Investigation Finds Amazon Benefitted From More Than $2.4 Billion In Subsidies – With Mixed Results

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Amazon benefited from more than $2.4 billion in incentives across the country, according to research published Wednesday by American City Business Journals

The company employs an estimated 10,000 people across 15 facilities in Pennsylvania, drawing nearly $25 million in known subsidies statewide. Bids for Amazon’s second North American headquarters HQ2 are due next week.

“They have a very streamlined and very refined process when they enter a community, and they’ve done so with a great communications strategy so that when they come to town its big tech, its thousands of jobs, the ability to work with robots and sophisticated logistics centers, and so they don’t get any opposition,” said Craig Douglas, director of data and research for American City Business Journals. “In fact, it’s the opposite, they often get a lot of support from local leaders in the form of taxpayer subsidies.”

Douglas said communities show mixed returns on those investments. Though some cities have seen more jobs created than expected, others have received many fewer than they were promised, while fulfillment centers have created a direct threat to traditional local retailers.

“What we’re not seeing is a lot of people asking the question, 'Is this a good thing long-term?'” Douglas said.

With the adoption of robotics and automation, many jobs Amazon currently hires for aren't likely to require a human labor force in five or 10 years, Douglas said.

"We’re not seeing a lot of communities ask [about] this as they bend over backwards to get Amazon to put down stakes in their communities,” he said.

At least 20 cities, including Pittsburgh and Philadelphia, are currently vying for Amazon to win HQ2. The selection is expected to create 50,000 jobs. 

Amazon has perfected the process of entering a community, identifying available incentives and "really leveraging cities and states against each other to maximize what those incentives are going to be,” Douglas said. “That’s going to be the case on steroids here with HQ2.”

Pittsburgh Mayor Bill Peduto said the overall cost of doing business, available talent and other factors that Amazon is looking for make the Steel City a potential contender, but “if it’s simply based upon public subsidy, Pittsburgh [will] not win this competition.”