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Comment by TuringNYC | Hacker News Reader

>> What's funny is she (and many other critics) specifically called out that all it would take is a single bad quarters for all those HQ jobs to evaporate and they were right.

Could you elaborate on the argument here -- are you suggesting that if a job has a potential for future loss, it is just better to not create the job at all? If I was mayor, i'd be happy to take a high-paying job in my locality even if it isn't perpetual. The key would be to tie incentives to actual payroll. Subsidy disappears as soon as the job disappears.

But guaranteeing perpetual jobs is something no organization can do, not even governments.

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AOC was against the subsidies. No one is stopping Amazon from creating jobs and then then getting rid of them when they hit a downturn. The issue was the subsidies provided and if companies can be held accountable.

Virginia paid $750M in subsidies for Amazon HQ2 to bring 2500 high paying jobs in 2023 and Amazon did not reach that goal. They'll probably miss the 2024 mark too. What recourse does Virginia have?

Well, it could build a sports facility for Ted Leonsis, and hope that that brings in jobs and dollars. But that didn't make it through the legislature.

He wanted VA to spend $2B to move the Wizards 8 miles.

How does that make any sense? 750M / 2500 is 300k. It's just better to do helicopter money - literally just drop money from the skies and I would bet that more would be generated in return.

Assuming that Gemini is right and Virginia keeps 5-6% of your taxable income, individuals should earn at least 5M just for break even. I don't understand this model - can someone help make sense?

300K is a one-time fee, but that high paying job will probably pay state taxes for years to come. Not to mention the extra taxes collected on that person renting, shopping, driving, etc. Amazon HQ2 might get other companies to make a HQ there too. There are benefits, but Amazon can't be held accountable for deals like these.

Don't forget all the sweet gentrification. /s

Pretty sure they missed a 0. They were meant to bring 25,000 jobs (which itself was scaled back from the 50,000 they had initially promised). Of course the problem with all such deals is that the timeline is always "flexible" (15+ years in this case), and even if the jobs are filled they will go away overnight if the company deems it better for their bottom line. Amazon has already cut 30,000+ corporate jobs in the last year and a half, and in his latest shareholder letter Jassy committed to continued "cost-cutting" across the company (https://www.cnbc.com/2024/04/11/amazon-ceo-andy-jassy-says-c...).

The actual terms of the deal is $22k subsidy per job. At the time of the deal the average salary for those jobs had to be $150k. That average salary requirement goes up each year. Last year it was $157k and next year $159k. The jobs also have to last 5 years in order for Amazon to get the payout. At those terms the state income tax in the salaries will more than pay for the subsidy over 5 years. That doesn’t include the additional tax revenue from the construction of HQ2. Additional tax revenue from service businesses and their employees which support either HQ2 or the employees working there.

> Virginia paid $750M in subsidies for Amazon HQ2 to bring 2500 high paying jobs in 2023.

Wrong. Virginia approved up to $750M in subsidies for Amazon should Amazon meet the terms.

> What recourse does Virginia have?

All they have to do is abide by the agreement because Amazon has to make the case each year to receive that year's subsidy.

Person below commented they already went down from 50K jobs promised to 25K and that $750M is still sitting pretty. The terms are also flexible and over 15+ years so they can keep making false promises kicking the can down the road.

Not hard to imagine Amazon got a favorable deal concerning the subsidy stipulations due to all the competing bids for HQ2.

The VA numbers were always based on 25k jobs.

Minimum 25,000 Phase 1 Jobs ($550M allocated) and 12,850 Phase 2 Jobs ($200M allocated)

No need to imagine -- the deal is linked in the WP article.

https://d39w7f4ix9f5s9.cloudfront.net/a1/f2/85b7a8db41379e15...

From my reading, it seems pretty reasonable.

(1) Here's what Virginia and Amazon agree to. (2) Here's how it will be measured. (3) Here are the terms around payments.

The "subsidies" in this case in NYC were a tax rebate over 10 years tied directly to the number of positions created. The Empire program itself was meant to incentivize new offices to open in boroughs other than Manhattan to help distribute the load on transit and other services. Any company opening new office space was eligible, not just Amazon.

The only real "subsidy" in the NYC deal was a land grant where an old plastics factory used to be that required significant environmental clean up. The land is also next to the notorious Queensbridge projects.

Really considering we mostly work in this industry, the amount of ignorance surrounding the deal, its incentive structure, and how it went up in flames is staggering.

Even the talking point about how Amazon opened up new NYC offices anyways is completely innumerate, so far they've created about 1/5th of the positions that they were projected to create under the HQ2 proposal.

So the original proposal was to create 25K jobs over 15+ years, and the fact that they have created "only" 1/5 the jobs in ~5 years with zero subsidies is supposed to be a negative? Especially considering that they are in the middle of layoffs and not even hitting their committed HQ2 goals.

Still innumerate I see. 1/5th of the projected rate.

Besides, the program is structured such that they wouldn't get the rebate if they didn't hire so what does it matter?

Spot on. This article is just click bait then and doesn’t mention the subsidy is strictly job based. This article goes into detail:

https://www.washingtonpost.com/dc-md-va/2023/04/13/amazon-hq...

Overall, Amazon did request $152M in April 2023 for the 6939 jobs it created. They didn’t request any money thru COVID and that $152M will be paid late 2026. Amazon has also paused building due to WFH and maybe realizing they don’t need another HQ. Overall, I would say this thing will stall for the next few years. There is an opportunity cost related to other businesses being offered those same subsidies and are growing. Alas, that can’t be measured.

