the Road New York, an organization of low-income immigrants and communities of colour.
Solis said local opponents were most concerned about gentrification and Amazon's partnership with companies that work with Immigration and Customs Enforcement.
"The issues that really resounded with our members and community were displacement, school overcrowding and Amazon's data surveillance practices and partnership with ICE," Solis said.
She said lower-income residents didn't think they'd get many of the 25,000 jobs, a concern echoed by independent analysts.
"New Yorkers have seen these projects come in with a lot of promises, and they don't always work out so well for the working-class people," said Marie Checker, a professor of urban studies at Queens College.
Opponents echoed that worry, predicting the new jobs would go to outsiders whom they derided as "Red Sox fans" who would root against the hometown Yankees.
The rising concerns about gentrification have contributed to growth of an outspoken, anti-corporate wing of the Democratic Party, spurred as well by opposition to President Donald Trump. One of its champions is Rep. Alexandria Ocasio-Cortez, D-N.Y., whose district borders the planned Amazon site and who helped lead the opposition to the project.
One consequence was that some political leaders who originally supported the Amazon plan changed their minds, and other supporters declined to speak up strongly in favour of the project.
Those who switched positions included state Senator Michael Gianaris, D-Queens, the deputy majority leader in the Senate; Deputy Leader of the City Council James Van Bramer, D-Queens; and Manhattan Borough President Gale Brewer, also a Democrat.
They have said they changed their position because the subsidies package was excessive and the deal with Amazon was structured to avoid the normal review process for city land-use decisions. Political observers said another factor was fear of a left-wing primary opponent in future elections.
"To the extent that some elected officials may be concerned that even if they are fairly left, that they could face a challenge from the left . . . that could be a factor in goading officials to be more visible on this than they otherwise would have been," said Jarrett Murphy, executive editor of City Limits, a nonprofit investigative news site.
- Washington Post