Amazon forewent incentives to build massive facilities

Business

Amazon’s new fulfillment center in Albuquerque | KRQE File

NEW MEXICO (KRQE) – Set to open later this year and promising over 1,500 jobs, the Amazon sortation, and fulfillment centers represent some of the largest development projects near Albuquerque in recent years. But Amazon reportedly didn’t ask for — and didn’t get any — economic incentives to come here.

The Amazon facilities are part of the Upper Petroglyphs development project — a 1,200-acre area west of Atrisco Vista Boulevard. While the sortation center will be over 270,000 square feet and the fulfillment center will be 650,000 square feet, according to Amazon Operations Public Relations Specialist Eileen Hards, they make up only about a quarter of the total floor space that could one day fill up the Upper Petroglyphs according to a May 2020 analysis obtained by KRQE through a public records request.

To support the Upper Petroglyphs industrial park and the new Amazon facilities, Bernalillo County spent $6.5 million on infrastructure, explains Bernalillo County Commissioner Debbie O’Malley. This money went towards public infrastructures, such as road improvements near the new Amazon facility, but the funds didn’t go directly to Amazon.

Beyond that, “there were no other subsidies that went into this project,” O’Malley told KRQE. And she says that most of the money Bernalillo County invested has already been returned to the county via fees paid by Amazon. KRQE reached out to Amazon to confirm that there were no tax breaks or other incentives used in the Amazon deal but was unable to receive confirmation.

If it’s true that Amazon received no incentives, this project is somewhat different from many Amazon deals across the country that have received tax breaks, state grants, and other forms of incentives. Throughout the US, Amazon has received over $4 billion in subsidies to build its warehouses, data centers, and facilities according to Good Jobs First, a research center that focuses on accountability in economic development.


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The new facility west of Albuquerque is huge, but comparable to its neighbor, a Tempur-Pedic factory, and much smaller than some other Amazon fulfillment centers across the US, such as the San Antonio, Texas center. Data from Amazon, bizjournals, and mwpvl.


“The big picture is that Amazon is a very profitable, giant corporation,” explains Kasia Tarczynska, a research analyst at Good Jobs First. And despite turning record-breaking profits during the pandemic, Amazon is “getting huge tax subsidies and other subsidies from many, many jurisdictions across the country,” she says.

KRQE reached out to Amazon to learn why they decided not to apply for incentives the county and state offer businesses. In response, Xavier Van Chau, a company spokesperson, said: “Amazon is excited about our ongoing investments and expansion in New Mexico. As we grow our operational footprint, we focus our site development based on our customer needs and where we see job opportunities for local talent. We’re committed to being a good community partner as we build out our presence in the state.”

Normally, New Mexico and Bernalillo County offer a range of assistance and incentives to both large and small businesses looking to set up shop. For example, developments can apply for impact fee waivers, which help new businesses avoid fees they have to pay to the county. Or new developments can sometimes get Local Economic Development Act money, which is essentially a grant to the company to support job creation. Although we don’t know exactly what Amazon might have qualified for, Amazon reportedly didn’t seek any of these types of support for their massive new facilities — despite the fact that they’ll create jobs.

“We will have over 1,500 jobs available between these two facilities,” says Eileen Hards from Amazon. Both full and part-time jobs will start at $15 per hour. And, of course, building the facilities also supported local construction jobs.


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Although some subsidies to Amazon have gone unrecorded, and the value of others are unknown, researchers at Good Jobs First have tallied over $4 billion in various subsidies that have gone to Amazon since 2000. Data from Good Jobs First.


Construction of the Amazon facility and other businesses within the Upper Petroglyphs area is expected to directly support 649 jobs over the coming eight years if all goes according to plan as laid out in an analysis Impact DataSource conducted for Bernalillo County back in 2020. Those jobs could have an average annual salary of $45,000, and the analysis estimates that $233,655,840 in salaries will be paid to construction workers during those eight years.

Once the envisioned Upper Petroglyph facilities, including Amazon, are up and running, they will bring an estimated 2,328 new residents to Bernalillo County over the first 30 years of operation, according to the Impact DataSource analysis. Of those, 776 will be direct and indirect workers. As a result of the influx, an estimated 152 new residential properties might be built in Bernalillo County, the analysis shows.

That also translates into tax revenue for Bernalillo County. The analysis estimates that Bernalillo County will earn over $77 million in property taxes and $109 million in gross receipts taxes over the first 30 years of business operations, including Amazon and others within the Upper Petroglyphs. An additional $166 million or so in tax revenue is estimated to go to the City of Albuquerque. Albuquerque Public Schools (APS), Central New Mexico Community College, and the University of New Mexico Hospital can also expect some tax revenue. The report estimates that they’ll divvy up over $137 million during the first 30 years.

But there are costs too.

Providing basic services to new residents and developments brought to the Upper Petroglyphs could cost the City of Albuquerque and Bernalillo County a combined $142 million over the first 30 years, the analysis shows. New families also bring new students. Educating those new students bought by the developments could cost APS more than $105 million over that time, the analysis estimates.

Still, all numbers considered, the Impact DataSource analysis shows that the benefits outweigh the costs. But there may be more to consider than just the numbers: An analysis by the Economic Policy Institute (EPI), a nonprofit think tank, found that while Amazon fulfillment centers clearly create warehouse jobs, the new employment is “likely offset by job losses in other [local] industries.”

“Amazon isn’t only hiring people who don’t have jobs,” explains Ben Zipperer, an economist at EPI who coauthored the analysis on Amazon. “It’s attracting workers from other businesses that already have jobs.”

These could be people coming from fast food or retail jobs, he says. And while these folks may be able to find higher wages at Amazon, the overall impact on employment in a local area is often minimal.

“In those places that Amazon builds fulfillment centers, you do see [that] there’s more people working in warehousing,” Zipperer says. But when it comes to the “overall impact on the local economy, we didn’t find any evidence that it [Amazon] significantly increased the number of people working.”

If Amazon doesn’t necessarily boost local employment, will it at least boost wages across Albuquerque? We won’t know until it happens, but a 2018 article from The Economist explains that in some areas, Amazon warehouse jobs seem to be linked to lower wages for similar occupations across a region. And Zipperer from EPI notes that working conditions are reportedly poor in some Amazon locations. Finally, even if Amazon doesn’t push down wages, their starting pay isn’t especially competitive compared to similar jobs.

In fact, at around $15 to $15.50 an hour, according to Amazon and a May 21, 2021 job posting, starting wages for an Albuquerque-based Amazon “Sort Center” job are 37.5% lower than the average hourly wage of $24.80 in Albuquerque. And the starting pay is only $1.42 per hour more than similar stock moving jobs in Albuquerque, according to data from the US Bureau of Labor Statistics.

Still, Bernalillo County officials say Amazon will be a boon to the local economy. And folks at the Mid Region Council of Governments tend to agree. “Amazon’s been the hero of COVID,” says Augusta Meyers, the economic development program manager at the Mid Region Council of Governments. “They’re the ones who got everything everywhere when people couldn’t leave their houses.”

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