Progressives Perpetuating Poverty

Danny Cendejas, an organizer with La ColectiVa, addresses concerns about HQ2. Photo credit: Washington Business Journal

Amazon’s decision to scrap a $2.5 billion investment in New York City has emboldened far-left progressives in Northern Virginia to oppose the e-commerce giant’s plans for plans to build an East Coast headquarters in Arlington. Critics of HQ2 are targeting $23 million that Arlington County will contribute to the pot of incentives, reports the Washington Business Journal.

“The county should vote down the deal,” said Roshan Abraham, an organizer with Our Revolution Arlington in an anti-Amazon meeting Monday. One of the richest companies in the world does not need the county’s money, he said. “If Amazon chooses not to come to Arlington over $23 million, good riddance.”

A primary concern among leftist activists is rising rent. As 25,000 highly paid Amazon employees start working in Arlington, they will bid up housing prices. About 3,000 apartment units in Alexandria and Arlington between South Glebe and West Glebe roads could become unaffordable for the largely Latino community living there once Amazon moves in, say Amazon foes.

I sympathize to some degree with those who resent the incentives, including some $500 million in workforce grants from the state. Amazon is the world’s most valuable company, CEO Jeff Bezos is the world’s wealthiest man (at least until his divorce is settled), and the showering of massive tax breaks on Amazon is manifestly unfair. But the world is unfair, and the rational response is not to chase Amazon out of town but to craft a deal that is tax-flow positive for state and local government, and work to ameliorate negative impacts on housing and transportation. To do otherwise is to limit opportunity and perpetuate poverty.

Left-wing activists regard the deal as a zero-sum game. They see Amazon getting giant subsidies and giving back nothing in return. But that view is grievously flawed. While Amazon is unlikely to hire many lower-income Northern Virginians directly — not unless they somehow acquire advanced technology skills — it will inject billions of dollars into the regional consumer and service economy, creating jobs that lower-income workers can qualify for. In all likelihood, that stimulus will force employers in a low-unemployment labor market to bid up wages.

Many Amazonians will want to live near where they work — indeed, Amazon will encourage them to in order to limit stress on the regional transportation network. All other things being equal, those employees, earning an average of $150,000 a year, will push up the price of nearby housing. But all other things need not be equal. The law of supply and demand may be an alien concept to many lefties, but if Arlington and neighboring jurisdictions allow builders to increase the supply of housing in equal measure to the increasing population, higher prices can be contained.

Progressive activists could play a useful role by lobbying local governments to make it easier to build new housing and relax some of the regulations that make it so expensive. But that would force them to confront the trade-offs inherent in local government. More housing equals more households, which equals more school enrollment, more traffic congestion, more demand for government services, and a demand for more revenue. It is so much easier just to stoke grievances and block change.

It’s a good thing for poor people in Arlington to organize and make their concerns heard. Amazon will exercise tremendous clout in the county, and there needs to be a counter-weight. But replicating the strategy of New York leftists and running Amazon out of town won’t help Arlington’s poor. To the contrary, evicting Amazon would limit economic opportunity. Of course, leftist progressives are so addicted to grievance mongering that they are blind to the positives. If they got their way, the lives of everyone, poor and well-to-do alike, would be immeasurably worse.

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29 responses to “Progressives Perpetuating Poverty

  1. As was the case in New York, I think many of the incentives and tax preferences are things that Arlington offers in general to other companies locating or expanding. Just how much is specific to this project is not….specified.

    No question, there will be a huge impact on rents and property values, but 1) landlords vote too and 2) that’s where the big fat tax payback will come from.

  2. What’s Good for the Goose
    is Good for the Gander..
    Give us ALL tax breaks…..

  3. As we have pointed out many times on this blog, there is no comparison between the New York Amazon deal and the Virginia deal. The crony capitalist and monolithic government power instincts of the New York Governor and New York City Major fed and destroyed any chances of a legitimate NY deal.

    The big question now is whether the progressive crony capitalist and monolithic government power instincts of the New York are spreading to Virginia? Given the stunning recent events, including those arising in Jim’s post, there is great reason for concern in this regard. Virginia may well now be reaching a hinge point, swinging into the arc of New York, Connecticut, New Jersey and California.

  4. so geeze… the folks on the right don’t like paying “bribes” to Amazon to locate here and the folks on the left see Amazon as a parasite sucking a community dry by eating up resources and making affordable housing scarce.

    Forget the “jobs” – in the end – we are “paying” for them with bribes and higher rent and more traffic congestion, etc… so what’s the upside?

    Oh wait… someone is going to get lots of money, right? who is that?

