CLBR Backgrounder on Good Jobs First Report "Cities need to stop selling out to big tech companies"

1. CLBR Backgrounder
Cities need to stop selling out to big
tech companies

2. Amazon HQ2
• “Amazon’s HQ2 project can go down in
history as a monument to high-tech
arrogance and tax-break favoritism” -
Greg LeRoy, Good Jobs First
• Most proposals are not public
• Chicago and Miami have had “second
visit” from Amazon team.
• Cook County, IL reportedly offering $2B in
incentives
• Past CLBR Episode
The Battle To Become the Home of
Amazon HQ2

3. “Buffalo Hunting”
• Governments engaging in “trophy
deal school of economic
development”.
• Wisconsin Foxconn Technology
Group deal ($4.8 billion)
• Cost of $346,153 to $1.5M per job
• North Carolina Apple Data Center
Deal ($320M)
• Cost of $6.4M per job $6,414,00
• Iowa Apple Data Center Deal
($214M)
• Cost per job exceeds $4.2M

4. $75M Loan Guarantees to Move From MA to RI
Filed Bankruptcy 13-Months Later

5. Job Blackmail
Subsidies
• Buffalo Hunting forces states
into giveaways to keep jobs.
• Oregon gave Nike over $2B in
incentives to keep its
operations in the state.
• Washington gave Boeing $8.7B
in tax breaks in 2013.
• Did not tie tax breaks to performance.
By 2017 Boeing had laid off 15 percent
of its Washington workforce.

6. Amazon Math
• Amazon receives $1.5B in tax
subsidies
• Example – Amazon received $123M
to locate distribution centers in OH
• Amazon ranks #19 among OH businesses
with employees on Food Stamps despite
being only the #53 largest employer.
• While Amazon pays no local property taxes,
it is a drain on its services as emergency
responders are called daily at Amazon’s
facilities.

7. ALTERNATIVES

8. Focus Investments on
Comparative Advantage
• Focus on industries, not companies. North
Carolina created a Biotechnology Center,
which especially benefited the Research
Triangle Region as a whole.
• Austin’s local tech leaders created incubators
and worked with local government to
develop the tech economy.
• Today Raleigh and Austin are two of the
hottest job markets in the country.

9. Invest in Infrastructure
• The University of California
System has four of the top
10 public colleges in the
country (UCLA, UC-Berkeley,
UC-Santa Barbara and UC-
Irvine).
• The UC System includes 61
Nobel laureates.
• Every $1 the California
taxpayer invests in the UC
system results in $9.80 in
gross state product and
$13.80 in overall economic
output.

10. Example: Chattanooga
Smart Grid with 1
Gigabit Internet Speed
• Funding $169M loan. Earned $111M Obama
stimulus grant. Launched in 2010.
• 2015 Study - 2,800 and 5,200 new jobs and $1
billion in economic benefit.
• In 2014, Chattanooga had the third highest
wage growth in the country among mid-sized
cities.
• Past CLBR Episodes
• Speed and Speed Bumps on the Net (May 18, 2011)
• How Chattanooga Tennessee Transformed Itself into
Americas First Gig City (Sep. 26, 2012)
• The Gigabit City Challenge (Jan 30, 2013)
• The State of Gigabit Nation (Apr. 19, 2017)

11. Other
Measures
• Bi-State Cease Fires
MO/KS had deal barred tax breaks
for intra-region relocations
• Regional Economic Development
Boards members must agree to no
job piracy
• Cap Subsidies at Per Job Amount
• Public Notice and Public
Participation Requirements
• Disclosure of Revenue lost to tax
breaks for economic development
per (Governmental Accounting
Standards Board—Statement No. 77
on Tax Abatement Disclosures)