WEBVTT - Your Tax Dollars Subsidize Amazon. Are the Jobs Worth It? 0:00:02.560 --> 0:00:06.320 Shakopee is a quaint city in Minnesota. It's only about 0:00:06.320 --> 0:00:09.200 thirty minutes from Minneapolis, but it feels like a small town. 0:00:09.720 --> 0:00:13.000 It has a fifty style main street lined with shops, pubs, 0:00:13.000 --> 0:00:16.680 and cafes. Customers pop in and out, and the occasional 0:00:16.680 --> 0:00:21.040 freight train rumbles by. Like any city, Shakopee wants good 0:00:21.120 --> 0:00:25.080 jobs for its residents. Historically, its main employers have been 0:00:25.079 --> 0:00:28.840 a malt plant serving the beer industry, and nearby Mystic 0:00:28.960 --> 0:00:34.160 Lake Casino. Then in a big company arrived in town. 0:00:34.920 --> 0:00:37.199 I really I think Amazon coming to down is a 0:00:37.200 --> 0:00:39.040 good thing. I think the city made the right column. 0:00:39.600 --> 0:00:42.960 As you just heard, the company in question is Amazon, 0:00:43.520 --> 0:00:49.080 the world's biggest online retailer. In Amazon opened a giant 0:00:49.120 --> 0:00:52.440 warehouse in Shakopee. It hired a thousand people to work 0:00:52.479 --> 0:00:56.360 there in this town of about forty people. But whether 0:00:56.440 --> 0:00:59.920 Amazon's arrival has been a good thing for Shakopee has 0:01:00.000 --> 0:01:03.720 has divided the town. I think overall, to benefit you 0:01:03.760 --> 0:01:06.600 have to invest money to make money, and overall, in 0:01:06.640 --> 0:01:10.400 the long period that Shackoby will be much better. That's 0:01:10.480 --> 0:01:13.720 Duane worm Restriction, who owns a jewelry shop in town 0:01:14.160 --> 0:01:17.039 and What he's referring to there is that Shackoby give 0:01:17.080 --> 0:01:22.000 Amazon something in return, about three million dollars in tax 0:01:22.040 --> 0:01:25.840 breaks over nine years. That's what some people don't agree with, 0:01:26.680 --> 0:01:29.560 like Matt Layman, who owns a local auto repair shop. 0:01:30.120 --> 0:01:33.440 He's also a Shackopee City councilman. Here he is talking 0:01:33.440 --> 0:01:38.480 about Amazon CEO Jeff Bezos. This guy's hobby is to 0:01:38.520 --> 0:01:42.640 put spaceships in the outer space. Okay, he just bought 0:01:42.640 --> 0:01:48.760 out seven million dollar housing in Washington, d c. Um, 0:01:48.800 --> 0:01:51.200 what kind of financial assistance is it that you need? 0:01:52.040 --> 0:01:55.000 The DC mansion was actually twenty three million dollars. But 0:01:55.040 --> 0:01:58.280 you get the point. Right now. There's a debate raging 0:01:58.320 --> 0:02:01.880 across the country over how to create more American jobs. 0:02:02.360 --> 0:02:05.560 President Trump says this is one of his top priorities. 0:02:05.960 --> 0:02:09.400 It seems like every day he's congratulating or taking credit 0:02:09.440 --> 0:02:12.760 for a company that announces plans to employ more U 0:02:12.880 --> 0:02:16.799 S workers. Amazon was among the companies that announced new 0:02:16.840 --> 0:02:20.760 staffing plans just before Trump was sworn into office. The 0:02:20.800 --> 0:02:24.240 company said it would hire one hundred thousand people over 0:02:24.280 --> 0:02:27.720 the next eighteen months. And for the cities competing to 0:02:27.760 --> 0:02:31.480 win these new jobs from Amazon and other big corporations, 0:02:31.919 --> 0:02:33.839 they're going to need to deal up quite a bit 0:02:33.960 --> 0:02:37.560 and tax breaks and other kinds of subsidies. These are 0:02:37.639 --> 0:02:40.919 the kinds of subsidies that are dividing Shackoby at this 0:02:41.120 --> 0:02:52.720 very moment. Hi, I'm Akio and I'm Spencer Soper, and 0:02:52.800 --> 0:02:55.720 this weekend Decrypted, We're going to be asking some tough 0:02:55.840 --> 0:02:59.600 questions about the jobs Amazon is creating in return for 0:02:59.639 --> 0:03:04.280 these big incentives. One report estimated that these tax breaks 0:03:04.320 --> 0:03:07.280 could be more than a quarter of a billion dollars. 