The spatial impacts of Amazon

A review of a new book about Amazon highlights the geographic impact of the influential company:

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In some of MacGillis’s stories, the connection to Amazon is so tenuous as to be almost indiscernible; the characters’ problems seem to arise more from larger forces, such as globalization, gentrification, and the opioid crisis, than from any one corporation’s influence. A young man from small-town Ohio—alienated by his experience in D.C., where he starts college—returns home and enters Democratic politics. After scoring a local success, he runs for Congress, determined that the party not write off his opioid-ravaged, Trump-supporting region, but he fails to drum up more than a couple of union endorsements. A gospel singer who became a cultural force in Seattle during the ’80s watches as her neighbors are pushed out of the city’s historically Black Central District one by one.

Local energies may have been sapped for many reasons, yet in the coastal cities that MacGillis visits, Amazon’s disproportionate ability to further enrich and empower already thriving places and workers is glaring. Familiar though they are, evocations of the six-figure salaries and amenities available to young Amazon programmers—a café catering to their dogs, meeting space in a giant replica of a bird’s nest—acquire new salience set against Torrez’s experience. And the sense of entitlement on display in the company’s search for a second headquarters site is breathtaking. Local officials across hard-knock America prostrate themselves for a chance to host it. In the end, Amazon chooses the suburbs of the nation’s capital—already one of the wealthiest areas in the country—and walks away having amassed a great deal of useful regional data provided by eager bidders who probably never stood a chance.

In the less glamorous pockets of the country—the rural areas and small cities where MacGillis has spent so much time as a reporter—Amazon’s role in making economic hardship more entrenched is no less stark. In El Paso, Texas, Amazon has aggressively marketed itself to the city government as a go-to source for office supplies—which has pushed local purveyors to open up online storefronts on Amazon; a large cut of their sales goes to the corporation. In York, Pennsylvania, the headquarters of the once-fashionable Bon-Ton department store has been made extinct by Amazon and the broader retail consolidation it represents. The crisis of unemployment that has ensued is one that Amazon exploits, finding able bodies for its warehouses in nearby towns.

On his home turf of Baltimore, MacGillis explores most intimately the ebbing of human fulfillment that has accompanied Amazon’s promise of high-speed customer service. He profiles Bill Bodani Jr., who spent most of his working life at Bethlehem Steel’s Sparrows Point complex, outside the city. In the early 2000s, a serious injury forced him to retire in his mid-50s, around the time that foreign competition and other factors pushed the company into bankruptcy. Eventually, the Sparrows Point plant shut down and Bodani’s monthly pension payment was cut from $3,000 to $1,600. Now 69 years old and back at work as a forklift driver in a 22-acre Amazon warehouse, he returns every day to the exact same piece of land. The peninsula has been rebranded—it’s called Tradepoint Atlantic now—and has become what MacGillis calls an “all-purpose logistics hub” that houses, among other facilities, an Amazon fulfillment center.

While Amazon is not the only major corporation that could claim to have a a large impact on so many places in the United States (think Walmart, McDonald’s, and a few others), it’s particular reach and impact might just be unique. With an ability to reach millions of customers in their homes, tech workers in a lot of locations, and fulfillment centers spread across the country, Amazon reaches across multiple sectors and job segments.

This means that its impact on particular places could be quite disparate. Take the Chicago region as an example. Like many places, Chicago wanted Amazon HQ#2. This would add to both office workers in downtown Chicago as well as many more in fulfillment centers around the region. Yet, Amazon’s locations received more money from some poorer suburbs.

Each of these Amazon locations, high-tech or not, has the potential to shape the character of communities. Consider the fate of places like Elwood, Illinois that rely on warehouses and distribution centers. Is an Amazon fulfillment center a good trade-off in the long run? Does the chase for a new headquarters or some higher-quality jobs in corporate offices encourage communities to offer tax breaks and more? What kind of local citizen is Amazon – does it participate in and contribute to local activities, do its buildings and its footprint positively contribute to civic life?

Amazon my be global but it is local for many communities. How it interacts with these numerous local contexts may help decide its long-term fate.

