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.
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