  5. As I have stated before, the “incentives” provided to Amazon are outlandish. I think it is highly likely Amazon would have chosen Northern Virginia without incentives, but we will never know.

    That being said, Arlington made the offer, so I seriously doubt if the county will back out. And $23 million is relatively cheap. Arlington will recoup that fairly quickly in property taxes on Amazon’s property.

    As far as housing is concerned, that was my first reaction when I heard that Amazon had selected Northern Virginia–those high housing costs are going higher. Even now, they are unbelievable to me. There was a story in the Post yesterday about a 76-year old veteran who has a full-time job making $66,000 annually and who is afraid that he might become homeless. He has to move out of his apartment and he is having problems finding another one that does not cost much more than the $1,200 per month that he is now paying. This is supply and demand at its core.

    I find it interesting that many on this blog blame local governments for the lack of housing. Please, tell me specifically what local governments should do to “make it easier to build new housing” and what regulations need “relaxing”. The population density of Arlington is the highest in the state. What else should it do?

    • ” I find it interesting that many on this blog blame local governments for the lack of housing. Please, tell me specifically what local governments should do to “make it easier to build new housing” and what regulations need “relaxing”. The population density of Arlington is the highest in the state. What else should it do? ”

      I’ve asked the SAME question more than once here and it’s pretty much a claim without real evidence…

      Some of the folks who assert this say they are “free market” types and that if the “free market” were allowed to “work” that it would meet the price points for “affordable” housing.

      So then I ask for a list of cities that have done that and have more affordable housing than places that are restrictive.

      So perhaps a good question right now is – what exactly should Arlington do – to make sure that affordable housing is available or perhaps to ask what Arlington is doing to make affordable housing “scarce” …

      We have a real test case.

      • There’s no chance that the free market will create affordable housing in a neighborhood that has suddenly become more desirable that it once was. In fact, it’s the most essential aspect of the free market – supply and demand – that explains why the free market won’t create affordable housing in a suddenly popular neighborhood.

        Let’s define Crystal City as the zip code 22202 and call that “ground zero” of Amazon in Virginia. Note that this zip code includes Reagan National Airport.

        https://www.unitedstateszipcodes.org/22202/

        Prior to Amazon … It has a population of 22,543 covering 3.87 sq mi for a population density of 5,824 per sq mi. There are 15,278 housing units with 13,111 occupied. The median home value is $585,600 and the median household income is $110,092.

        In what will seem stunning to many readers, this zip code is relatively affordable by Arlington County standards. The median household income across Arlington is just under 22202’s $110k at $108k. However, the median property value across Arlington is higher at $623k.

        Now comes Amazon.

        Average salary is $150,000. However, let’s assume that 50% of these people have wage earning partners making $100,000. That’s a household income of $200,000 for the Amazon households.

        The people who live in the zip code today can afford 5.3X their household income for their residence. Using the same ratio, the new Amazon households will be able to pay $1.06M per residence.

        The most densely populated zip code in Virginia is 24142 in Radford. Let’s throw that out assuming it is a college town outlier. The next four most densely populated are in Arlington, VA. 22202 is not among them partly because 22202 includes National Airport. They average about 12,000 people per sq mi. Let’s “spitball” 22202’s population growth

        2019 – 23,000
        2020 – 24,000
        2021 – 25,000
        2022 – 26,000

        We’ve added housing for 3,000 additional people in 22202 (over 3 years). Let’s assume that all the vacancies get “mopped up” in the existing housing stock adding another 1,000 people. That’s 4,000 additional people living in 22202 by the end of 2022. But Amazon has brought 12,500 people to the region by 2022 (assumption of 50%) and each Amazon employee brings another 1/2 person. That’s 18,750 new people.

        Now add the adjacent zip codes to 22202 – 22211 (zip code for Ft Myer), 22204 (12.3k per sq mi), 22206 (8.4k per sq mi), 22305 (10.2k per sq mi).

        Since the Army probably won’t bulldoze Ft Myer we have 3 out of 4 adjacent zip codes to expand. That’s another 12,000 people by 2022. We’re up to 16,000 of the 18,750 additional new people we have to house. Where do we put the remaining 2,750 people and account for non-Amazon population growth? Fun fact – the population of Arlington County increased by 13.2% from 2010 – 2017 without Amazon.

        I defy anybody to go through these facts and assumptions (or use your own assumptions) and tell me how the “free market” is going to build affordable housing as the Amazonians come flooding in.

        • Don –
          I respect your opinion, and surely you are right near past be prologue. But I believe that ways can be found under these circumstances today, to accomplish remarkable things in Northern Virginia here at this time, within these truly remarkable circumstances now at hand, including our new engines and tools of power and creatively, and our abilities to arrange these urban places for cumulative impact. I has happened before, and it can happen again, the rebirth of cities are all over the place. But leadership is key even in best of circumstances. Start at the Fiscal Fix and go from there. Plus there is huge talent to do this in Virginia right now, including in Richmond and soon in Arlington, if our sick culture will release that talent to do what it is capable of doing.

