I was listening to another excellent Strong Towns podcast featuring Stacy Mitchell, co-director of the Institute for Local Self -Reliance today. In the first part of the conversation, Mitchell and Strong Towns founder Chuck Marohn spoke about the problem with Amazon’s HQ2 escapade, which pitted over 200 cities and regions against each other in an effort to land Amazon’s second headquarters. Millions of dollars were spent by cities across the nation in an effort to “court” the online retail giant and convince them that their community was the best place for HQ2 to reside. Billions of dollars in tax breaks and incentives were promised to Amazon by cities in the hopes of bringing 50,000 jobs to their community and region.
First off, let’s do the math on this… many cities offered Amazon upwards of $2 billion in tax incentives, which comes out to be $40,000 per employee over 10 years, a number that would make any fiscal conservative’s head spin. Furthermore, the other 200-plus cities that didn’t win the HQ2 sweepstakes still shelled out tens of millions of dollars just to throw their hat in the ring. Most of these cities probably realized that the retail giant could only practically land in an already existing major metro area, like New York City and D.C., where they ultimately selected. So why did so many cities spend so much public money, and promise far more just to buy a ticket to the “party?”
In the podcast, Mitchell hinted that New York’s Governor Cuomo and New York City Mayor DiBlasio made bad choices in promising so much to a company that may be doing more to decimate our free economies than make them stronger. And while she is in part correct, I believe there is a subtle but important component to conversations that strictly blame our political leaders for making bad choices about employment opportunities.
Here’s a hint… it’s not because of clueless local governments. It’s because we, as a culture, have become so fixated on growing jobs in our communities that we literally can’t see anything else. When the prospect of more jobs enters our collective minds, we become a hyper-focused machine, unable to see the complex and often negative variables that accompany the addition of a major employer to our regions.
Let’s take my home city of Rochester. We partnered with Buffalo to make an Amazon HQ2 pitch. While I don’t have the figures, I know that time, resources and public funds were spent in an effort to “woo” the employment giant, only to come up short, which most knew was probably the case anyway.
But what would the narrative have been if we were one of the few cities/regions that didn’t pitch to Amazon? What would the people of our city, one that grapples with an anemic job growth ranking, say if we didn’t even try to bring a major employer here? Because our Upstate and Western New York regions scream so loudly for an economic injection, the tiniest of possibilities to rejuvenate our local economies are met with an aggressively desperate approach, and that approach is driven by our citizens, not our local leaders.
Our poorest citizens make up a huge percentage of lottery ticket sales and gambling revenue across the U.S. Those who are desperate to better their situation are more likely to ignore the fact that the percentages are always stacked against them. They play because they truly believe that their best option might come from the slim margins in a game of chance. This is the counterproductive psychology that desperation creates.
The same desperation for jobs in communities struggling for employment is why Walmart can convince a rural town that their presence will breathe life into their region, when in fact, big box stores likely cost local economies more jobs than they create.
I’ve been to the town hall meetings where big box stores look to break into desperate towns, promising to be the economic savior. I’ve seen residents stand up and demand that their government give companies like Walmart and Amazon a red carpet of economic welcome because above all else “we need more local jobs!” Ultimately, our local leaders are handcuffed by the will of a desperate population that truly believes that employment, regardless of the employer’s motive or history, is the only thing that matters.
Owners of major sports teams routinely hold local governments hostage when asking for new stadiums or upgrades to arenas. They cite the anecdotal arguments of job creation, urban vibrancy, and the always over-inflated “spill-over” effect of these franchises, and the city’s impending doom if they’re “forced” take their team to another city as a means to a heavily subsidized end. Local governments are caught in between the “spin” of major league owners and the citizens who believe them. To deny these owners would surely mean the end of their political futures.
The same narrative is now happening with major employers. Local governments are under such fierce pressure from citizens to seek and welcome new jobs that they are almost forced to say yes to any arrangement, even it leads to a long-term economic detriment.
I’m not taking big business or government off the hook. They are as much to blame in this win-less game as anyone. But so often, we blame corporate interests for demanding that local governments roll out the financial red carpet on the backs of the taxpayer. We blame local leaders for choosing to subsidize jobs in our region that turn a rise in employment into a zero sum game (or worse) for our communities. But at some point, we as citizens need to stand up, like New York City did, and tell employers that subsidizing jobs to the tune of millions and billions is not sustainable, and not beneficial to our communities in the long run. It is up to us, even as we scream for more employment options, to recognize that our cities and metro areas can ask for better.