0:03:08.040 --> 0:03:10.000 That's a lot of money that could have gone into 0:03:10.120 --> 0:03:14.679 repairing roads and building schools, then instead, put it one way, 0:03:14.960 --> 0:03:17.840 ended up subsidizing the growth of what was already one 0:03:17.880 --> 0:03:22.280 of the world's largest companies. We'll also look at the 0:03:22.360 --> 0:03:26.080 impact Amazon's new warehouse has had so far in Shacopy 0:03:26.240 --> 0:03:28.920 to get a sense of whether these subsidies have had 0:03:29.000 --> 0:03:33.440 positive ripple effects across this Minnesota suburb. Yeah, whether the 0:03:33.600 --> 0:03:37.200 subsidies have been or ultimately will end up being worth 0:03:37.280 --> 0:03:41.200 that investment. You'll be hearing from the residents I met 0:03:41.200 --> 0:03:44.760 in Shakope, as well as people living in San Marcos, Texas, 0:03:45.360 --> 0:04:12.200 which is another city with a new Amazon warehouse. That's 0:04:12.240 --> 0:04:14.560 me in the shack of Pee car repair shop owned 0:04:14.560 --> 0:04:18.120 by Matt Lahman. On top of running his business, Matt 0:04:18.160 --> 0:04:20.799 has served on the Shakopee City Council since two thousand 0:04:20.800 --> 0:04:23.200 and two. He took a break to puff a few 0:04:23.240 --> 0:04:26.520 Marlboroughs and chat with me about the new Amazon warehouse. 0:04:27.000 --> 0:04:31.320 He's wearing a baseball cap, beard and glasses. Various cities. 0:04:31.360 --> 0:04:35.680 I suppose we're negotiating with Amazon on sweetheart deals to 0:04:35.760 --> 0:04:39.520 try to convince them which city to go to. Apparently 0:04:39.520 --> 0:04:41.480 we gave m a sweetheart deal that they can't refused. 0:04:42.640 --> 0:04:47.200 Matt voted against offering incentives to Amazon. The wages that 0:04:47.279 --> 0:04:54.800 they pay you basically have incentivized below livabola jobs. Well, 0:04:54.839 --> 0:04:57.280 I started out to be ten twelve bucks an hour. 0:04:57.480 --> 0:05:00.320 I see now that they're slowly moving their wages up 0:05:00.360 --> 0:05:04.120 because they can't get no help. Um, which I guess 0:05:04.120 --> 0:05:07.960 it's a good thing, but but even at that, they're 0:05:08.000 --> 0:05:10.640 not livable way just to where somebody working there can't 0:05:10.680 --> 0:05:15.160 afford to actually buy a house make the payments. Local 0:05:15.200 --> 0:05:18.599 governments use the tax revenue that they collect from residents 0:05:18.600 --> 0:05:22.360 and companies to pay for things like schools and libraries. 0:05:22.640 --> 0:05:27.760 Parks and emergency services. They also have agencies whose job 0:05:27.800 --> 0:05:30.279 it is to talk to companies and convince them to 0:05:30.320 --> 0:05:34.719 set up their operations in your town, to create jobs 0:05:34.880 --> 0:05:39.080 in your area. And the most shall we say, persuasive 0:05:39.120 --> 0:05:43.000 tool they have is to offer tax breaks. But here's 0:05:43.040 --> 0:05:46.839 the tricky part. Let's say Amazon wants a new warehouse 0:05:46.920 --> 0:05:50.160 somewhere close to Minneapolis, where the company has a lot 0:05:50.240 --> 0:05:54.080 of customers and it needs another facility to keep up 0:05:54.080 --> 0:05:57.800 with rising demand. The question becomes where to build it. 0:05:59.240 --> 0:06:02.680 Unlike Matt Lane men the councilman we just heard from, 0:06:02.720 --> 0:06:05.440 there are a lot of people who really want Amazon 0:06:05.520 --> 0:06:08.960 to pick their town. So a community like Shakope ends 0:06:09.000 --> 0:06:13.280 up having to fight, sometimes against neighboring towns for Amazon's 0:06:13.320 --> 0:06:18.520 business in a really competitive situation. It basically turns into 0:06:18.560 --> 0:06:22.240 an auction where cities fight each other to give Amazon 0:06:22.360 --> 0:06:27.040 the most lucrative packages they can muster. And it's Amazon 0:06:27.320 --> 0:06:31.040 and all these other big companies that end up benefiting 0:06:31.240 --> 0:06:40.080 from these bidding wars. All of this is based on 0:06:40.120 --> 0:06:43.240 the idea that the city's investment will pay off over 0:06:43.279 --> 0:06:45.960 time from the boost a new company will give to 0:06:46.000 --> 0:06:49.400 the local economy. And if that isn't what ends up happening. 