The current holy grail of sports: cheaper labor with stars, MVPs on rookie contracts

Sports leagues have always had a few teams with a lot of money and a willingness to pay players. See the leaked details of Lionel Messi’s contract. These teams with resources tend to do well as their resources allow them to regularly compete for titles and pay to rectify mistakes.

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But, for the majority of teams, there is a regular pattern now: look for players on the cheap. Keep labor costs down. Do not pay too much for past performance. Sometimes this is due to limited resources, sometimes it is about ensuring profits, sometimes it has to do with salary caps or structures that try to ensure competitiveness.

This can occasionally lead to magical runs. The Leicester City title in 2015-2016 defied all odds. In baseball, teams like Tampa and Oakland regularly compete on the cheap and ship away players when they become too expensive. The Detroit Pistons could win an NBA title in 2004 without a major star. Tom Brady can be found in the sixth round.

But, these are rare. Without stars – who often are paid a lot of money – it is hard to compete year after year. Everyone hopes to strike gold now with a top pick, to find good fortune with home-grown talent, or to find diamonds in the rough missed by others. Hence, we see tanking and massive rebuilds as teams tear it all down and trust they can put together the right combination. This is the holy grail: have young players at a reasonable price and then hope it happens.

If it does not, teams often follow patterns. The Rockies pay to send the best third baseman of his generation to the Cardinals. The Lions and Rams paid big contracts to #1 overall drafted quarterbacks and now they swap them amid disappointment. The Blackhawks won multiple championships but now are burdened by big contracts paid to aging stars. Once these players command big money, it limits what else the franchise can do.

In each league, only one team can win it all each year. This would be true even if everyone spent all they could. But, when that does not happen, it is easy to see the interest in keeping labor and operational costs low as an impediment to winning. Even as the public debates inequality, the inequality in sports is real and affects outcomes and wages.

Homes as investments in continually increasing national median home values

The national median house value kept going up through November 2020:

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Despite a global pandemic and an economic downturn, U.S. home prices pushed new boundaries last year: The national median sale price for existing homes hit $310,800 in November, marking 105 straight months of year-over-year gains, according to data from the National Association of Realtors.

This could reinforce the now common viewpoint that homes are investments. Increasing median values for over eight suggests reinforces the idea that homes generally go up in value. Except for big economic crises – think the burst housing bubble of the late 2000s – houses accrue value over time. Even COVID-19 could not derail this.

This is often viewed as a good thing. Homeowners like that their homes are increasing in value because they can make more money when they sell. Communities take this as a marker of status. Realtors and others in the housing industry benefit. No one wants a drop in housing values across the board. (Of course, this is the median so the values can differ a lot by location.)

The commodification changes how owners, developers, and communities think about houses. They are not just the private spaces to escape the outside world – an established idea in the American Dream – but goods to profit from. An increasing value must be good and steps in other areas should be taken to protect home values.

This has numerous effects. It encourages Americans to invest resources in buying housing when that money could be put to use elsewhere. It contributes to single-use zoning where homes are protected from any other possible uses. It can exacerbate the inequality gap between those who can buy homes and those who cannot or between those with homes in places where the values keep going up versus those with homes in places with stagnant values.

Evidence that some have done well during COVID-19, many others have struggled

Socioeconomic data released recently highlights the ongoing bifurcated effects of COVID-19. Start with increasing levels of inequality as the wealthiest did well:

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According to a report by Thomson Reuters Foundation, billionaires including Amazon’s Jeff Bezos and Tesla founder Elon Musk have seen their wealth soar during the COVID-19 pandemic while the world’s poor face years of hardship, charity Oxfam said on Monday as it demanded steps to tackle inequality…

It could take more than a decade to reduce the number of people living in poverty back to pre-crisis levels, Oxfam said. Meanwhile, the collective wealth of the world’s billionaires rose $3.9 trillion between March and December 2020 to reach $11.95 trillion, the report calculated. The 10 richest men saw their net worth increase by $540 billion in the same period, Oxfam said.

The poverty rate in the United States had its highest annual increase with some groups more affected than others:

Economists Bruce Meyer, from the University of Chicago, and James Sullivan of the University of Notre Dame found that the poverty rate increased by 2.4 percentage points during the latter half of 2020 as the U.S. continued to suffer the economic impacts from Covid-19.

