The Journal Gazette
 
 
Friday, July 30, 2021 1:00 am

Three questions; unsettling answers

Amazon abatement fails multiple analyses

Dr. John Crawford

The reason for granting a tax abatement is to get a sought-after business to come to Fort Wayne, to expand or to stay.

Amazon's distribution center site has already received an abatement for the real estate, worth $16 million over 10 years. The company then requested $7.3 million in personal property tax abatements.

The first question to be answered when considering voting for a tax abatement is the “but for” question.

But for this tax abatement, would this company come to Fort Wayne? Since the building is already under construction, that question has been answered with near certainly that the project will proceed without the personal property tax abatement.

The second question to be answered is: “Why do we want this company to come here?”

The primary reason a company should be sought after is it pays high wages. Amazon promises 1,000 jobs at an average wage of $30,000. The average Allen County 2020 wage was $50,727; Indiana, $52,210; and the United States, $64,238.

Many discussions I have attended at City Council, Greater Fort Wayne and Northeast Area Partnership have identified low average wage as our No. 1 economic problem.

But some people may say, “It's 1,000 jobs!” If it were 5,000 jobs paying minimum wage of $7.25 an hour, would it merit a tax abatement? Of course not!

If we need to increase our average wage in this area, $30,000 jobs will not get us there and will actually lower our average wage.

A study in The Economist showed that when an Amazon fulfillment center came to Lexington County, South Carolina, the annual wage for warehouse workers dropped from $47,000 to $32,000 when a new wage floor was established.

Amazon has received more than $1 billion in local tax incentives across the country, promising an overall increase in economic activity.

The fulfillment centers often have led to a negligible net effect on the overall economy where they locate, and the tax incentives have been a bad investment.

The third question to be answered when considering a tax abatement is, “Are there any red flags about this company?”

This project started as Project Mastodon, denying transparency, public input and debate about the desirability of a tax abatement for this company.

This tactic has been used by Amazon in other communities, such as Project Bronco in Idaho. This was a bad precedent to set in Fort Wayne and, to me, is a red flag for how this company operates.

The New York Times reported the Amazon economic model has very low upward mobility, leading to high turnover.

Benefits are often higher at other warehouse companies than at Amazon.

Amazon has twice the incidence of serious injuries compared to other warehouse companies. A high repetitive stress injury rate is attributed by many employees to very high productivity targets often impossible to reach.

So, in my opinion, this tax abatement failed on all three questions:

1) The “but for” question: It's coming anyway.

2) The “why” question: Amazon pays lower than our average wage and doesn't create broad-based economic growth.

3) The “red flags” question: Numerous reports have shown potential problems.

I would never have voted for this at City Council.

There is also an offensive feel to this abatement. Fort Wayne citizens would have paid a slightly higher tax rate if Amazon had gotten the abatement.

This abatement would have yielded a higher profit for Amazon and its owner, Jeff Bezos.

He is currently the richest man on earth (and in space) with a net worth of $211.4 billion.

The total assessed actual value of all property in 2020 owned by all 270,402 Fort Wayne citizens is $9.8 billion.

So, why give a tax abatement to a man with a net worth 21.5 times greater than the entire value of Fort Wayne so he can make a greater profit?

City Council made the right decision to deny this personal property tax abatement request. The present process City Council has in place should be re-evaluated if that gave a passing score to a company paying well below our average local wage.

Greater Fort Wayne needs clear, easily understandable criteria to negotiate with business prospects. A definite wage level minimum should be established for a company to be considered for an abatement.

Dr. John Crawford is a former member of Fort Wayne City Council.


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