by Dr. Roy Cordato
Senior Economist, Emeritas
New York City and State were on the verge of handing over up to $3 billion in subsidies to Amazon as an enticement (bribe) to get them to locate a new headquarters on Long Island in Queens. Luckily for the people of New York, Amazon is backing out of the deal. (The details can be found here.) The fact is that this deal was more likely to hurt, rather than help, New York’s economy. NYC is currently fully employed with a 4 percent unemployment rate. The state has a 3.9 percent unemployment rate. Unless this is about employing out-of-staters, any new demand for workers would have to be filled by those who are already employed. The cost of labor would be bid up and existing local businesses would be squeezed. The money promised by the city and state would have been a subsidy to Amazon that would give them an unfair advantage in labor and capital markets. Congratulations New York, you lucked out.