That percentage-point rise is nearly double the largest annual increase in poverty since the 1960s. This means an additional 8 million people nationwide are now considered poor. Moreover, the poverty rate for Black Americans is estimated to have jumped by 5.4 percentage points, or by 2.4 million individuals.

The impact of jobs lost globally during COVID-19 go far beyond the economic crisis of the late 2000s:

Four times as many jobs were lost last year due to the coronavirus pandemic as during the worst part of the global financial crisis in 2009, a U.N. report said Monday.

The International Labor Organization estimated that the restrictions on businesses and public life destroyed 8.8% of all work hours around the world last year. That is equivalent to 255 million full-time jobs – quadruple the impact of the financial crisis over a decade ago…

The drop in work translates to a loss of $3.7 trillion in income globally — what Ryder called an “extraordinary figure” — with women and young people taking the biggest hits.

And this is on top of the differential health impact of COVID-19.

It will both take some time to fully assess the effects of COVID-19 and then some time to interpret and act on the findings. As data and studies are released, as various parts of society reckon with the fallout, and people respond, themes and narratives will develop as to what happened and what it means.

Getting back to “normal” or pre-COVID conditions will surely be a goal. Yet, if COVID-19 did significantly alter economic and social conditions, will returning to “normal” be acceptable or will there be calls for a bigger response? It is not as if inequality was a non-issue before COVID-19.

All of this highlights that even with all the advances of the modern world, it is a struggle to keep up with the rapid social change and think about the future. This hints at the problems of complex systems and the ongoing human experience of living through difficult experiences.

The architectural view of Chicago’s Plan for Transformation for public housing

In an interview for Chicago, former architecture critic of the Chicago Tribune Blair Kamin responded to a question about how public housing in Chicago has turned out:

Cover of the 2000 report on the Plan for Transformation.

Overall, though, I would say the Plan for Transformation has been a disappointment. It took far too long. It built too little housing. The overall aim of integrating very poor people into their communities and the city at large has not been fully achieved. The continued segregation of Chicago by race and class continues. I guess you could say that the series helped set the agenda or some of the reforms that occurred, but I’m sure not satisfied with the outcome.

For low-income housing to succeed, it doesn’t need to be an architectural showplace. It just needs to do the basics, right. It needs to provide shelter, it needs to provide community, it needs to provide integration into the broader society, so [that] people can climb the ladder, economically and socially, if they want to. It doesn’t need to win a design award, although good design certainly can be a part of its success.

I do think it’s really important to say that design is not deterministic. In other words, better buildings will not make better people. Design is part of the equation of integrating the very poor into the city. But it can’t do it all by itself. It’s naive to think that. It needs to be combined with social service programs, and other things – schools, families that are supportive – in order for it to succeed. Design can open the door to success, but it cannot achieve that on its own.

And the corollary is true, too. You can’t blame bad design for the failures completely. You can’t completely blame bad design for the failures of high-rise public housing. The failure has had to do as much withe federal policy that was well intentioned, but foolish. Concentrating lots of very poor people and a vast high rise development, like the Robert Taylor Homes or Stateway Gardens, was an invitation to disaster. In a way, it doesn’t matter how the buildings are designed. The design simply accentuated the social problem these high concentrations of poverty.

Kamin highlights multiple important elements at play: how much replacement housing was actually created, the larger social issues still very present in Chicago (“segregation…by race and class”), and the role of design. I’ll comment briefly on each.

First, this was one of the fears of public housing residents as the Plan for Tranformation was getting underway: if high-rises are torn down, will they be replaced and by what? The Plan for Transformation has not delivered on the number of units promised. The issue of the high-rises may have been addressed but the issues simply morphed into different issues.

Second, is the issue really public housing or is it ongoing inequality in Chicago? As luxury buildings keep going up, conditions in many Chicago neighborhoods have not improved. Public housing has never been particularly popular in the United States but neither has actually acknowledging and addressing the deeper issues of why some city residents might have a need for public housing or why affordable housing is in short supply.