0:06:49.839 --> 0:06:52.599 It can be hard to justify the deal. Now you 0:06:52.640 --> 0:06:54.279 think that some of the people who would be the 0:06:54.320 --> 0:06:58.040 most strongly opposed to having Amazon in town would be 0:06:58.080 --> 0:07:02.640 people running local business. Is this classic narrative of these 0:07:02.720 --> 0:07:09.360 multinational corporations killing mainstream merchants. Interestingly, I met a few 0:07:09.400 --> 0:07:12.760 business owners in Shakopee who do think the gamblon Amazon 0:07:12.880 --> 0:07:16.240 is working. Like Dwayne we heard from earlier, he's had 0:07:16.280 --> 0:07:19.760 a jewelry shop downtown for the last thirty five years. 0:07:19.800 --> 0:07:22.280 But I think what I've noticed in the last even 0:07:22.280 --> 0:07:26.080 with Amazon coming in, I think that you know, most 0:07:26.080 --> 0:07:29.840 people are working, and uh, you know, there's a lot 0:07:29.840 --> 0:07:32.440 of jobs out there that can be more selective. So 0:07:33.200 --> 0:07:35.480 I think that's kind of helped the pool a little bit. 0:07:36.360 --> 0:07:39.200 Around the corner from the jewelry shop is Bill's Toggery, 0:07:39.320 --> 0:07:43.120 immen's clothing store. It's been there for eighty years. I 0:07:43.160 --> 0:07:46.880 stopped buying a Tuesday morning. The place was bustling. People 0:07:46.880 --> 0:07:50.000 were buying dress shirts, browsing for work boots, picking up 0:07:50.000 --> 0:07:52.360 clothes from the tailor. And the best part is what 0:07:52.440 --> 0:07:54.320 they did develop and the tax break they didn't give 0:07:54.320 --> 0:07:58.520 them to develop that area, created a few more flats 0:07:58.600 --> 0:08:00.840 for other businesses that have our be built up. So 0:08:00.880 --> 0:08:05.160 that's another local businessman feeling upbeat about Amazon. So just 0:08:05.240 --> 0:08:08.080 their business alone has allowed it for I think at 0:08:08.120 --> 0:08:11.240 least three other businesses to come in around them. A 0:08:11.360 --> 0:08:14.280 ripple effect, yes, and which is a good thing for 0:08:14.320 --> 0:08:18.480 our time. This is what economists called the multiplier effect. 0:08:19.080 --> 0:08:21.320 There's actually been a lot of research done on the 0:08:21.360 --> 0:08:24.480 impact of new jobs that come to a city, and 0:08:24.520 --> 0:08:28.280 it's this research that convinces local officials to deal out 0:08:28.320 --> 0:08:31.480 tax breaks to attract new businesses in the first place. 0:08:32.280 --> 0:08:35.760 It goes like this, Even if Shakopee isn't making its 0:08:35.800 --> 0:08:39.720 investment back directly from the workers Amazon is hired, the 0:08:39.800 --> 0:08:44.360 building of the warehouse has stimulated other economic activity nearby. 0:08:44.760 --> 0:08:47.880 And Shacopy isn't the only town that has seen this happen. 0:08:48.360 --> 0:08:54.000 Take San Marcos in Texas. Last year, Amazon opened a 0:08:54.040 --> 0:08:57.840 warehouse there. It's spent a hundred and ninety one million 0:08:57.920 --> 0:09:01.640 dollars on construction and equipment and side, and it hired 0:09:01.720 --> 0:09:07.400 three thousand people. In exchange. San Marcos promised Amazon twenty 0:09:07.440 --> 0:09:11.400 one million dollars in tax breaks over fifteen years but 0:09:11.679 --> 0:09:15.320 Sam Marcos says Amazon's warehouse was just the first step 0:09:15.400 --> 0:09:19.040 in a bigger economic development plan. If you look for 0:09:19.080 --> 0:09:22.160 it on a map, San Marcos is about halfway between 0:09:22.200 --> 0:09:28.360 Austin and San Antonio. That's three point five million people nearby. 