Let’s Call Amazon’s Bluff

Amazon says they’ll halt new office projects if Seattle enacts an employee head tax. Good.

by Geov Parrish, Op-Ed Columnist

The debate over a proposed Employee Head Tax (EHT) on our city’s largest employers, with revenue dedicated to affordable housing and homelessness services, is coming to a head. After eight months of debate, the Seattle City Council is scrambling to meet a self-imposed mid-May deadline for trying to pass the proposal, with a final vote currently scheduled for Monday, May 14.

In the face of civic activists demanding long-overdue major action on Seattle’s critical affordable housing and homelessness crises – and packing council meetings to press their demands – five of the nine council members have said that they support the current bill. At least one of those council members must change their minds to kill or significantly weaken the bill. That effort, already in full force, was turbocharged this past week by Amazon’s freeze of two new office facilities downtown, suggesting it would “rethink” further Amazon expansion in Seattle if the new tax passes.

Ordinarily, this alone would be enough to kill the bill. A notorious Seattle Times headline last year – “Thanks to Amazon, Seattle is now America’s Biggest Company Town”- wasn’t wrong, but politically and economically, it missed the larger context. Seattle has always been a company town. Before Amazon, it was Microsoft; before Microsoft, Boeing; and before Boeing, a century ago, Weyerhaueser, and before that, servicing the Yukon Gold Rush. The history of Seattle has largely been shaped by its political leaders giving the boom economy of the day whatever it wanted. Amazon is just the latest and biggest company whose displeasure is, for a certain type of Seattle politician, unthinkable.

Most recently, political obsequiousness has basically created our city’s twin crises in affordable housing and homelessness – crises so extreme that this tax might just pass anyway.

And it should. Seattle should call Amazon’s bluff.

The Opposition

It’s impossible to understand why our city should defy what is now by far its largest employer – Amazon already has 20 percent of Seattle’s office space – without understanding the literal bankruptcy of tax opponents’ arguments. These fall into two broad categories: the people objecting to such a tax being collected, and those objecting to what it’s being spent on.

In terms of its purpose, homeless advocates and social service providers have expressed serious concerns about how Mayor Durkan has said she wants to direct any EHT revenues, particularly the portion that would go to services. Durkan wants to funnel that money to Seattle’s badly flawed “Housing First” approach, in which emergency shelter, transitional shelter, and support services are defunded in favor of forcing the homeless to sign up for waiting lists for affordable housing units that don’t exist, and sweeping the unsanctioned encampments that spring up in lieu of organized ones. For example, Durkan wants to put more money into the “Navigation Teams” that help refer homeless people into resources. Yet despite official claims that thousands of local homeless were housed in 2017, the Navigation Teams successfully referred exactly one homeless person into permanent affordable housing. One.

The bulk of the new EHT money would go not to services or shelter, but to building badly needed permanently affordable housing – but even funding that is halved from the $150 million EHT recommendation of the task force city council created after last fall’s failed EHT bill. And the task force acknowledged that its recommendation would only put a dent in the need for tens of thousands of new affordable units.

Meanwhile, while even that inadequate level of housing is being built, where are homeless people supposed to live? Defunding shelter and services only forces more people onto the street – making their path out of homelessness far more grueling and difficult, and in some cases deadly. Seattle set a record for homeless deaths in 2016, and again in 2017, and is well on its way to a new record in 2018, with dozens having already been lost. With any other group of people, that would be an international scandal. For Seattle’s homeless, it’s just another number.

Despite those problems, advocates for the homeless unanimously support the current EHT proposal, figuring that the fight over how revenues are first spent is less immediately important than establishing a long-term, dedicated revenue source for addressing the issue. But Seattle has plenty of people who object to any public money being spent to help our city’s most vulnerable residents.

That Trumpian impulse was on full display at a Ballard town hall meeting on the EHT proposal this past Wednesday. The panel format, hosted by EHT bill co-sponsor CM Mike O’Brien, never happened, shouted down by a loud, abusive, ill-informed mob that spewed hate at every speaker not in their tribe and that drowned out with denials anyone who patiently tried to present simple facts on the issue. It was so bad that the notorious Alex Tsimerman, an abusive, obscenity-spewing nutcase whose unhinged rants have routinely gotten him banned from city council meetings, was one of the more lucid speakers.

The Ballard fiasco was a stark reminder that, contrary to the placid belief of many Seattle liberals, the ignorance, hatred, and fear that propelled Donald Trump to the presidency isn’t strictly a red state phenomenon. There’s plenty of such residents here, and plenty of demagogues (like KIRO-FM’s execrable Dori Monson) willing to transform even legitimate concerns into vehicles for punching down. Regardless of how the head tax fight plays out, that contingent will surely produce candidates running against the bill’s sponsors next year. If any of them gain traction, the big business opponents of the tax will face a difficult choice.