Third, considering the full set of forces at work in a particular context – design, social forces and processes, relationships, power dynamics, the organizations and institutions involved – is very important. If segregation by race and class is present in Chicago, certain institutional actors have particular vested interests, and the design all need to be considered, how might this change constructing buildings in the first place?

With all this said, I hope conversations about public housing and affordable housing in Chicago are not solely relegated to discussions of past decisions and poor outcomes.

The Simpsons portrayed a (rare?) comfortable working-class family life

If television helps provide viewers reference groups to compare themselves with, The Simpsons suggests working-class Americans can have a decent life:

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The 1996 episode “Much Apu About Nothing” shows Homer’s paycheck. He grosses $479.60 per week, making his annual income about $25,000. My parents’ paychecks in the mid-’90s were similar. So were their educational backgrounds. My father had a two-year degree from the local community college, which he paid for while working nights; my mother had no education beyond high school. Until my parents’ divorce, we were a family of three living primarily on my mother’s salary as a physician’s receptionist, a working-class job like Homer’s…

The Simpsons started its 32nd season this past fall. Homer is still the family’s breadwinner. Although he’s had many jobs throughout the show’s run—he was even briefly a roadie for the Rolling Stones—he’s back at the power plant. Marge is still a stay-at-home parent, taking point on raising Bart, Lisa, and Maggie and maintaining the family’s suburban home. But their life no longer resembles reality for many American middle-class families.

Adjusted for inflation, Homer’s 1996 income of $25,000 would be roughly $42,000 today, about 60 percent of the 2019 median U.S. income. But salary aside, the world for someone like Homer Simpson is far less secure. Union membership, which protects wages and benefits for millions of workers in positions like Homer’s, dropped from 14.5 percent in 1996 to 10.3 percent today. With that decline came the loss of income security and many guaranteed benefits, including health insurance and pension plans. In 1993’s episode “Last Exit to Springfield,” Lisa needs braces at the same time that Homer’s dental plan evaporates. Unable to afford Lisa’s orthodontia without that insurance, Homer leads a strike. Mr. Burns, the boss, eventually capitulates to the union’s demand for dental coverage, resulting in shiny new braces for Lisa and one fewer financial headache for her parents. What would Homer have done today without the support of his union?

The purchasing power of Homer’s paycheck, moreover, has shrunk dramatically. The median house costs 2.4 times what it did in the mid-’90s. Health-care expenses for one person are three times what they were 25 years ago. The median tuition for a four-year college is 1.8 times what it was then. In today’s world, Marge would have to get a job too. But even then, they would struggle. Inflation and stagnant wages have led to a rise in two-income households, but to an erosion of economic stability for the people who occupy them.

This critique hints at broader patterns of how television depicts the working class. The 2005 documentary Class Dismissed: How TV Frames the Working Class discusses how television tends to minimize the difficulties of working class life. The Simpsons fits some of these patterns: Homer still somehow keeps working despite his mistakes and anti-intellectualism, the family does not really get ahead, and the family seems happy-go-lucky. Shows with working class characters rarely challenge the economic and social systems that constrain working class Americans.

Similarly, The Simpsons falls into the mold of many sitcoms in television history where there are happy endings and the characters end with good relationships. Despite all the controversy about the show in its early years, the show is at its heart a typical sitcom. While the show does poke fun at many people and aspects of American life, at its basis is a loving nuclear family living in a single-family home with Homer having a steady job. The Simpsons is not a critique of working class life in the United States. Perhaps the portrayal of Mr. Burns best critiques the systems that keep the Simpsons in place.

One place for wiggle room in this critique may be the location of Springfield. The show has been very careful to not reveal where Springfield is within the United States. Homer’s income might be meager but cost of living does differ by region.

Even Lucy Van Pelt knows the value of getting into real estate

To close a scene of A Charlie Brown Christmas, Lucy Van Pelt explains what she really wants for Christmas:

A Charlie Brown Christmas

Lucy: Don’t worry. I’ll be there to help you. I’ll meet you at the auditorium. Incidentally, I know how you feel about all this Christmas business. Getting depressed in all that. It happens to me every year. I never get what I really want. I always get a lot of stupid toys and a bicycle or clothes or something like that.