0:09:28.559 --> 0:09:30.880 It wants to position itself as a shipping hub for 0:09:30.920 --> 0:09:33.920 companies selling goods to all the people in those cities. 0:09:34.240 --> 0:09:38.800 Besides the impact, of course of jobs and investment, you know, 0:09:38.880 --> 0:09:43.280 having that brand name, having uh, you know a company say, well, 0:09:43.320 --> 0:09:47.320 it's been vetted by Amazon, it's certainly worth looking into 0:09:47.360 --> 0:09:51.640 for our operation. Um that that's a huge win for us. 0:09:51.679 --> 0:09:55.680 That's Adriana Cruz, who heads the Greater San Marcos Partnership, 0:09:56.160 --> 0:10:00.200 an economic development agency serving the region. She also it's 0:10:00.200 --> 0:10:03.439 something interesting about the kinds of jobs Amazon was bringing 0:10:03.480 --> 0:10:06.760 to San Marcos. Earlier in the show, we heard Matt 0:10:06.840 --> 0:10:10.600 Lehman and Shakopee say that Amazon's jobs didn't pay a 0:10:10.640 --> 0:10:14.440 whole lot, but Adriana said that in San Marcos were 0:10:14.480 --> 0:10:17.839 retail and service jobs are the biggest industries. There is 0:10:17.880 --> 0:10:23.240 a bonus for the people Amazon hires. The benefits begin 0:10:23.400 --> 0:10:27.480 day one that includes medical for a one K career 0:10:27.600 --> 0:10:33.120 choice tuish and reimbursement benefits. That's something you can't really 0:10:33.160 --> 0:10:36.000 count on in the retail business. A lot of people 0:10:36.040 --> 0:10:39.480 work part time or their job doesn't come with healthcare 0:10:39.480 --> 0:10:43.079 in sick days. For our community and for the community 0:10:43.160 --> 0:10:46.240 surrounding us, we felt it was it was a good, 0:10:46.640 --> 0:10:49.760 you know, way to diversify our industrial sector, you know, 0:10:49.840 --> 0:10:53.440 and enter the e commerce and logistics area. All of 0:10:53.480 --> 0:10:57.440 that's evaluated as we take this before our our council. 0:10:58.000 --> 0:11:00.559 You know, we thought this is going to be for 0:11:00.760 --> 0:11:07.120 you know, a segment of our population and employer of choice. 0:11:09.720 --> 0:11:12.920 So this brings us to our next question, what kind 0:11:12.920 --> 0:11:19.160 of jobs is Amazon offering? The main criticism here is 0:11:19.200 --> 0:11:24.280 that Amazon pays about twelve dollars an hour for warehouse jobs. Yeah, 0:11:24.280 --> 0:11:26.920 these are jobs like walking around a huge warehouse to 0:11:26.960 --> 0:11:31.359 gather things that Amazon customers have ordered, packing them in boxes, 0:11:31.480 --> 0:11:36.240 and stilling all of the new incoming inventory. The pay 0:11:36.280 --> 0:11:38.720 and Benny's make it a step up from flipping burgers 0:11:38.720 --> 0:11:41.679 for minimum wage, but it's still about half the median 0:11:41.720 --> 0:11:45.560 hourly pay for those working in car manufacturing. High paying 0:11:45.559 --> 0:11:50.400 manufacturing jobs are the big jackpot for economic development agencies. 0:11:51.040 --> 0:11:54.120 That means factory workers have a lot more money to 0:11:54.280 --> 0:11:57.760 drop in the local economy, whether it's the restaurants and 0:11:57.800 --> 0:12:00.360 bars you're frequent at the end of a shift, or 0:12:00.400 --> 0:12:03.160 the local doctor you go see when you catch the flu. 0:12:03.760 --> 0:12:05.680 But when you get paid a lot less as an 0:12:05.720 --> 0:12:09.240 Amazon warehouse worker, you also have a lot less money 0:12:09.280 --> 0:12:13.240 to spend. And because of that, attracting low wage jobs 0:12:13.440 --> 0:12:16.679 doesn't help your economy the same way attracting higher paid 0:12:16.679 --> 0:12:20.559 work does. Amazon should not be subsidized at all. Taxpayer 0:12:20.559 --> 0:12:24.520 should stand back on what the dynamics of the market 0:12:24.640 --> 0:12:29.439 in retailing play out. That's Greg Leroy, and he says 0:12:29.480 --> 0:12:34.040 you can't even compare the jobs Amazon with the manufacturing job. 0:12:34.520 --> 0:12:36.800 Although to be fair, it's not like Shakoby had the 0:12:36.960 --> 0:12:40.640 choice of whether to invite a factory or an Amazon warehouse. 