As is, the Tsimmerman contingent is a de facto ally in the anti-EHT fight with our city’s economic giants. In testimony to city council, local business leaders have taken pains to emphasize how much they love the poor, and how much they already have done to help them. (Such claims from a Vulcan executive drew spontaneous, derisive laughter from an otherwise polite pro-tax audience.) But corporate help, those leaders cautioned, can’t come through taxation and publicly accountable programs, because…..uh, reasons. Essentially, the position is: we’re not willing to make less money, so if we’re taxed by this we’ll have to cut expenses elsewhere – by either cutting jobs or relocating to a place, any place, that doesn’t have this tax.

But companies don’t create new jobs because they’re generous and have the spare money for it. They do so because they need those jobs to meet the demand for what they sell, or as an investment to create that demand. A job is created when, and only when, a company thinks the expense of it will be more than offset by the money that position helps earn. An EHT that amounts to about $500 a year for a full-time employee, for Seattle’s largest employers, is not a serious hit – as demonstrated by the lack of difficulty such employers have had absorbing much more costly minimum wage increases across the country despite identical arguments.

But for a company like Safeway or Kroger or Amazon, with not just national but global employee bases, the cost of a Seattle tax isn’t the point – it’s the precedent that tax would set for all those other jurisdictions.

A recent study put the annualized global median income for an Amazon employee at $28,000 a year, far lower (and more likely to contribute to homelessness) than the $110,000 median income for Seattle Amazon employees. But those figures imply far more than a reason for Amazon to extort our city. Amazon owns Seattle now; it doesn’t need a good reason to extort us. That’s how company towns work. The companies are inevitably going to leave. Sooner or later, Amazon executives will look at that $110,000 figure and start “rethinking” it.

For reference, Seattle’s previous company “owners” haven’t gotten any smaller – they’ve just deemphasized our region. Microsoft has lost much of its tech dominance to Google, Facebook, and others, but it still has enough lucrative global monopolies to be a hugely profitable company. But for a couple of decades, it has quietly been putting more and more of its resources into lower-wage countries like India.

Seattle’s previous owner, Boeing, was and remains a high-profile extortionist of our local and state governments. A 2013 Olympia special session of our state legislature, held in three days with no public notice or input, had as its sole purpose responding to a Boeing threat by approving the biggest single package of state tax breaks in US history, worth $8.7 billion. But Boeing has bled jobs from our state anyway, mostly to lower-wage, non-union states. Similarly, Boeing’s 2001 move to Chicago wasn’t because Seattle was untenable; it was because Seattle could not come close to matching Chicago’s offer of huge incentives and tax breaks. And even Weyerhaueser, a century on, remains one of the world’s largest owners of privately held timberland. Most of it just isn’t in the Pacific Northwest now.

In the race to the bottom, someplace else is always cheaper. And as a global empire, Amazon has no more hometown loyalty than Boeing or Microsoft or Weyerhaueser. To pretend otherwise is naive.

Amazon’s current rapid expansion in Seattle won’t last. At some point, it will conclude that those $110,000 a year jobs can be performed more cheaply elsewhere. If it’s not the EHT, some other pretext will be used to justify it.

The other lesson of those past dominating companies is that despite the initial panic, Seattle is doing just fine with their reduced footprints. We’ve somehow still got the best local economy in the country. If Amazon pulls back, our city has a very good track record of replacing those jobs with other, likely better jobs.

The Social Contract

Meanwhile, Seattle literally cannot keep growing like this. Twenty years ago, Seattle was a national center for the dot-com boom. Since the height of that boom, though, our city has added more than a fifth of its population, growing from 563,374 in the 2000 Census (and 513,269 in 1990) to an estimated 704,352 in 2016 – all with making virtually no significant infrastructure investments to accommodate all of that growth.

Certainly, Seattle’s revenues have grown along with that population and job growth. Where has the money gone? Some of it to expand existing amenities such as parks and libraries, to be sure. But many of its biggest-ticket items have been real estate schemes disguised as infrastructure – the Mercer Mess, streetcars, the downtown tunnel.

Though light rail is finally being built out – years after many mostly smaller U.S. cities (e.g., Portland, Salt Lake City) started their systems – Seattle still only has one line with 16 stations, with the next expansion – three more stops on the same line – not due to open until 2021. Seattle’s busses and schools are bursting at the seams. Traffic gridlock remains a constant, and as one neighborhood after another gets terraformed – 27 major neighborhood upzones are in the pipeline – parking spaces will become mythological. Our garbage and sewage systems are beyond their capacities. And, of course, our social services are wholly inadequate to the demand as Seattle’s gap between rich and poor widens.