    • Yes, Arlington and Alexandria are Great test cases for finding new ways to build and renovate and continuously maintain effective affordable housing. Reasons for that include:

      1. While Amazon represents a threat to affordable housing, it also at the very same time represents a huge opportunity to revolutionize affordable housing, while also it creates solutions build culture within those new affordable housing units, all financed by the new wealth that will be injected into the larger region by reason of Amazon’s presence.

      2/ One above should be facilitated by Arlington’s/ Alexandria’s smart growth culture, as well as injection of a great new engine of higher education into the mix. Here I speak of the Va. Tech initiative, and Amazon’s innovative culture and energy level.

      3. Much of the existing housing stock in Alexandria and Arlington lends itself the new affordable housing initiatives, plus obsolete neighbors can be torn down and/or rearranged to create dynamic, and vibrant new neighborhoods and communities serving a closely knit diverse groups of people, in traffic neutral configurations, all conceived as a part of an effort to solve the regions overall traffic gridlock.

      4. Here we might think of this effort as local and regional Marshall Plan. We can do all this given a wonderful confluence of events. My greatest concern however is my sense (perhaps wrong) of the growing incompetence of Arlington’s local government, fed by the progressive leftist Identity movement, as represented by Danny Cendejas and his ilk. Call this the Charlottesville Affect spreading to other parts of Virginia.

      • What does all this mean? It is a lot of high-sounding generalities with little substance. And I see little relevance to how it pertains to local governments and what they should/could do. I do find the comments in Item 3 somewhat detached from reality. From what I can see when I visit family in Northern Virginia, “existing housing stock” does not lend itself to affordable housing; rather, existing housing stock is torn down and replaced with million dollar homes or condos.

        • “I do find the comments in Item 3 somewhat detached from reality.From what I can see when I visit family in Northern Virginia, “existing housing stock” does not lend itself to affordable housing; rather, existing housing stock is torn down and replaced with million dollar homes or condos.”

          Dick, I spent years, from earliest childhood, living then working as a real estate guy in Arlington Country, as did my kin going back for generations. There remains today a great deal of existing housing stock in Arlington matching that description for affordable housing that used to be middle class housing, built from the 1920s and 30s on.

        • “What does all this mean? It is a lot of high-sounding generalities with little substance. And I see little relevance to how it pertains to local governments and what they should/could do.”

          We have discussed this endlessly on this blog earlier.

          Look back in the archives into stories dealing with real estate development and smart growth, and new urbanism, including a lot on Arlington County, and Northern Virginia generally, and then follow the threats of related articles. You’ll find goldmines of info on these and related topics.

          You might start with The Fiscal Fix found here:
          https://www.baconsrebellion.com/wp/the-fiscal-fix/

        • See my comment above. Arlington and Alexandria combined are 65 sq mi. They have grown 14% from 2010 – 2017 (without Amazon). They will end this decade at about 418,00 people or 6,400 people per sq mi. Including Amazon they will grow by about 12,000 people per year starting at the beginning of the next decade. They will end the next decade at 538,000 people and a population density of 8,300 per sq mi.

          The only possible way these jurisdictions can provide any level of affordable housing is through strict regulation. They will either use money from the increased tax base to build and manage affordable housing or they will mandate the construction of affordable housing along with the construction required to support the hyper-growth.

          In a free market system supply and demand set price. Given the 65 sq mi size (along with places like Arlington National Cemetery, the Pentagon, Reagan Airport and Ft Myer taking up big chunks of land) the demand will overwhelm supply and prices will skyrocket. Just ask Seattle.

          • Reed Fawell 3rd

            Don –

            I would hope talented people are already into this problem, its challenges, mine fields, and opportunities big time. First analyze everything built and going on inside the beltway on Virginia side. Simultaneously do the same outside the beltway, including say Fairfax and Prince William at first. Doing this assume you’ve erased all political borders from consideration, and pretend you are the King of the place with absolute powers. Then assume the best case for the Amazon affect over say for next 30 years out, here we talking about magnet affect of this starter engine with cumulative growth, like a Silicon Valley scenario. Be that outrageously bold. Then mix and match for best advantage, its all about synergy of the mix and arrangement. Then draw it all out in all its possibilities, then figure it all out as how to make it all work on the ground. And go at it. What’s to lose? Worst that happens is we rid ourselves of the incrediable defeatist sick funk we are in. Believe me, in the 1930s when Northern Virginia took off like rocket ship, we were a hell of lot sicker and dispirited than we are now.