Charlie Brown: So what is it you want?

Lucy: Real estate.

In addition to the words of Lucy, I recently heard a famous person describe their interest in real estate this way: “they aren’t making any more of it.” I have heard some variation of this numerous times in life. Since there are limits on how much real estate can be had, this can push prices up in places where there is high demand and limited property. (Of course, humans are pretty good at finding ways to create more real estate – think in-fill in many coastal cities – or finding financial opportunities out of what exists.)

If you have resources, real estate can be a good investment. Not only might you be able to use the property while you own it or gain money from its particular use, its resale value could be good. But you have to start with real estate or have the capital to get into real estate to reap the rewards down the road. Not all real estate is desirable – see a recent overview of some such properties in the Chicago area – even as many Americans assume that purchasing a home will pay off in the end.

And perhaps this hints at Lucy’s frustration. She keeps getting Christmas gifts for kids when she really wants to get ahead. Real estate would be a unique but wealth-building present. Forgot those ads with a car in a bow in the driveway: Lucy wants a property deed under the tree.

Looking for buyers for thousands of properties in Black communities in and near Chicago

Even as new skyscrapers join the Chicago skyline, thousands of properties in the Chicago barely attract any interest:

Locations of Cook County property tax 'scavenger sale' properties
Chicago Tribune graphic

County Treasurer Maria Pappas is out with a new report that concludes the 81-year-old program isn’t working. Not enough people are bidding on the properties, she says, and so the parcels often remain eyesores, a deterrent to revitalizing the neighborhoods they blight. That especially hurts struggling Black city neighborhoods and south suburbs, Pappas notes.

“Nobody wants these properties because they are in areas that are losing population, have high crime and aren’t worth the property taxes you have to pay to own them,” said Pappas, who conducts the sales as directed in state law. “So people abandon them.”…

Land Bank officials strongly dispute that notion, saying they’ve done more to return properties to productive use in just a few years than private buyers — often hedge funds making speculative bids — have achieved over a much longer period of time.

They acknowledge changes to the system are needed, and plan to ask lawmakers to approve them. “If the treasurer would like to support the reform of this, we couldn’t be more happy to have her join us,” said County Commissioner Bridget Gainer, who set up the Land Bank in 2013.

Vacant properties are not desirable in any community since they are not generating the revenues they could, whether because taxes are not being paid or the land is not being used in a productive way. Additionally, they are aesthetically unappealing – being often viewed as signs of blight or neighborhood problems – and could attract unwanted activity. Whether it is suburbs trying to fill empty grocery stores or dead shopping malls or communities with fewer economic opportunities looking for redevelopment, vacant or abandoned land is distressing.

This particular ongoing issue in the Chicago area is highlighted even more clearly when land not very far away – perhaps just a few miles and sometimes in the same municipality – is very desirable and multiple actors would want to redevelop it. Even during COVID-19, land in the Loop attracts attention as developers and architects eye property and vie to be part of what is viewed as a desirable area and a good investment.

In the United States, the contrast between the availability of capital and development by location can be incredibly stark. In this case, it is connected to significant residential patterns by race where land and buildings in Black neighborhoods are less desirable. There is land to be redeveloped in Chicago and it can be had rather cheap…but, due to powerful social forces over time, no one has any interest in the cheap land and they would rather continue to fight over and compete in the lucrative areas.

The new residential skyscrapers in Chicago continue to highlight capital flows and disparities

While reading reporting about skyscrapers going up in Chicago even during COVID-19, I continue to wonder: who is purchasing all of the residential units in times like these? Here is one example involving Chicago’s new third-tallest building.

Part of the Chicago skyline from East Jackson Drive – Google Maps

Located on a multilevel riverfront site at 363 E. Wacker Drive that belongs to the same Lakeshore East development as Aqua, Vista will house a 191-room hotel and 393 condominiums once it’s complete in the third quarter of next year.

For now, as COVID-19 rages and office cubicles remain empty, the tower sends the upbeat message that downtown has a future, and it’s not just for the 1%. Vista’s ground-level amenities will benefit ordinary citizens as well as those who can afford the tower’s condos, which start at around $1 million.

