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Tribune Editorial: Did Utah’s Amazon deal need to be so sweet?

First Published      Last Updated Jul 13 2017 09:27 pm

The good news is internet giant Amazon will add 1,500 jobs in Salt Lake County.

The bad news is it will lower the average wage paid in the county.

On the face of it, recruiting a player like Amazon to build one of its fulfillment centers in Utah is a no-brainer. In addition to the jobs, the center near the new prison in Salt Lake City will generate construction employment now and property taxes later. That's why the Governor's Office of Economic Develop offered Amazon a $5.6 million incentive package.

But the deal raises questions about the intent of GOED incentives, which is not just to bring in jobs but also to lift wages. That is why GOED only incentivizes jobs that pay at least 110 percent of a county's average wage. In Salt Lake County, that average is $49,449.




Amazon says it intends to employ 1,500 at the center, but only 130 of those positions would be above the 110 percent threshold. So the state's incentive package is built on only those 130 jobs, not the other 1,370 Amazon jobs, which are expected to average $30,000.

As a result, the state is giving incentives to a company that will bring in 10 lower paying jobs for every one higher paying one. Given that Salt Lake County is at virtually full employment, the employees Amazon hires for those $30,000 jobs will be quitting other employers. Should the state be subsidizing that?

Government incentives for Amazon's fulfillment centers, like the centers themselves, are all over the map, according to a Tribune investigation published Sunday. In Coppell, Texas, Amazon received no state subsidy to build a fulfillment center, although the city came up with $547,000. Aurora, Colo., also didn't get a state incentive for its Amazon center, but the city came up with its own $1,184,000. At the other end, Fresno, Calif., offered more than $11 million. (Salt Lake City did not offer any incentives in addition to GOED's $5.6 million.)

Unlike other GOED-incentivized projects, it's not clear that Utah was competing with any other state for the center. Amazon wants it here primarily to serve Utahns. Most surrounding states already have centers.

And, of course, all of this ignores the Utah jobs that have been lost because Amazon's decimation of traditional brick and mortar retail. To be clear, that upheaval is driven by customer preferences, and the disruption is inevitable. But it's a reasonable consideration when deciding how much economic development can be attributed to Amazon.

Amazon needs Utah as much as Utah needs Amazon. A smaller offer still would have closed the deal.

 

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