    • I tend to be suspicious of “incentives” that are not related to improving infrastructure. And like DHS, I wonder whether Amazon would still have come to Crystal City anyway. Government should be efficient and impose reasonable taxes and regulations. A well-run state or local government should be the best attractor of businesses.

      I personally doubt Amazon’s build-up of jobs over time will necessarily have a huge upward impact on housing costs. In and around Crystal City, yes. But throughout the Metro Area, I think not.

      At the same time, I object to the taxpayer subsidies to below-market labor rates caused by the failure of the federal government to make E-Verify mandatory. The availability of illegal workers also harms the less skilled and less educated among us. We are also setting up a situation that could lead to substantial societal discord as we bring in unskilled workers in the face of increased mechanization of lower-skill jobs. Just read an article about a robot that can pick strawberries. The robot costs $300 K and is not as accurate and humans. But it can work 24-7 and prices will drop. Remember the price of a PC in the late 1980s?

      I’m also not sure what local governments can do to make large amounts of affordable housing available. Most require the proffer of low-cost housing with re-zonings. And many in the area are looking towards repurposing commercial and light industrial units for housing. But in order to protect the property rights of existing residents and businesses, zoning ordinances still need to exist and be enforced.

  6. No matter what, those “incentives” are money that the state/local area loses in terms of revenue that can go to schools/roads etc. Saying they’ll pump, for example, $1 billion into the economy but you lose $500 million in revenue, that’s an issue. These companies don’t need it. For how many centuries did govt. make it without giving incentives? All that we see now is companies acting like the robber barons of old.

  7. Meanwhile, in Chicago, community organizers have successful delayed construction of a $500 million project — the Barack Obama Presidential Center. I suppose there’s a bitter-sweet justice there, given Obama’s past as a… Chicago community organizer. But this looks like another example of lefties cutting off their nose to spite their faces. The Presidential Center could drive considerable tourism to the area, creating patronage and jobs for local businesses.

    • It is a number like this that drives me crazy. How could a Presidential Library/Center cost half a billion dollars?

      • Consider that the cost of the Presidential Library/Center must match the size of the ego being put there on grand display.

      • It costs so much because it’s not a “library”; it’s a tourist attraction/museum/conference-hall/architectural-demonstration-project/ethnic-pride-destination/politics research facility/entertainment center/local economy booster. Built at federal taxpayer expense; admission free. The egos on display in these Presidential super-monuments cover the political spectrum and testify to the power and prestige of the Office, not so much the person who occupied it.

        • Oh, really. Come on Acbar! These are pyramids, gross obscene monuments to despotic power, false Gods. These offices are representatives of Kings, but common people. Let them eat cake, this false idols, to hell with have billion dollar pyramids, for Nixon, or any other man in office.

          • Reed Fawell 3rd

            Correction.
            Let them eat cake, and wear sack cloth, these false idols, to hell with their $billion dollar pyramids, for Nixon, or any other sinner claiming greatest for himself by reason of his corrupt office. History written by honest people build these edifices, not our criminal political class. So let these arrogant people, heroes and imposters alike, go home with humility and keep their damn mouths shut, not build pyramids to themselves. Like G. Washington, the greatest of them all, did.

  8. Why bring up Chicago as more dirt against the “lefties.” Why not stick closer to home and see how for years VEDP was shoveling money out the door with no accounting — mostly by the GOP. Or how about Bob McDonnell spending, what? $400 million? — on the U.S. 460 replacement to nowhere. Where did all that money go?

    It’s too bad that this blog takes so many stupid pot shots at the lefties when we have a seriously mentally disturbed incompetent in the White House. Somehow you never read about the Donald in Bacons Rebellion — just little ankle bites against “lefties.”

    • Dick Saslaw – R- Fairfax? I think not.

    • Peter, I was among McDonnell’s worse enemies, but my commentaries focused on what I considered his aweful policies. Same with the lefties. And I am no fan of many of The Donald’s personality traits but to say he is “a seriously mentally disturbed incompetent in the White House,” is a bit of a stretch, for me at least. And I agree with most of his polities because in my view, they deal with the real world, instead of an imaginary one built on identity politics which I despise, because they are racist to the core. Hence the policies of the leftist progressives leave me no choice. By the way, I was a fan of Northam, said so here numerous times, before he told me how he lets little babies die after they’re born.

    • Let me remind you of the descriptor on the “About” page: “The Bacon’s Rebellion blog tracks public policy issues in Virginia.”

      Virginia. Not Washington, D.C.

  9. Peter, Please – plenty of bipartisan foolishness..

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