Critics are sounding the alarm about how Amazon’s deal to build a new facility in Niagara, New York, could negatively impact the community.
The Niagara County Industrial Development Agency (NCIDA) voted this month to approve plans for Amazon’s new distribution center. Amazon will receive a $123 million tax break for this 216-acre facility, and in return Niagara County expects the deal to create 300 new construction jobs and 1,000 Amazon positions with an average wage of $18 per hour, as estimated by Amazon.
While the deal may be welcome news for those in search of work, critics warn that Amazon rarely meets their promises of job growth or stimulating economic growth. A 2018 study from the Economic Policy Institute found that Amazon does not create new net jobs, and instead creates new warehouse jobs that offset lost jobs across other industries affected by their presence. Those in opposition to Amazon’s latest facility also view the deal as harmful to taxpayers and the local economy overall.
“[Niagara County] is being asked to subsidize the biggest, most powerful e-commerce corporation in the world, and by doing so they are directly harming their own small local businesses,” said Pat Garofalo, the director of state and local policy at the American Economic Liberties Project.
The American Economic Liberties Project, along with several other labor and watchdog organizations, sent a letter to the NCIDA urging them to oppose the deal. The letter, dated Aug. 5, states that Amazon’s promises of job creation and economic growth may not be met, and instead may lead to lower wages and lost jobs over time.
The letter also underscores the negative impacts the deal will have on the Niagara-Wheatfield Central School District, which receives almost half of its revenue from property taxes. Amazon has applied for a payment in lieu of taxes incentive, and a large portion of their $123 million tax break will be redirected revenue from the local school district.
“[T]he biggest loser in terms of which public services suffer the most are the public schools,” said Greg LeRoy, the executive director of Good Jobs First, another organization that signed the letter opposing the Niagara County deal.
Amazon receives tax subsidies to build their facilities in areas that are beneficial to their business—areas near arterial highways, major cities, and with a high number of Prime members, all to expedite shipping.
“If you look at where their warehouses are, they place them very strategically,” Garofalo said. “So you’re punishing the local school district and depriving it of funds that they would have had anyway to just pay Amazon to do what is in its economic interest to do.”
Both Good Jobs First and American Economic Liberties Project research how tax subsidies for large corporations like Amazon impact the communities surrounding their facilities and have found that schools are the most negatively impacted. Garofalo and LeRoy said corporations like Amazon do not need incentives to move into an area, and these deals are ultimately harmful for the communities that Amazon chooses.
Good Jobs First reported that in fiscal year 2019, public school districts in 27 states lost $2.37 billion in revenue because of tax abatements for large corporations like Amazon. The report also found that Black, Latinx, and low-income students were disproportionately impacted due to districts with higher proportions of these students losing larger shares of tax revenue.
“Everything about the quality of schools suffers. It means that teachers don’t get raises, that schools don’t have as many counselors or nurses as they should, [and] it means the classroom sizes remain too big,” LeRoy said.
According to the organizations that signed the letter, Amazon has yet to deliver on their promises of job creation and economic growth in communities that entice them with these tax subsidies. The Economic Policy Institute’s study also concluded that county-wide employment does not increase two years after Amazon moves into a community.
“This is just a raw deal for the community, and you’re paying Amazon a huge sum of money to do what it was always going to do anyway,” Garofalo said. “And in the process, [you’re] harming the folks in the community, whom the government is supposed to be protecting, not actively undermining.”
LeRoy urges communities to consider the effects of giving corporations like Amazon large sums of taxpayer dollars to build their facilities.
“[W]hat’s the net benefit, and what else could the money be better spent on? And why subsidize a company that’s going to do what it’s doing anyway?” LeRoy said.