> Amazon has also paused building due to WFH and maybe realizing they don’t need another HQ

Working at AWS I had teammates hired as remote for a team that was distributed across various regions, and we were given a mandate to either "return" to an office (including potentially having to move if one of the ones assigned to the team) or "voluntarily" leave (with no severance). I'm not saying that they didn't realize they didn't need as much real estate overall, but WFH is not the reason because it largely doesn't exist anymore at Amazon.

What happens if you just decided not to move? That voluntarily leave would need to become a firing with notice pay and severance.

you would have the opportunity to argue whether you were fired for cause (which determines eligibility for unemployment insurance). in general that's hard to win if you just don't show up to your assigned work location, but there may be grounds to argue that mandatory relocation beyond a certain distance constitutes constructive dismissal.

but notice pay and severance are not mandatory for at will employees. the company basically gets to decide whether it's worth paying you not to sue them.

I imagine they'd just stop paying you and not give you any severance, putting the ball in your court to initiate any legal actions to try to force them to pay severance.

I think you are both right? amazon did pause or at least slow building due to WFH, during the pandemic. now WFH is over, but they are still doing layoffs. obviously both are sensitive subjects, but it doesn't make sense to immediately resume large construction projects while headcount is trending downward.

there's one more factor being missed here. obviously they won't say so publicly, but there's a case to be made that the entire HQ2 was as much about calling Seattle's bluff as it was about establishing a second company HQ for its own sake. now that that particular piece of legislation has been repealed, there's not as much reason to follow through on the original plan for HQ2. see: https://en.m.wikipedia.org/wiki/Seattle_head_tax

>> So the original proposal was to create 25K jobs over 15+ years, and the fact that they have created "only" 1/5 the jobs in ~5 years with zero subsidies is supposed to be a negative?

How is this obviously not bad!? Arent most of us technologists here? How is creating 1 job better than creating 5 high paying jobs? Can anyone currently unemployed chime in on whether you prefer having high paying jobs available vs not having them available?

> tax rebate

Why are you putting subsidiy in quote if they got a tax rebate?

Because the rebate was conditional on sustained hiring and not a grant like the political rhetoric would have most believe.

Essentially the state was rebating the corporate tax they would have received in lieu of the income tax revenue obtained from the new positions along with the increased competition for high paying tech roles in the city.

The program was deliberately structured to be revenue neutral in terms of absolute tax revenue while increasing overall tax revenue by increasing state GDP

I'm not sure what you mean by political rhetoric. Are you saying calling it a subsidy would be misleading (?) because it was given on a condition? That seems a bid odd because subsidies often comes with conditions attached.

> Could you elaborate on the argument here

It seems like you're trying to make this way more complex than it is.

From the perspective of a city:

Gaining quality high paying jobs without a large subsidy >> Gaining quality high paying jobs while paying a large subsidy.

That's what was argued and is correct. She knew the city was in a strong negotiation position and it was absurd to provide a subsidy.

AOC represents one district in Queens, not Manhattan or the entire city of New York. Her constituents do not benefit from Amazon relocating to Manhattan's West Side. Hudson Yards, where Amazon has rented space, received $6 billion in tax incentives, double the HQ2 package.

Further, most of the incentive programs that comprised Amazon's HQ2 package were pre-existing programs available to anyone, led by $1.2 billion from Excelsior Jobs, $897 million from REAP, both of which are still active programs open to any company meeting their requirements.

https://esd.ny.gov/excelsior-jobs-program

https://www.nyc.gov/site/finance/business/business-reap.page

>>> Could you elaborate on the argument here

>It seems like you're trying to make this way more complex than it is.

>From the perspective of a city:

>Gaining quality high paying jobs without a large subsidy >> Gaining quality high paying jobs while paying a large subsidy.

>That's what was argued and is correct. She knew the city was in a strong negotiation position and it was absurd to provide a subsidy.

Here is the actual equation we ended up with:

Gaining N high paying jobs without a large subsidy << Gaining 5N quality high paying jobs while paying a large subsidy paid if and only if 5N jobs created.

If the company is soliciting significant bribes from the state to create the job, then, er, yeah, arguably the state should _never_ engage in that sort of thing, but if it does then it should absolutely be looking for assurances that it's getting value for money.

I do think it's slightly surprising that the US doesn't really seem to have an equivalent to the EU's concept of "unlawful state aid", which shuts down a lot of this stuff before it starts.

What's crazier still is that Amazon made all state and local governments sign NDAs which stated that the bidding process and any other specifics could not be shared with the public. Officials nationwide read this and went "yup, sounds good!" Quite literally legalized corruption.

Jobs are not a commodity that has to be "created" at all. A job is just a demand for labor. Either the demand is there at market rate, or it's not.

>> Jobs are not a commodity that has to be "created" at all. A job is just a demand for labor. Either the demand is there at market rate, or it's not.

You are right, but missing the fact that the commodity can exist in location a vs location b. The argument for subsidies was to push to move the job to a specific location. As a tech worker in the NYC area, this would be awesome. It was an incredibly selfish decision by AoC and others to vanquish most of these jobs.

Also remember all the secondary and tertiary jobs (nannies, restaurants, dog-walkers) which were all lost along with the high paying tech jobs.

I think we should just be proud of her for acknowledging the existence of business cycles.

Are you implying that someone who graduated cum laude with a degree in economics and international relations would not understand business cycles?

I think we should openly admit

1. that organizations leverage and abuse these breaks

2. that its possible for layoffs to not impact the new teams and buildings pretty easily

3. that a single bad quarter shouldn't lead to layoffs esp from a company that literally is the poster child for not tanking share price when facing losses

Its weird to have this subtext or joke that AOC wouldn't understand business cycles. She's not the first or last politician to try and spend money on lasting change.

It's very easy to act righteous in hindsight, but she was skewered by the media for even acknowledging the existence of business cycles.

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