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Amazon Scammed America’s Hurting Cities

Their new headquarters was never destined for anywhere but the country's most prosperous metropolitan areas.

Alex Wong/Getty Images

For over a year, Amazon dangled the prize of a second headquarters, or HQ2, in front of cities across the country, and then watched as they duked it out. The result was a sort of hypercapitalist Hunger Games, in which cities and states debased themselves in the hopes of reaping tens of thousands of jobs and several billion dollars in investment. The biggest bidders promised billions in tax breaks and subsidies, while smaller municipalities resorted to more creative measures: The mayor of Stonecrest, Georgia, offered to build a town named Amazon and to anoint CEO Jeff Bezos, the richest man alive, as its king.

That competition apparently ended last week, when it was reported that Amazon had chosen the Solomon option: not one, but two additional headquarters. One would be located in the Virginia suburbs of Washington, D.C., the other in Queens, New York. It was an anticlimactic end, given the expectations. But if indeed Amazon has decided to split HQ2 among two of America’s most profitable cities, the tech behemoth may exacerbate several societal problems—including one it claims to want to solve.

The HQ2 selection process was always a racket. Often referred to as a “sweepstakes,” it was designed for only one winner: Amazon. The company not only garnered free, widespread publicity, but also drove up its asking price, as some competitors raised their bids by billions. It’s possible that the plan all along was not to open a second headquarters, but to open two, smaller satellites. What’s unlikely, however, is that the deals being offered to Amazon will change significantly, even though the company is effectively halving their investment.

Amazon has already faced backlash for its handling of HQ2. The $1 trillion company is hardly in need of public handouts, and yet it has benefited greatly from taxpayer dollars in recent years. It may have sensed there would be further backlash over its decision, which would explain why the news broke on the eve of the midterm elections, effectively burying it. Unlike other localities, which made their offers public, not much is known about the bids from New York City and Virginia. But the public scrutiny of HQ2 will only intensify as the details—and the social consequences of HQ2—become clear.

The D.C. suburbs were always seen as a favorite, given that Bezos owns The Washington Post and that Amazon’s lobbying spending has increased dramatically in recent years. He also appears to enjoy spending time there. New York, where Bezos worked as a hedge fund manager before moving west, has been Silicon Valley’s closest tech rival for some time. But there were also strong reasons not to choose either New York or D.C., since neither is desperate for economic investment or high-skilled jobs. In fact, Amazon’s presence may be a net negative for both places.

Washington, D.C, and New York, already have tight housing markets, and will be further squeezed by an influx of highly paid, younger workers. Both cities also have decaying public transportation networks that are struggling to meet demand. HQ2 will only aggravate those problems. “The 7 train is overloaded today, and we can’t sell Long Island City as being transportation rich,” Councilman Jimmy Van Bramer told The New York Times, referring to the Queens neighborhood where half of HQ2 would be located. “The people who work at Amazon are going to be competing for space on that train.”

HQ2 would present problems wherever it opened, but there was a stronger case for Amazon to choose somewhere less prosperous. “The economic impact of locating a new corporate campus with 20,000 highly paid jobs would be radically different in a city like Detroit, Cleveland, or Indianapolis for the simple reason that these cities have a lot of slack in their housing markets,” Vox’s Matt Yglesias wrote last week. Even with tax breaks, HQ2 would act as an economic stimulus for a struggling region.

Activists in New York and D.C. have been mobilizing against Amazon for quite some time. A year ago, a number of New York City community groups wrote to Mayor Bill de Blasio to protest potential tax breaks:

You should focus on pushing Amazon to be a better corporate citizen and improving how it treats communities and workers. You should also ensure that this multibillion-dollar company, [which] already has a significant presence in New York, does not receive financial incentives simply for doing business here. New York communities are facing massive cuts to public goods and services, and working families are trying to make ends meet.

In Washington, long seen as a frontrunner, the opposition is much more organized. “If D.C. does get chosen, we have some real issues with how Amazon does business, in terms of fair labor, equitable hiring, and equitable practices for people of color and women in particular,” the Fair Budget Coalition’s Stephanie Sneed told me back in April. Although HQ2 would be in neighboring Northern Virginia, it would have a significant impact on D.C.

Amazon has been batting away bad publicity (often for its labor conditions) and government scrutiny (often on antitrust grounds) for a while now—most recently in September, when Senator Bernie Sanders unveiled the Stop BEZOS Act. While the bill itself, designed to punish large employers whose workers received public assistance, was shoddy and misguided, its true purpose was to punish Amazon by making it the face of corporations that underpaid and mistreated its workers. In October, Amazon announced that it would raise its minimum wage to $15 and begin lobbying the federal government to raise the national minimum wage.

By moving to New York and Northern Virginia, Amazon may further tighten housing markets, contributing to greater homelessness, and put more stress on failing public transportation. Seattle, where Amazon is based, has seen housing prices and homelessness skyrocket in recent years—problems the company certainly didn’t cause, but which it’s certainly making worse. The crisis prompted Seattle’s city council to pass a tax on large employers, like Amazon, to help pay for affordable housing; the company responded by threatening to stop construction in the city. “We remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here,” Amazon vice president Drew Herdener said at the time. Ultimately, pressure from Amazon killed the tax, although Bezos announced that he would be contributing $2 billion toward combating homelessness and early education in September.

Many in New York are looking at Seattle as an example of what Amazon will do to an already stretched market. “Growth challenges are already familiar ones in New York City and metropolitan Washington, D.C., where once-affordable neighborhoods have morphed into upmarket enclaves, and aging and overloaded transit systems create daily headaches for their millions of riders,” Margaret O’Mara, a historian at the University of Washington, wrote last week in The New York Times. “Just as in San Francisco and Seattle, HQ2’s arrival could make them far worse.”

Amazon likely chose Washington and New York for obvious reasons, making the pageantry surrounding the yearlong search for an HQ2 site all the more absurd. These are attractive places to work, and, as national hubs of politics and media respectively, they influence the national discussion. But they’re also among just a handful of major cities that could meet Amazon’s needs, in terms of infrastructure and talent. That was always true, and the company cleverly exploited it, using cities that never stood a chance to extract concessions from the few that did.

“Of the many places that offered themselves on a platter, only a dozen or so truly made sense for Amazon to consider,” Annie Lowrey wrote last week in The Atlantic. “The rest would have needed far more development for the company to justify heading there—development that would excite existing businesses, would-be entrepreneurs, and companies quietly looking for a new corporate site.” This regional economic inequality is unsustainable for the country at large, and yet Amazon’s decision suggests that it will only worsen in the years to come.

There was hope among many HQ2 bidders that Amazon would be the cure to decades of problems. But it’s clear now that the company never intended to save a struggling American city, transforming its economy, infrastructure, and perhaps even schools; it only ever made sense, in purely capitalist terms, to choose a city that already was flourishing. The dozens of desperate bidders, from Detroit to Stonecrest, were nothing but pawns in a rigged, zero-sum game they’ve been losing for decades.