0:12:40.720 --> 0:12:46.160 Right factory jobs are disappearing across the country. Greg would 0:12:46.160 --> 0:12:50.800 even argue Amazon isn't really creating jobs at all, it's 0:12:50.840 --> 0:12:54.520 just shifting them over from department stores and big box 0:12:54.600 --> 0:12:58.720 retailers like Walmart. The broader issue here is there's a 0:12:58.760 --> 0:13:02.680 market change going on driven by a business model. Amazon's 0:13:02.880 --> 0:13:06.400 very aggressive market share business model in which it is 0:13:06.480 --> 0:13:09.480 growing at the expense of other retailers. You know. The 0:13:09.480 --> 0:13:13.360 headlines are full of closures by the Limited and Sears 0:13:13.679 --> 0:13:18.079 and Kmart and Macy's and lots of regional and local 0:13:18.160 --> 0:13:22.120 chains as well. Greg is the executive director at Good 0:13:22.200 --> 0:13:25.880 Jobs First. It's a watchdog group that tracks the results 0:13:25.880 --> 0:13:29.280 of so called job creation deals like the ones Amazon 0:13:29.400 --> 0:13:32.880 is negotiating. If Macy's and Sears and km Ard are 0:13:32.880 --> 0:13:35.400 going to shrink and Amazon is going to grow, that's 0:13:35.440 --> 0:13:38.960 the market. It's not like there's some poverty alleviation mission 0:13:39.000 --> 0:13:43.400 going on here. The group put out a report last 0:13:43.480 --> 0:13:47.079 year that said Amazon received more than a quarter billion 0:13:47.160 --> 0:13:50.600 dollars in tax breaks to fuel its warehouse expansion over 0:13:50.640 --> 0:13:54.040 a two year period. They say Amazon shouldn't get tax 0:13:54.080 --> 0:13:57.640 breaks because it has to build these facilities anyway, and 0:13:57.640 --> 0:14:00.280 his little choice somewhere they should go. You and I 0:14:00.360 --> 0:14:03.400 do not have more money with which to shop. This 0:14:03.520 --> 0:14:08.240 is not net growth in retailing. It's churn in retailing 0:14:08.280 --> 0:14:13.160 between different companies and different business models. We have Macy's 0:14:13.160 --> 0:14:17.959 and Sears and Kmart getting displaced by Amazon. Again. It's 0:14:17.960 --> 0:14:20.400 all retailing, and it's all about shopping. It's just a 0:14:20.440 --> 0:14:23.520 different way to shop. But it's the same amount of 0:14:23.560 --> 0:14:32.560 buying power available with which to shop. Of course, the 0:14:32.800 --> 0:14:35.600 counterpoint to all of this is the people who actually 0:14:35.720 --> 0:14:39.440 take the jobs at Amazon brings to towns like Shakopee 0:14:39.640 --> 0:14:44.480 and sam Marcos. Spencer, you talked to one of these workers. Yeah, 0:14:44.520 --> 0:14:47.440 his name was Derek Peters, and he's a veteran. He 0:14:47.560 --> 0:14:50.280 served more than four years in the army, including more 0:14:50.280 --> 0:14:53.120 than a year in Iraq. I come from a military family. 0:14:53.280 --> 0:14:55.800 My grandfather was in the army. My father was in 0:14:55.840 --> 0:14:58.320 the army, and I had a brother who had joined 0:14:59.040 --> 0:15:02.400 West Point and I had to deploy to Iraq, and 0:15:02.400 --> 0:15:03.960 so I was able to, you know, see from his 0:15:04.040 --> 0:15:07.200 letters and emails home, the experiences that he was having. 0:15:07.200 --> 0:15:08.560 I was able to see, you know, what he was 0:15:08.600 --> 0:15:10.880 doing for our country and also what he was doing 0:15:10.880 --> 0:15:14.160 for him as an individual and a leader, and so 0:15:14.400 --> 0:15:18.720 so compelled to join the army. San Marcos has a 0:15:18.800 --> 0:15:21.680 lot of veterans in its workforce because it's just a 0:15:21.680 --> 0:15:24.560 couple of hours away from forth Hood, which is one 0:15:24.560 --> 0:15:28.480 of the largest military bases in the world, and last year, 0:15:28.600 --> 0:15:32.520 Amazon committed to hiring twenty five