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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 subsid

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?

cafard 3y ago
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.
- CalChris 3y ago
  He wanted VA to spend $2B to move the Wizards 8 miles.
rkuodys 3y ago
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?
- deleted 3y ago
  [deleted]
- theturtletalks 3y ago
  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.
  - nebula8804 3y ago
    Don't forget all the sweet gentrification. /s
- paxys 3y ago
  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-committed-to-cost-cutting-while-investing-in-ai-in-shareholder-letter.html https://www.cnbc.com/2024/04/11/amazon-ceo-andy-jassy-says-c...).
- tssva 3y ago
  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.
meragrin_ 3y ago
> 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.
- theturtletalks 3y ago
  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.
  - snowwrestler 3y ago
    The VA numbers were always based on 25k jobs.
    - theturtletalks 3y ago
      Minimum 25,000 Phase 1 Jobs ($550M allocated) and 12,850 Phase 2 Jobs ($200M allocated)
  - ethbr1 3y ago
    No need to imagine -- the deal is linked in the WP article. https://d39w7f4ix9f5s9.cloudfront.net/a1/f2/85b7a8db41379e151054ff05e815/commonwealth-of-virginia-agreement.pdf 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.
CoolGuySteve 3y ago
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.
- paxys 3y ago
  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.
  - CoolGuySteve 3y ago
    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?
    - theturtletalks 3y ago
      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-hq2-virginia-incentives-jobs/ 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.

cafard 3y ago

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.

CalChris 3y ago
He wanted VA to spend $2B to move the Wizards 8 miles.

rkuodys 3y ago

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?

deleted 3y ago
[deleted]
theturtletalks 3y ago
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.
- nebula8804 3y ago
  Don't forget all the sweet gentrification. /s
paxys 3y ago
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-committed-to-cost-cutting-while-investing-in-ai-in-shareholder-letter.html https://www.cnbc.com/2024/04/11/amazon-ceo-andy-jassy-says-c...).
tssva 3y ago
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.

meragrin_ 3y ago

> 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.

theturtletalks 3y ago
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.
- snowwrestler 3y ago
  The VA numbers were always based on 25k jobs.
  - theturtletalks 3y ago
    Minimum 25,000 Phase 1 Jobs ($550M allocated) and 12,850 Phase 2 Jobs ($200M allocated)
- ethbr1 3y ago
  No need to imagine -- the deal is linked in the WP article. https://d39w7f4ix9f5s9.cloudfront.net/a1/f2/85b7a8db41379e151054ff05e815/commonwealth-of-virginia-agreement.pdf 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.

CoolGuySteve 3y ago

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.

paxys 3y ago
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.
- CoolGuySteve 3y ago
  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?
  - theturtletalks 3y ago
    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-hq2-virginia-incentives-jobs/ 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.