New York Business Journal: Amazon warehouse footprint grows thanks to tax incentives. How necessary is that support?
From the story:
Around 10:40 a.m. on a standard Tuesday in New York City, waves of vans carrying tens of thousands of packages depart from DAB5, a delivery station in Red Hook, like they do every other day of the year. The drivers will transport parcels throughout Brooklyn, as far as Greenpoint.
DAB5 is one of 31 delivery stations that Amazon has opened in the state, along with seven fulfillment and sortation centers, including one massive facility in Staten Island.
Amazon has invested significantly and rapidly during the pandemic. As e-commerce sales boomed, Amazon went on a buying and leasing spree – more than doubling its footprint nationally. An Amazon spokesperson declined to comment on the company’s future road map.
The warehouses it has opened in the last few years have had considerable economic impacts on surrounding neighborhoods – and the company has benefitted from significant city and state support. Some have questioned, however, whether that equation is balanced…
Nationally, Amazon has received $6.1 billion in subsidies, according to a database by Good Jobs First, a nonprofit that promotes corporate and government accountability in economic development. In New York City, that number is at least $51 million, including distribution centers, offices and other investments, like Whole Foods supermarkets.
One study estimates that governments spend nearly $43,000 for each job created via an Amazon fulfillment center subsidy.
In the state, Amazon has created more than 41,000 full- and part-time jobs as of January 2023. The company estimates it has supported an additional 52,000 indirect jobs, based on Input-Output methodology developed by the U.S. Bureau of Economic Analysis.
Senior Fellow at the Jack Kemp Foundation and Co-Author of the study Ike Brannon argues that government incentives may not always be justified because if Amazon wants to achieve its goals of quick delivery, it will open warehouses where it needs to regardless of financial support provided.
“The bar should be set really high, maybe impossibly high, for subsidies that effectively go to individual businesses,” Brannon told NYBJ.
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