thousand veterans and their 0:15:32.560 --> 0:15:36.920 spouses over the next five years. Derek started working with 0:15:36.960 --> 0:15:40.040 Amazon as an intern while he was completing a master's 0:15:40.080 --> 0:15:43.400 in business administration. He said, it was tough finding work 0:15:43.480 --> 0:15:46.280 after the recession of two thousand eight, and so one 0:15:46.320 --> 0:15:49.120 of the things I hadn't anticipated was how hard it 0:15:49.160 --> 0:15:51.640 was going to be because of the recent recession to 0:15:51.760 --> 0:15:55.560 find an opportunity available. And I probably applied UH to 0:15:55.920 --> 0:15:59.320 fifteen different companies, probably was interviewed by ten and what 0:15:59.440 --> 0:16:02.400 I kept hearing from recruiters was, Hey, we like you, 0:16:03.040 --> 0:16:05.800 but we can't take a chance on your background because 0:16:05.800 --> 0:16:07.840 you're making a career switch, right and they say, But 0:16:07.920 --> 0:16:11.000 then he got a call from Amazon. I ended up 0:16:11.000 --> 0:16:14.080 getting a project that I worked on around conveyance and 0:16:14.200 --> 0:16:17.960 material handling UH and I didn't have a background in this, 0:16:18.080 --> 0:16:20.680 and so I was really kind of surprised that they 0:16:20.680 --> 0:16:22.800 would they would let me do this. I was able 0:16:22.800 --> 0:16:25.400 to successfully complete the project, but really just fell in 0:16:25.400 --> 0:16:28.640 love with with the company, with how they let me 0:16:28.680 --> 0:16:31.000 come in and and add value in any way I could, 0:16:31.080 --> 0:16:35.320 how they valued my military background. Today, Derek is an 0:16:35.320 --> 0:16:39.480 assistant manager at the warehouse in San Marcos. He was 0:16:39.560 --> 0:16:42.400 part of the team that helped open the facility last year, 0:16:47.640 --> 0:16:51.440 so there's no question that Amazon is employing lots of people, 0:16:52.080 --> 0:16:54.320 even if at least some of those jobs with Amazon 0:16:54.640 --> 0:16:59.440 might be merely replacing positions that existed at other retailers. 0:17:00.320 --> 0:17:03.480 And hearing from Derek and hearing from the local businesses 0:17:03.480 --> 0:17:06.960 and Shakope, it sounds like Amazon's presence has been a 0:17:06.960 --> 0:17:10.680 pretty good thing zooming out from these two towns, though, 0:17:10.840 --> 0:17:13.879 and looking at this whole practice, the cities and states 0:17:13.920 --> 0:17:16.960 trying to outbid each other with bigger and bigger subsidies, 0:17:17.920 --> 0:17:19.919 it makes you wonder if it's a good thing for 0:17:19.960 --> 0:17:23.440 the country over time. Because for America as a whole, 0:17:23.480 --> 0:17:26.760 it doesn't matter if this new warehouse goes to this 0:17:26.920 --> 0:17:30.480 or that suburb of Minneapolis, as long as it's within 0:17:30.560 --> 0:17:35.800 the United States. But there's still competition between cities and 0:17:35.840 --> 0:17:39.880 states within the US, which enables companies to pit them 0:17:39.880 --> 0:17:43.879 against each other. It's similar to professional sports teams playing 0:17:43.880 --> 0:17:46.359 cities against one another for the nicest stadium in the 0:17:46.480 --> 0:17:50.320 best terms. And this is not just Amazon, it's basically 0:17:50.359 --> 0:17:53.680 every company that can afford to make these flexible decisions 0:17:53.720 --> 0:17:58.200 about where to build new operations. Because of this, American 0:17:58.240 --> 0:18:02.480 taxpayers end up poor. It's essentially transferring all this money 0:18:02.480 --> 0:18:05.720 that could have been spent on schools and public parks 0:18:05.840 --> 0:18:09.000 or just funded tax breaks for US actual individual residents, 0:18:09.560 --> 0:18:12.640 and enriching these companies, many of which are already doing 0:18:12.720 --> 0:18:16.440 quite well. Like Amazon. It's one of the biggest success 0:18:16.520 --> 0:18:20.840 stories of our generation, and that