NEW YORK (CBS NEWS) – North Texas and 19 other U.S. and Canadian cities are offering lavish tax benefits and incentives as they vie to become the new home for Amazon.com’s second headquarters. But a new study raises questions about whether such tax incentives actually pay off for the towns and states that offer them.
Amazon.com has likely received $1 billion in incentives from state and local governments in 25 states where the online retailing giant operates 95 fulfillment centers, according to a new study by the left-leaning Economic Policy Institute. Yet those incentives may not have paid off, the study suggests.
The massive Amazon distribution centers failed to boost overall employment in their markets within two years of opening even as they boosted distribution employment by 30 percent, the study notes. The authors, Ben Zipperer and Janelle Jones, suspect that’s because workers are either shifting industries or the Amazon facilities are creating too few new jobs to make a dent in overall employment.
Amazon did not immediately return a request for comment.
The study is attracting attention as Amazon employs a similar strategy, on a much larger scale, of seeking government incentives for a second headquarters beyond Seattle. The company named 20 finalist cities last month, setting off a debate about the use of economic incentives to attract businesses. Some policy experts and economists say such incentives do little for local towns or states other than cost them money.
There’s no question Amazon’s proposed second headquarters, which promises 50,000 jobs across a broad range of skills and pay levels, is a very different animal from a distribution center with mostly low-wage jobs. Still, EPI’s Jones said she hopes her study gives local government officials some pause as they build out proposals for Amazon.