Seattle, like a handful of other cities (including Portland and Vancouver B.C.), has pioneered a new political and ideological alliance to justify its rapid growth this century: the need for urban density in response to climate change became an environmental justification for real estate development at any cost. In Seattle, this meant that 20-year neighborhood plans, carefully developed with resident input, were simply ignored under the mayorships of Nickels, McGinn, Murray, and now Durkan. When neighborhood councils strongly objected, the city just stopped funding the councils. When commercial and residential property values (and rental and lease rates) skyrocketed, as a result, the city doubled down, in the Randian (and idiotic) belief that more extremely expensive new housing would somehow be a solution for the loss of existing affordable housing stock.

In short, many of Seattle’s growth problems can be traced directly to city leaders’ past, decades-long failure to plan to address the consequences of future growth. Even now, in the EHT debate, the city’s Housing Now fiction that thousands of homeless are being housed each year is apparently preventing leaders like Mayor Durkan from acknowledging that at least until new public housing comes online, still-exploding housing costs inevitably mean that we need to plan for even more homelessness in coming years. (Conveniently, while this year’s “one night count” was taken in January, its sure-to-be-a-new-record results aren’t set to be released until the end of this month, after the EHT vote.) Perpetually ignoring today’s problem has required, for decades, that they not be anticipated as even bigger future problems.

Fixing those problems won’t be easy. Seattle’s options for funding solutions are limited. Thanks largely to its lack of an income tax, our state has the most regressive tax system in the country, and a study released last month showed Seattle to have the most regressive taxes in the state. Low and middle-class taxpayers in Seattle are already maxed out.

The city tried to address this last year by passing a high earners’ income tax, but that measure is on hold pending court challenges. That leaves local big businesses as the only remaining stakeholders financially capable of absorbing a major initiative. The only alternative is increased property or sales taxes that will, essentially, tax the poor to help the poor. It’s a complete negation of the social contract that liberals, in particular, are supposed to hold dear.

That social contact – the basis for the “commonwealth” language beloved by this country’s founders – is the centuries-old notion that justifies modern government. It holds that we, as individuals in a society, surrender some of our rights in order that other, larger rights might be protected. A corollary is the inverse: that we do better as a society when we each do better individually. An injury to one is an injury to all.

No one bill can solve the many problems brought on by Seattle’s poorly planned growth. Housing and homelessness are only a part of what’s gone wrong – though they’re arguably the most urgent part, the part with an ongoing death toll. And the EHT bill is an important step, but only one step, in addressing these crises. But if even this proposal can’t be passed – after eight months of negotiation, for a tax Seattle has already had – how will anything else succeed?

Does Seattle, as a city, want to honor its social contract? Or does it want to adapt to climate change by becoming a comfortable ark for the wealthy, floating on ever-rising sea levels while everyone else drowns?

When Amazon issued its threat, EHT bill co-sponsors issued a statement insisting that the debate over their bill wasn’t about Amazon. Of course, it is, at least for that certain type of owned politician Seattle has always had.

But in a broader view, the co-sponsors are right. Honoring our social contract – before the path to darkness becomes irreversible – is more important than what any one company, no matter how large, chooses to do. And setting precedents isn’t just an Amazon concern. If Seattle stands up to its corporate overlord, that statement of priorities will resonate far and wide.

Seattle should call Amazon’s bluff. The city council should pass the EHT proposal without weakening it, and Mayor Durkan should sign it.

The alternative future, in which the debate is over which and how many of us are disposable, looks a lot like that town hall mob in Ballard.


Featured image by Carolyn Bick

 

 

11 thoughts on “Let’s Call Amazon’s Bluff”

  1. I guess you have to have lived here when Boeing laid off 50,000 workers and another 50,000 lost their jobs who worked for subcontractors, restaurants, etc. There was a sign on the way out of town. Would the last person leaving please turn out the lights. The only good think about having big industry leave is it makes buying a home easier. But tough as hell to sell your home so you can relocate to South Carolina.

    It was tough as hell to be in a small business.

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  2. The Navigation Team doesn’t put people into permanent housing. They only offer people a shelter and connection with services, which can then lead to permanent housing. They are not allowed even to track whether people took the shelter or the services, so I have no idea where your data came from. All Home King County performance dashboard shows that 35% of the people who came into the system, which the Navigation Team connects them to, went into permanent housing. This is a regional problem that needs a regional solution. A small geographic area like Seattle, which has 40% of King Co population but 70% of the unsheltered homeless and 76% of the sheltered homeless should not cripple itself taking on yet more of the burden.

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    1. Amazon employees 222,400 persons. Lets guess they spend $30 a day on food, clothing, coffee, everything they buy paying sales tax on . Seattle gets 2.7% of the state’s 9.6% sales tax. that is close to 30% of the total sales tax of everything the purchase.

