Big Reputation & The Dark Side of Amazon HQ2 Bid

Philly announced it was named to the top 20 cities competing for Amazon’s second headquarters.

At first glance, Amazon in the city sounds alluring. 50,000 new high-skilled jobs (many over $100,000)! $5 billion invested in “the community” (i.e., building the Amazon campus.) Possibilities for local businesses to get more business with Amazon!

Here’s the flip side of the excitement.

Amazon & the local economy: job destroyer?

As we mentioned recently, there’s a new movement in business: triple bottom line. Rather than just caring about a business’s financial statement, businesses are considering how people and profit benefit in their company’s equation. But is Amazon furthering that movement’s sentiments?

One report from the Institute for Local Self-Reliance (ILSR) shares that Amazon stifles competition, erodes jobs and threatens local communities. Amazon rivals have little choice but to “become third-party sellers on its platform,” the report says, pointing to one way Amazon dictates trade. Despite arguments that Amazon is creating jobs, ILSR estimates that Amazon has eliminated 149,000 more jobs in retail than it has created through its warehouses. But even the jobs that Amazon creates in its warehouses are often temporary or independent contractors, like Amazon drivers who have to pay for their own cost and often don’t receive social protection or benefits.

With half of all US households subscribed to Amazon Prime, many are questioning if Amazon has gotten too big of a monopoly. During the presidential campaign, Donald Trump said Bezos has a “huge antitrust problem because he’s controlling so much.”

As Amazon continues to grow, it could destroy 1.5 to 2 million jobs in brick-and-mortar stores: grocery stores drugstores, warehouses, and delivery services.

How Charitable is Amazon?

Another talked-about bonus about Amazon coming to town revolves around philanthropy. How will many of Philadelphia nonprofits benefit from the influx of people and dollars from Amazon?

Amazon doesn’t exactly have a great reputation in its home city. Philanthropy in Seattle has been virtually nonexistent until very recently, and Amazon still doesn’t disclose exactly what it gives to charity, nor match employee donations or compensate for volunteer hours. (One opt-ed by the Economic Opportunity Institute describes Amazon as a “sociopathic roommate, sucking up our resources and refusing to participate in daily upkeep.” Ouch!)

Despite Jeff Bezos listed as the world’s richest man at $105.1 billion, he hasn’t signed the Giving Pledge, which is a commitment of the world’s 169 wealthiest individuals to give away a majority of their fortunes. Facebook CEO Mark Zuckerberg and wife Priscilla Chan, Bill and Melinda Gates, Netflix CEO Reed Hastings & wife Patty Quillin and Warren Buffet are all included in the ranks.

Bezos has never appeared on the Philanthropy 50, a list of America’s 50 largest donors, that is published yearly by The Chronicle of Philanthropy and is estimated to give about $100 million in total on charities, an estimated one-tenth of 1 percent of his fortune.

secrets of Amazon Smile

But Amazon has a direct giving program with sales, right?

The numbers are still slim for this charitable cause, too. In 2015, the AmazonSmile Foundation donated $12,867,013 to charity, according to the foundation’s Form 990-PF – which is less than 0.5 percent of Amazon.com’s retail sales.

In 2015, Amazon generated about $99.1 billion in the U.S. and international retail sales or about 0.00012 percent of sales: That’s $1.20 in donations for every $10,000 in sales.

 

Amazon HQ2 has its fair share of headaches: traffic jams, labor pains for other businesses and a skyrocketing housing market. Additionally, Amazon is demanding big incentive packages. Although Philadelphia passed a “megabusiness” bill coincidentally timed during the Amazon bid proposal, there’s no official word on just how much Philadelphia offered for incentives. As Billy Penn mentioned, incentives often create winners and losers – the losers being “the less politically connected, smaller businesses.”

Sure, Amazon could bring benefits to the city. We’d gain bragging rights, an influx of 50,000 (high-skill) workers and an addition to the economy. But is it worth it at the expense of the 5^th largest city and the poorest major US city?

With a vague RFP, there’s a lot of mystery about the Amazon’s actual cost and benefits for the city beyond actual HQ building. How much will Amazon give back to the city? And what would they actually invest in: our infrastructure, bike lanes, public transit – or none of the above?

Rather than trying to impressing Amazon with the city of Brotherly Love, the company should be making the case on how they’d change our city – for the better.