Facebook LinkedIn Twitter Vimeo RSS

Fast Forward: Amazon gift will keep giving, even to those who don't get it

By ,
(Photo / )

Amazon will pick its second headquarters next year, and then people will start picking fights.

They will pick fights in the places passed over by the online purveyor of just about everything. And they will pick fights in the state where Amazon decides to bestow one of the greatest gifts in the history of economic development.

Politicians, of course, will tout their state’s selection as a huge victory and a harbinger of even greater things to come – as well as a powerful vote of confidence in their state’s business climate.

If Amazon picks Philadelphia or Pittsburgh, or even long-shot Harrisburg, it will show up in the race for governor as a proud accomplishment for Democratic incumbent Gov. Tom Wolf.

If Amazon picks Colorado or Georgia or Arizona, it will be something that Wolf’s Republican challenger likely will remind us of every day until November.

"If we don’t get it, it ought to be an opportunity for real introspection," said Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry. "There needs to be a strong dialogue about why."

Pennsylvania’s corporate net income tax will come under scrutiny, as will its cantankerous state budget process, which rarely seems to end on time.

"Let’s be honest," Barr said. "What’s going on with the budget and state government is not a positive."

Barr noted the warehouse tax that was proposed then killed by state lawmakers. It’s probably not something that would be popular with an online retailer that fills up a lot of warehouses.

Pennsylvania isn't the only state of dysfunction.

Luckily for us and our rival suitors, Amazon is considering plenty of other factors for its second headquarters, such as access to higher education, quality of life and the state of public transportation.

No state is a lock for the so-called HQ2 and Pennsylvania has its positives.

"There’s no one that makes anybody go, ‘That’s it. That city was created for Amazon,’ There’s none of that," Barr said. "Everyone has plusses and minuses and we’re going to have to see what happens."

The city that is picked may find out that winning has its downsides, too.

Someone, at some point, is going to ask what it cost in terms of tax and other economic incentives for Amazon. They will wonder whether it was worth it and couldn’t the money have been better spent on the people and companies who already live here. 

"Whoever does get it will come under a lot of scrutiny for that dollars per job number,” said Mark Price, an economist with the Keystone Research Center, a liberal think tank in Harrisburg.

The average per-job incentive nationwide in 2015 was $2,400, according to research by the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich. 

But the numbers can vary widely by state and by industry - or by who's calculating.

Dallas-based real estate consulting firm Site Selection Group said economic incentives in the second quarter of 2017 totaled $15,373 per job, down from more than $30,000 for the same period in 2016.

Pennsylvania was among the biggest incentivizers, according to Site Selection Group. The Keystone state announced 88 incentive packages in the second quarter, second only to California's 127. Kentucky was third, with 48.

And if you think it’s hard to find skilled people now in Central Pennsylvania, wait until Amazon posts a "help wanted" sign in Pennsylvania.

The company plans to hire 50,000 people. Even if it’s for Baltimore or New York, the ripples are certain to disturb the talent pool here.

The political windfall also may be short-lived, Price said.

Not too long ago a Pennsylvania governor helped land a multibillion ethane cracker. But Tom Corbett is now former governor after losing his 2014 campaign for reelection. Voters cared more about other issues.

A tech giant is flashier than an old-school energy company. But flash only goes so far.

Some in Pittsburgh have been second-guessing the Steel City’s selection as a testing ground for the ride-hailing service Uber

When it comes to Amazon, however, "I think most of the political types would prefer to win it rather than lose it," Price said.

And they may not have to spend a lot to catch Amazon’s eye.

Although no one can say for sure, the company’s decision may very well hinge on the strictly business factors it laid down in its initial request for proposals.

"They may surprise us," Price said. "They may end up not taking a lot of incentives from the final winner."

In which case at least one state will be spared a fight.

You May Have Missed...

Joel Berg

Joel Berg

Joel Berg is editor of the Central Penn Business Journal. Born in Philadelphia, raised in Northern Virginia and now living in York, he's a graduate of Franklin & Marshall College and the University of Maryland. Have a question or story idea? Email him at jberg@cpbj.com. Follow him on Twitter, @JoelBYorkPa.

Leave a Comment

test

Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
View Comment Policy

Comments

Hollie Bennett July 3, 2018 5:39 am

Wow, amazon is really changing its game now. Amazon is really giving out a lot, these Gift Ideas are really impressive. Fights often happen because of these as well, personally look forward to quite more on it.

close