Experts: Amazon didn't need Pa.'s $22M incentive package

• DCED approved $22.25 million incentive package for Amazon to expand by at least 5,000 jobs in Pa.
• Researchers argue Amazon had funds and desire to expand without government subsidies.

The state recently announced its approval of a $22.25 million incentive package for Amazon to create jobs and invest in Pennsylvania, but independent researchers argue the major internet retailer would have expanded regardless.

The incentives, courtesy of the state Department of Community and Economic Development, include a $5 million Pennsylvania First Program grant, $15 million in job creation tax credits and $2.25 million in funding for employee training, according to a news release from Gov. Tom Wolf's office.

Department spokesman David Misner wrote in an email that the assistance is contingent upon Amazon investing at least $150 million statewide and creating at least 5,000 new, full-time jobs paying at least 150 percent of federal minimum wage during the next three years.

The company must maintain those new and current positions an additional four years, Misner wrote.

Amazon will expand its fulfillment and distribution operations in the state, according to the release.

Amazon operates a fulfillment center in Fairview Township that employs more than 800 people, and the company has committed to opening a center in Northampton County as part of the agreement, according to the department. It's unclear whether the York County facility will expand as a result of the incentive package.

The release also notes that the company's new Prime Now initiative requires the company's fulfillment centers to be in close proximity to their customers.

Issue: That's where independent researchers have an issue with Amazon receiving incentives.

Greg LeRoy, executive director of Good Jobs First, said he's always critical when states or communities pay a company to do something it would have done anyway.

"It's been public knowledge for a long time that Amazon must do this (to expand its Prime Now plan)," he said. "Why subsidize them for it?"

Prime Now offers free two-hour delivery to Amazon Prime members in some areas and one-hour restaurant delivery in selected markets. It is not available in York.

Amazon representatives did not immediately respond to a media request asking whether the company would have expanded without the incentive package.

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Olivia LaVecchia, a research assistant at the Institute for Local Self-Reliance, noted that Amazon is a big enough company to expand without tax breaks.

When asked why the state would provide incentives for a company that could afford to expand without them, Misner wrote that incentives "are based on the analysis of the size and scope of the project."

"The agreement represents a significant stimulus to Pennsylvania’s economy, employment environment and overall well-being," he wrote.

Tax breaks: LaVecchia, who said she's researched Amazon incentive deals for about two years, said the company is a "master" at getting money from communities.

A Civic Economics study found that the company sold $44.1 billion worth of retail goods in 2014 while avoiding $625 million in state and local sales taxes thanks to tax breaks.

LaVecchia added that the jobs Amazon does create tend to be physically taxing and, though above minimum wage, not commensurate with other companies in the same field.

LeRoy said he doesn't have specific issues with Amazon, but he takes issue with local governments "putting their finger on the scales" in favor of big business.

Cookie Driscoll, board chair of the National Small Business Association and the owner of a small retail store in Fairfield, Adams County, said "the big guys are constantly getting breaks," though she doesn't believe her business directly competes with Amazon.

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Small businesses: Driscoll said legislators need to always be aware of how their decisions impact small businesses, which create jobs and drive the economy.

David Smith, co-owner of i-ron-ic in downtown York, lauded the state's announcement because he said it might bring more "millennial types" into the state, and they tend to spend money in cities.

LeRoy said the new Amazon jobs will just decrease other retail jobs throughout the state.

"(Residents) won't have more money to spend on retail," he said. "Any gains will come at the expense of mostly small retail businesses."

The Civic Economics study concluded that Amazon sales produced a net loss of nearly 136,000 retail jobs.

"It's important for us to question what is economic development," LaVecchia said. "For true economic development, governments should be investing in local businesses."

— Reach David Weissman at dweissman@yorkdispatch.com or on Twitter at @DispatchDavid.