      $30 a day times 200 days (they do not purchase something every day) time 222,400 people times 2.7%. The city collects $36,028,800 in their share of sales tax. Do you think that each of those families only purchase $30 a day, $6,000 a year.

      How much do you think each of the shop owners and employees who provide services purchase everyday.

      Remember this is only the daily expenses and ignores the taxes on their autos, homes, fuel, utilities they pay. Much less the sales tax on the big items they purchase.

      Consider all the items they purchase help employ about that many more people.

      Please do not run Amazon, Boeing, the U of Washington, Microsoft, providence Health Services, even Fred Meyer’s employees to say nothing to the number employed by the Federal government, City of Seattle and King County.

      How many homeless will we then have?

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      1. Derf –
        A. when was the last time you lived in Washington State, if ever? The sales tax in Seattle is 10.1% in Seattle and hasn’t been 9.6% for well over a year. And the base State sales tax is 6.5%, which means Seattle’s is 3.6%.

        B. Amazon does not employ 224,000 people in Seattle so your math about the tax contributions of Amazon employees in Washington is hugely inflated. Let me guess you did an Internet search real quick and inserted the first things you saw and posted them as if they are facts? Well, clearly they aren’t. Amazon employs less than 50,000 people in the whole state of Washington, so definitely not anywhere near 200k in Seattle. I suggest you first check your numbers before you talk about something you clearly don’t know about.

        And you know who pays more in sales tax than anyone? The people who make the least amount of money pay a disproportionate amount of their income on sales tax and this is not the Amazon workers living in Seattle. The ripple effect of the income and housing inequality Amazon has produced without any accountability is far reaching. Amazon employees are not contributing more than the rest of us in sales tax. They do not buy more than any other person, but the human cost that has been created by pushing long-time Seattle residents out of their homes and city is much greater.

        Which is why Amazon, the company, and other large companies like it, must be required to pay a special tax. Until we can change our State tax law and enforce an income tax on high earners, we can’t keep taxing lower wage earners more to support services the whole community needs. This false fear that big companies like Amazon will move away is only a scare tactic. Seattle is always going to be a desirable city for businesses and a draw for recruiting employees. It’s time for City Council and the Mayor to call Jeff Bezos bluff and force big corporations to step up.

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  3. I plead guilty to going to the internet for a quick read on the numbers employed by Amazon and the percentage of the sales tax that goes to the City. So if Seattle is getting 3.6% that is even more money for the city from all the products and services sold in Seattle.

    Yes I have lived here from 1940-43; 1960-2018 with two years off to serve in the Navy/Marines including almost a year in Vietnam. My family has lived here since 1916.

    I agree the sales tax is a regressive tax. Poor folks pay a greater percentage of their income due to sales tax and they spend most of their income for taxed items.

    However everyone who buys a big ticket item, think car, fancy clothes, boat, airplane or any large item you can think of, fancy dinners or catered events all contribute to the income of the city.

    As had as I tried I could not get a figure of how much the average wealthy person spends each year. It is a significant part of the cities income.

    I realize you would like to top the Sales Tax with an income tax. I believe the State has voted that down at least once. If you manage to force Amazon out of town, how many people do you think will be out of work.

    Amazon does not depend on our air industry, trucking industry, marine system to operate. They only need a large city with a diverse and well educated population. There are many such cities they can go to.

    Think a minute how many apartments would be left vacant. How many of the buildings downtown would be vacated. You are right lets play Russian roulette, lets play chicken, with Amazon. If you win and they leave; where will all the jobless go?

    Just remember Boeing in 1971? Do you really want that again? That was about 50,000 job loss with an addition $50,000 from support industries. If amazon pulled out how many would loose their jobs?

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  4. Right on, Geoff!

    This is a great opportunity for Seattle to teach Jeff Bezos a lesson: If you continue to demand “privitizing the profits but socializing the costs”, then don’t expect Seattle to roll out the welcome mat. Seattle wants “corporate responsibility”, not wild housing price inflation that leaves most of the public in the dust.

    Stopping your expansion plans for Seattle would be a welcome first step after a real commitment to help out with the housing and homelessness crisis that you have engendered.

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  5. The author’s thesis is critically flawed. The average tech bro at Amazon makes 120k a year and is responsible for a 3.8x economic multiplier. The money he or she spends results in 3.8x the economic activity. Nurses, CPAs, bartenders, restaurants workers, architects, lawyers, pilates instructors, etc. all depend on the economic activities of Amazon workers for their livelihoods. We impose taxes on things we want less of in the future…..ie carbon tax, cigarette tax, soda tax, ammunition tax, etc. What fucked up liberal fantasy are you living in where a tax on jobs will not result in further jobs, more people in poverty, etc. etc.

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