Fwd: Amazon fulfillment centers come with a hefty price to taxpayers: tax breaks + food stamps funding to feed Amazon workers

["Dave Farber" <dave () farber net>]

---------- Forwarded message ---------
From: Kimi Wei <kimi () thewei com>
Date: Thu, Jan 11, 2018 at 10:05 AM
Subject: Amazon fulfillment centers come with a hefty price to taxpayers:
tax breaks + food stamps funding to feed Amazon workers
To: David Farber <dave () farber net>


https://newrepublic.com/article/146540/amazon-thriving-thanks-taxpayer-dollars?utm_content=buffer26bae&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Amazon Is Thriving Thanks to Taxpayer Dollars
The tech giant has received more than $1 billion in tax breaks. The
government is also funding food stamps for many of its workers.

BY DAVID DAYEN  January 9, 2018

As Amazon builds up its distribution network, it’s hit on a trick long
practiced by the likes of Walmart: using the federal government to help pay
its workers. A new study by Policy Matters Ohio found that more than 700
Amazon employees receive food stamps, or more than 10 percent of the tech
giant’s 6,000-strong workforce in the state. Some of those recipients may
be part-time help, but the fact that they need federal aid to survive
suggests that they would be happy to work more. “Why is this giant,
successful company offering such limited pay and hours of work that many of
its workers need help buying food?” asked Zach Schiller, research director
at Policy Matters.

Amazon ranks nineteenth among Ohio businesses in number of employees on
food stamps, behind Walmart, McDonald’s, and Kroger. But Amazon is only the
fifty-third-largest employer in Ohio, suggesting a higher rate of employees
on food stamps than its counterparts. More important, Amazon has obtained
at least $123 million in state tax incentives to place warehouse and data
center locations in Ohio. This reflects a perverse form of double-dipping:
Amazon gets a bounty to create jobs in Ohio, and then a good chunk of the
jobs are so low-paying that workers have to seek federal assistance,
providing a second subsidy for the e-commerce giant.

Cities and states are offering Amazon eye-popping tax subsidies to win its
second headquarters. But smaller, existing tax incentives have already made
Amazon the leading recipient of so-called “economic development” subsidies
in the country. According to Good Jobs First, a non-profit that tracks
state tax breaks, since 2000 Amazon has received $1.115 billion in 129
communities in the U.S., rocketing past the previous leader in this
category: Walmart.

This was the result of a concerted strategy by Amazon. In 2012, the company
hired Michael Grella, a specialist in economic development tax credits. The
company created an entire team just to seek out these subsidies, in a
continuation of its strategy to work the tax code to its advantage—first by
not collecting sales tax and offering an effective discount on every
product, and more recently to lower the cost of building new shipping
facilities.

If a city or state shells out millions of dollars to attract Amazon, the
least it can do is ensure that the resulting jobs lift people out of
poverty. When Ohio gave Amazon $17 million for two distribution centers in
Licking County, Amazon promised to hire at least 2,000 employees with a
payroll of $60 million. That comes out to $30,000 per worker, barely above
the $26,208 poverty line. Amazon subsequently hired many more employees
than that baseline, but payroll has remained so low that a healthy number
have to turn to food stamps, as the Policy Matters Ohio report shows.

The famously grueling jobs in Amazon warehouses have also created strains
on local services. Bloomberg reported in October that emergency responders
visit the Amazon warehouse in Licking County at least once a day to attend
to an injured worker. Local residents have to fund those forays because
Amazon pays no property tax in Licking County under their subsidy deal.
Voters approved a $6.5 million property tax levy in November to keep the
Fire Department operational.

The largesse bestowed on Amazon in Ohio is incredible. A deal for three
Amazon data centers netted Amazon a 15-year exemption on property and sales
taxes worth $77 million, a $4 million offset to payroll costs, and $1.4
million in cash, and only committed the company to 1,000 full-time jobs. A
sorting facility in Twinsburg, Ohio, would only have ten full-time jobs,
with the rest part-time or seasonal. No matter: Twinsburg gave a partial
property tax exemption worth $600,000. Another warehouse opening in Euclid,
outside of Cleveland, has yet to yield details on what the state kicked in.

Most of these deals go through a privatized economic development agency
called JobsOhio, which doesn’t require as much transparency as a public
agency about what taxpayers are getting for their money. JobsOhio continues
to defend the Amazon deals as good for the state, claiming that full-time
warehouse workers receive 30 percent higher compensation than the national
retail worker average. That figure doesn’t bear out compared to independent
data reports from the Bureau of Labor Statistics, which puts Amazon wages
15 percent below the average wage in 11 metro areas, at only $11.96 an
hour, a number roughly equivalent to the average retail wage.

Amazon CEO Jeff Bezos has a net worth of about $100 billion. Take that down
to $99.5 billion and nobody working at any Amazon facility in America would
need assistance to eat. But this is as much a problem with state and local
governments who feel the need to give a fantastically wealthy corporation
incentives to build facilities that are critical to its business model.

Amazon’s model of two-day or even same-day delivery of tens of thousands of
products through its Prime service demands a large footprint across the
country. If Amazon wants to live up to its shipping promises, they need to
build warehouses virtually everywhere, beyond the roughly 140 fulfillment
centers in operation today. “It requires at least one and sometimes
multiple facilities in or near every major consumer market in the U.S.,”
notes Good Jobs First in a report on Amazon subsidies.

So it’s not clear why any state or local government would pay Amazon to
build something it already must build. Communities seeking jobs may feel
the need to compete with neighbors to attract an Amazon warehouse. But to
be as convenient as the neighborhood store, Amazon has to physically exist
in the neighborhood. Any city with decent roads and a lot of Prime members
will eventually become a candidate for a warehouse; they don’t need to top
it off with a corporate handout.

If taxpayer dollars do keep flowing, governments have a duty to impose
stringent standards for the number of jobs and the level of salaries and
benefits that will result—and threaten to claw back the subsidies if those
parameters are not met.

Economic development incentives don’t create jobs as much as they shift
them around, pitting communities against one another for who can pony up
the most corporate welfare. Companies rely on desperation in these
communities, knowing they can win valuable incentives just by dangling a
few low-wage jobs. But why aren’t they demanding that companies, in
exchange for job-creation tax incentives, pay those new workers a livable
wage?



Kimi Wei
kimi () thewei com  @kimiwei
facebook.com/thekimiwei
862-203-8814



-------------------------------------------
Archives: https://www.listbox.com/member/archive/247/=now
RSS Feed: https://www.listbox.com/member/archive/rss/247/18849915-ae8fa580
Modify Your Subscription: https://www.listbox.com/member/?member_id=18849915&id_secret=18849915-aa268125
Unsubscribe Now: 
https://www.listbox.com/unsubscribe/?member_id=18849915&id_secret=18849915-32545cb4&post_id=20180111101459:2EA33A7C-F6E2-11E7-ADB7-A5BBE95F120D
Powered by Listbox: http://www.listbox.com