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Why Amazon’s HQ2 might be better for New York than for Virginia

Amazon has pledged to bring 25,000 jobs that pay an average of at least $150,000 a year to both New York and Virginia in its East Coast headquarters expansion — but the big question is whether that prosperity will be limited to those with Amazon badges.

The company’s recent promise to pay all of its workers at least $15 an hour doesn’t apply to subcontractors who supply the company with bathroom cleaners, landscapers and window washers. Nor will it cover the thousands of food service and retail jobs expected to arise as a result of Amazon’s new outposts.

New York has addressed income inequality with a minimum wage that’s on its way to $15 an hour for all workers, paid sick leave requirements, and strong unions. But Virginia is an entirely different ball game. It’s a right-to-work state, which has historically kept unions weak, and localities have no authority to raise their minimum wages above the federal baseline of $7.25.

The result is that the Amazon deal might wind up delivering on its pledge better in New York, which expects to generate 67,000 “indirect” new jobs — everything from construction workers to nurses, accountants to cooks, baristas to bike mechanics — than in Virginia, which expects the company to create demand for 22,000 workers beyond its own walls.

“This is an incredibly one-sided deal,” says Tanya Goldman, a senior policy analyst with the Center for Law and Social Policy, a nonprofit think tank in Washington DC that focuses on alleviating poverty. “There are people who are going to get $150,000 a year, but we’re going to exacerbate racial disparities and economic inequality. The instinct that not all of these jobs are going to be good jobs is going to be correct.”

Amazon’s track record in Seattle may tell us something about what to expect in New York and Virginia, but it has also been heavily shaped by the city’s role as a trailblazer in the United States on raising wage floors and labor standards.

The company said that its presence in the city, where 45,000 people now work at its original campus, had given rise to 53,000 additional jobs through the end of 2017. The largest chunk of those are in construction, followed by retail, hospitality and healthcare. They’ve increased the income of non-Amazon employees by $17 billion, and encourage their contractors to pay at least $15 an hour.

According to the Bureau of Labor Statistics, construction workers in the Seattle metropolitan area make an average of $62,230 per year. Retail jobs pay $50,560, technical healthcare jobs pay $94,420 and healthcare support jobs pay $39,450. That’s mostly higher than the Washington DC metropolitan area and slightly lower than the New York City area, with the exception of those healthcare support jobs, which pay substantially more in Seattle.

Seattle has raised the floor for the lowest-paying positions through measures such its $15 minimum wage for large employers, a “secure scheduling” law that gives workers more control over their hours, and one of the strongest paid sick leave ordinances in the country.

In addition, Seattle provides a supportive environment for union organizing. Most large companies now contract out their building services, like landscaping and security, which means those contracted service workers don’t get the benefits available to the company’s white-collar employees. But in Seattle, many of those contractors are unionized — including Amazon’s janitors, whose contract guarantees family healthcare coverage and other protections.

“Regardless of whatever corporation is in your home town, you have to continue to push for living wages and the right to unionize,” says Councilmember Teresa Mosqueda.

So, what does that mean for Amazon’s new corporate homes?

An economic impact study prepared for the Virginia Economic Development Partnership — which was predicated on the original 50,000 job scenario — forecast that the indirect jobs would have an average annual salary of $65,630. But that could mask the creation of some very low-wage jobs, since even counties that want to don’t have the power to raise standards in the way Seattle or New York can.

“I think it’s outrageous that our minimum wage working population would be able to cross the border and make twice as much,” says Arlington County Board Chair Katie Cristol. It’s a fiscal problem too: Low wages require government to pick up the slack. “We have really struggled as a locality to fund enough of a safety net for people who are working incredibly hard.”

Amazon says it doesn’t control the wages offered by companies it retains for tasks like window-washing and bathroom-cleaning. But other tech companies have established minimum standards for contractors. Microsoft, for example, requires its larger suppliers to offer 12 weeks of paid family leave. Facebook demands that its vendors to pay employees at least $15 an hour and offer 15 paid days off.

The coalition organizing against Virginia’s subsidies, which includes the local Democratic Socialists of America chapter, says that lawmakers could pressure the company to stop trying to thwart labor union organizing at its Whole Foods stores and fulfillment centers.

“They could put in workplace protections,” says Roshan Abraham, a member of the steering committee of Our Revolution Arlington. “Unionizing is one of them. Even if they just did it in Virginia as a first step, that would be a good signal to us.”

Arlington’s County Board still has to vote on the $23 million cash grant it offered Amazon, but that’s not a lot of leverage, and the County has shown no willingness to hold up what it otherwise sees as a very good deal for the area by imposing other requirements on Amazon.

Technically, the Virginia General Assembly would have a greater opportunity to attach conditions to the $22,000 per job subsidy it’s offered Amazon. But the heads of key committees have already indicated support for the deal as is, and even Northern Virginia’s Democratic representatives seem sanguine about it.

“The fact that the state is going to come up about $3.2 billion in revenue after incentives are paid is a hard argument to turn away from in considering these incentives,” says state Senator Adam Ebbin, who represents the Arlington neighborhoods Amazon plans to occupy, as well as Alexandria to the south. “The the thing that I have to weigh is the state’s package includes significant money for transportation in our district that should help us generally. And that’s a great thing.”

Rather than requirements, local officials are counting on pure supply and demand to support good jobs. Stephanie Landrum, president of the Alexandria Economic Development Partnership, says creating the environment for businesses to make more money should trickle down to employees, especially in an area where unemployment is already low.

“If you’re working at a restaurant and there’s only one shift because there’s not enough demand, if a business comes along that sends in customers, then you can pick up more shifts,” Landrum says. “All of the additional activity should raise wages for workers.”

For some opposition groups, the concern about Amazon’s arrival stems more from a fear that even marginally higher wages won’t be able to keep up with the rising cost of housing fueled by astronomical tech salaries — as well as a more global objection to Amazon’s business practices.

“Their entire model is based on exploiting and destroying small businesses,” says Renata Pumarol, deputy director of New York Communities for Change, which is part of a coalition of unions and community groups organizing against subsidies for Amazon. “In a city that’s already facing the worst affordability crisis that we’ve ever seen, what a company like that would do to New York would be absolutely devastating.”

Pumarol says that the best way for Amazon to help would be employing graduates from the City University of New York, which serves the city’s working-class students, rather than importing tech workers from Ivy League schools.

As part of its deal with the state, Amazon committed to providing $5 million for workforce education and classes that serve neighboring residents, but made no promises about whom it would hire. Because of how the deal was constructed, local politicians have little opportunity to attach additional requirements, which leaves Pumarol out of options.

“We’re just not ready to say what we need from Amazon,” she says. “We’re just saying no to the subsidies and no to Amazon coming to New York City.”