The entry point of $1 million means that the clientele for such a building is pretty restricted. The Chicago area is not a superheated real estate market like San Francisco or Manhattan or several other coastal cities yet tall residential buildings are meant for a select few.

On the other hand, another skyscraper project in Chicago might move to make their residential units available for rent rather than purchase:

The biggest Chicago skyscraper to have construction halted by the coronavirus pandemic could be revived in 2021 — as apartments instead of condos.

Unit layouts are being redesigned at 1000M, the Helmut Jahn-designed condo tower on South Michigan Avenue, in an effort to refinance the project and resume construction next year, “primarily as a rental project.”…

It was the largest condo development by unit count, at 421 units, launched in Chicago since the Great Recession all but shut down construction of condos in the city for several years. At 832 feet, it also would be the tallest Jahn-designed building in Chicago, where the German-born architect is based.

With rentals being in demand, this makes some sense in order to help get the project started again. At the same time, these rental units will not come cheap.

All of this residential construction suggests there is a lot of capital continuing to flow for prestigious building projects in desirable locations. COVID-19 might be a bit of a speed bump – whose impact will continue to be determined by its length – but big lenders, developers, and buyers still have an appetite for these prestigious residential units.

Focusing on the construction of these units can both help the public pay attention to where the money is really going as well as continue to highlight the disparities in development money by location. It is hard not to report on these new tall structures; they require a lot of effort and resources and will be part of a celebrated skyline for decades. Yet, within Chicago, as the skyscrapers continue to rise for the corporations and residents with plenty of resources, needs for housing and other development are very present elsewhere.

$741 million in tax incentives for Amazon in NE Illinois – with a bigger price tag for economically challenged communities

Amazon has constructed 36 facilities in the Chicago region since 2015. And they got a lot of help from taxpayers in disadvantaged communities:

WBEZ

To help pay for its vast expansion, the company and its developers have won at least $741 million in taxpayer-funded incentives in northeast Illinois alone, according to a Better Government Association/WBEZ investigation…

Amazon collected less than $100 million in public incentives for the 15 warehouses it built in predominantly white communities but won more than $640 million in taxpayer incentives for the 21 projects built in communities with larger nonwhite populations, the examination found. Many of those communities are either mostly Black, mostly Latinx or have higher concentrations of low-income residents, and with municipal budgets already short on cash.

Records show the three largest incentive packages Amazon received — totaling $512 million — all came from predominantly Black suburbs. By contrast, the company built warehouses in at least seven mostly white communities that reported offering no public incentives at all…

While many of the communities may get more jobs, experts interviewed say the lost revenue from taxpayer incentives will strain public resources to rebuild crumbling roads from the truck traffic, mitigate pollution from the exhaust fumes and noise and to pay for other services such as police protection and fire prevention.

That big companies seek out tax breaks and local incentives is not new. Amazon played the game on a grand scale with its proposed second headquarters.

But, this illustrates one of the problems with tax breaks in general: it is a race to the bottom. Companies look for communities that will have a hard time saying no. What mayor or local official wants to turn down local jobs? Or, turn away a big company with the status like Amazon? Once they have such a company in town, communities often build on this when marketing land and facilities to other firms by saying they are home to Amazon.

Yet, the deal may not be a good one. Jobs are not the only factor that matters in a community. As the story above notes, traffic, pollution, noise, the strain on local budgets and services, and the quality of the jobs also matter. Does the addition of Amazon or another large company make the community as a whole better down the road?

The system could be improved in multiple ways. All the communities in a region could stop competing in this way; that Amazon locates within one municipality could also have spillover benefits for other communities. One community’s gain is not necessarily one community’s loss; the region operates as a whole. If revenue was shared across a region, then tax breaks in a particular community would matter less. Or, communities could just commit not to offer tax breaks at all. If companies cannot play the game, they would have to locate places for other reasons.

These possible solutions do not solve the underlying issues: jobs and capital in a metropolitan region are not evenly distributed. Patterns by race and class continue for decades as companies, residents, and other seek out particular locations and not others. That some communities have to pay more for Amazon to locate there just compounds the problem.