success has made CEO 0:18:20.920 --> 0:18:25.360 Jeff Bezos an incredibly rich man. He's the third wealthiest 0:18:25.400 --> 0:18:28.520 man in the world, behind Bill Gates and Warren Buffett, 0:18:28.840 --> 0:18:32.840 with the net worth exceeding seventy billion dollars. It's also 0:18:32.880 --> 0:18:35.760 made a lot of money for Amazon shareholders. Here's Greg 0:18:35.840 --> 0:18:38.840 Leroy again, there absolutely is an issue here of the 0:18:38.920 --> 0:18:41.439 sort of corporate rich getting richer or the corporate one 0:18:41.480 --> 0:18:45.160 percent getting richer. We looked carefully, for example, at fourteen 0:18:45.640 --> 0:18:49.280 states with programs that were theoretically open to companies of 0:18:49.280 --> 0:18:52.600 every size, but we found that seventy of the deals 0:18:52.640 --> 0:18:56.000 and of the money was going to big you know, 0:18:56.080 --> 0:19:00.720 usually multi state multinational companies. Even though these programs are 0:19:00.840 --> 0:19:05.080 theoretically open to small and local entrepreneurs, In reality, the 0:19:05.119 --> 0:19:07.040 vast majority of money is going to companies that have 0:19:07.080 --> 0:19:10.359 the most aggressive business strategies, and the and the tax 0:19:10.440 --> 0:19:12.919 consultants and the lawyers and the site location consultants to 0:19:12.960 --> 0:19:16.919 help them get those tax breaks. From the taxpayer's perspective, 0:19:17.080 --> 0:19:19.600 it'd be a whole lot cheaper if every city and 0:19:19.680 --> 0:19:23.760 state in America just suddenly agreed to stop offering these 0:19:23.760 --> 0:19:28.080 incentives and Amazon just randomly picked a new location out 0:19:28.080 --> 0:19:31.920 of a hat. At this stage, you may be wondering 0:19:32.640 --> 0:19:35.960 what's Amazon's position and all of this. We did ask, 0:19:36.040 --> 0:19:42.560 but the company decided not to comment. Number One, it 0:19:42.600 --> 0:19:45.159 makes no sense to me to subsidize a business whose 0:19:45.240 --> 0:19:48.000 CEO is one of the richest people in the country. 0:19:48.960 --> 0:19:51.840 That's Matt Lehman again from the shack Apee City Council. 0:19:53.200 --> 0:19:57.200 Remember Matt voted against the Amazon deal for his town, 0:19:57.640 --> 0:20:00.520 but it went through anyway. Since then, a new mayor 0:20:00.560 --> 0:20:03.040 has been elected and the town has adopted a new 0:20:03.200 --> 0:20:06.639 nineteen dollar an hour minimum wage for companies looking for 0:20:06.680 --> 0:20:10.000 similar tax breaks for job creation deals. Now are two. 0:20:10.080 --> 0:20:12.840 It makes no sense to me to subsidize a business 0:20:12.840 --> 0:20:18.360 whose workers will require additional taxpayer funded subsidies. How does 0:20:18.400 --> 0:20:22.359 that help the taxpayer? Okay, it doesn't. This is an 0:20:22.359 --> 0:20:27.400 important point. These additional taxpayer subsidies. Amazon's wages are low 0:20:27.520 --> 0:20:29.960 enough that parents of one or two children working at 0:20:30.000 --> 0:20:33.479 Amazon could be eligible for things like food stamps and 0:20:33.560 --> 0:20:38.080 housing subsidies. These benefits are calculated based on household income 0:20:38.440 --> 0:20:41.199 and number of people in the household, so young families 0:20:41.240 --> 0:20:44.320 would be likely to qualify. That's been a big part 0:20:44.359 --> 0:20:46.840 of the minimum wage debate that if wages are so 0:20:46.960 --> 0:20:51.760 low workers can't support themselves. Taxpayers supporting food stamps and 0:20:51.800 --> 0:20:55.960 housing assistance are essentially subsidizing the companies that benefit from 0:20:55.960 --> 0:20:58.639 this low wage labor. They don't want to see me 0:20:58.800 --> 0:21:02.480 take their hard earned money subsidize a business and then 0:21:02.560 --> 0:21:05.280 turn around and come back to them again and say, gee, 0:21:05.320 --> 0:21:09.439 because I subsidized as low paying business, I need more 0:21:09.480 --> 0:21:14.080 of your money to subsidize these workers houses, daycare, transportation, 0:21:14.280 --> 0:21:26.199 and social needs. Um. That's crazy, but even low paying 0:21:26.320 --> 0:21:30.200 jobs are better than no jobs at all. Right, There's 0:21:30.359 --> 0:21:34.439 another scarier scenario looming ahead of us, which is automation. 