Amazon’s promise of jobs and economic boom may come up short, according to analysis from the Economic Policy Institute (EPI). Luring big economic concessions from cities in order to move a headline item there is a tried-and-true formula long used by the National Football League (NFL) to entice cities to host the Super Bowl.
Economists have long scoffed at the estimates bandied about by hired-gun research firms that suggest the NFL’s big game will generate an economic windfall for cities in the hundreds of millions of dollars. (This year’s estimate for the Super Bowl’s economic impact for Minneapolis is $338 million.)
Similarly, analysts at the Economic Policy Institute (EPI) say Amazon’s claims that its new headquarters will bring $5 billion worth of prosperity and 50,000 jobs should be taken by local lawmakers with a grain of salt.
“The thing with HQ2 is it’s such an open question,” EPI economic analyst Janelle Jones, who co-authored the study, said in a phone interview. “It’s going to create jobs, but is it just displacing other workers or moving them around?”
The study asserts that while Amazon has a hefty national profile, even something as large as HQ2 “will not necessarily create more jobs overall.”
“What we’re saying to cities is ‘Let’s be sure,’” Jones said. ”Are all the things we’re sacrificing with public dollars actually going to bring some kind of noticeable and significant economic growth? Or is it just displacing other workers and shifting dollars?”
Amazon on defense
Amazon refutes much of the EPI’s findings, and in an email to Yahoo Finance, a company representative said the fulfillment centers offer “good jobs that offer competitive pay and comprehensive benefits, which include medical insurance, bonuses, 401(k) with 50% match, generous maternity and parental leave,” as well as tuition reimbursement programs.
“Our goal is to give employees the opportunity to learn new skills that can help an employee further build their careers at Amazon or even in another industry,” the company said in the emailed statement.
Amazon also argued that its fulfillment centers have created 200,000 additional non-Amazon jobs and pushed the unemployment rate in those areas down by an average of 4.8 percentage points between 2010 and 2016. (It is worth noting that from 2010 to 2016 the U.S. unemployment rate overall dropped to 4.9 % from 9.8%, a reduction of 4.9 percentage points, according to the U.S. Bureau of Labor Statistics.)
The EPI report, which analyzes the impact of Amazon’s fulfillment centers across the country, concludes that cities are largely wasting the tax incentives on an “ineffective strategy” and “unneeded giveaway” to Amazon because that money figures very minimally in corporations’ decision making; it simply turns into a windfall of profits for the company. Additionally, the report suggests that money would be better spent on public goods, such as transportation or education.