0:21:37.000 --> 0:21:42.200 Amazon already has forty robots deployed in warehouses around the world, 0:21:42.520 --> 0:21:46.600 including in Shackopine, and it's experimenting with a Seattle convenience 0:21:46.600 --> 0:21:50.760 store that doesn't have cash registers or cashiers. You know, 0:21:50.840 --> 0:21:54.000 but I don't think I'm buying this job killing narrative 0:21:54.119 --> 0:21:58.679 just yet. Yeah, Amazon defies that by deploying robots and 0:21:58.800 --> 0:22:02.600 hiring tens of thousands of people simultaneously. And these tax 0:22:02.640 --> 0:22:05.919 breaks usually have strings attached to make sure Amazon is 0:22:06.160 --> 0:22:10.000 honoring its hiring commitments. If it fails to maintain the 0:22:10.119 --> 0:22:15.199 jobs promised, it loses the tax break. Suspenser give us 0:22:15.280 --> 0:22:19.919 the final take for every economic development official listening to 0:22:20.000 --> 0:22:24.880 this show. Are Amazon's jobs worth a tax break? It's 0:22:24.920 --> 0:22:27.480 an interesting question that will keep playing out with Amazon 0:22:27.520 --> 0:22:31.200 and other companies, and the willingness of cities and states 0:22:31.240 --> 0:22:35.240 to doll outbreaks varies depending on the health of the economy. 0:22:35.560 --> 0:22:38.240 As the labor market titans, they can afford to be 0:22:38.280 --> 0:22:41.960 more finicky, and Amazon might encounter tougher wage requirements like 0:22:42.040 --> 0:22:45.680 the ones that were just adopted in Shakopee. We'll leave 0:22:45.720 --> 0:22:49.239 you with these parting thoughts from Matt. My job is 0:22:49.240 --> 0:22:53.760 not too help just one company. My job is to 0:22:53.840 --> 0:22:58.000 help the taxpayers out large, my constituents. My constituents would 0:22:58.000 --> 0:23:00.640 like to keep the money they earned. They don't want 0:23:00.640 --> 0:23:13.719 to give it to billionaires. And that's it for this 0:23:13.720 --> 0:23:17.679 week's episode of Decrypted. Thanks for listening. Tell us what 0:23:17.760 --> 0:23:20.080 you thought of the show, Record us a voice memo 0:23:20.200 --> 0:23:24.400 and send it to us at Decrypted at Bloomberg dot net, 0:23:25.160 --> 0:23:27.640 or you can write to me on Twitter I'm at 0:23:27.760 --> 0:23:32.480 Spencer Soaper and I'm at Akiso seven. You can subscribe 0:23:32.480 --> 0:23:35.800 to Decrypted on iTunes or wherever you get your podcasts 0:23:36.119 --> 0:23:38.440 and leave us a rating in a review. This helps 0:23:38.480 --> 0:23:40.560 us make our show better and it also gets our 0:23:40.640 --> 0:23:43.800 podcast in front of more listeners. And this month we're 0:23:43.840 --> 0:23:47.760 participating in a fun project on Twitter where we're recommending 0:23:47.880 --> 0:23:52.320 everyone our favorite podcasts with the hashtag tripod as in 0:23:52.520 --> 0:23:57.119 try a podcast. My favorite show aside from Decrypted is 0:23:57.240 --> 0:24:01.240 a Gimlet media show called Startup and I Like a Choir. 0:24:01.720 --> 0:24:04.760 It's a podcast put out by Madrona, a venture capital 0:24:04.800 --> 0:24:09.040 firm in Seattle. This episode was produced by Pierre Getkari 0:24:09.359 --> 0:24:13.400 Magnus Hendrickson, and Liz Smith. Emily Busso edited the print 0:24:13.480 --> 0:24:15.960 story running with this article, which you can read on 0:24:16.000 --> 0:24:20.040 Bloomberg dot com slash Technology. Alec McCabe is head of 0:24:20.040 --> 0:24:23.840 Bloomberg Podcasts and a special thanks to our reporter Shelley Hagen, 0:24:24.080 --> 0:24:26.639 who helped with research for today's show. We'll see you 0:24:26.640 --> 0:24:27.080 next week,