Amazon in Seattle: An economic godsend or tech-giant pain
SEATTLE - On an upper floor of Amazon’s Day 1 tower, foosball tables and beanbag games dot the shared spaces filled with mostly young employees and, occasionally, their dogs. Looking through tinted windows to downtown streets below, the workers can see five new Amazon buildings under construction in the three city blocks immediately around them.
The new buildings – four towers and a low-rise – will house some of the 9,000 new employees the company plans to hire in the near future. They will add another layer to the explosive growth that has made Amazon Seattle’s largest private employer and taxpayer in less than a decade.
Two miles to the east, in the historically African American Central District, the impact of Amazon’s rapid expansion is visible. A chain-link fence surrounds Earl’s Cuts and Styles, signaling the neighborhood landmark is slated for demolition.
In its place will rise an upscale apartment building, similar to two across the street that cater to tech workers and other professionals who have been supplanting middle- and working-class black residents. Seattle’s tech boom accelerated the change, and African-Americans now make up about 15 percent of the Central District’s population, down from 21 percent when Amazon arrived in 2010.
Amazon’s rise in Seattle has earned it a mixed reputation as both a progressive-minded, economic godsend for the city and a self-centered behemoth contributing too little to address the disruption it helped create, analysts say.
The online retail giant has created 45,000 jobs here, a welcome investment in this city of 725,000 people. Seattle was losing jobs to the suburbs before the Amazon buildup began and had just suffered the collapse of Washington Mutual in 2008.
The city also has at times feared that Boeing, a predecessor as its top employer, would cut operations or depart altogether. Old-timers still shudder to recall the “Boeing bust” in the 1970s, when a billboard was erected that said, “Will the last person leaving Seattle turn off the lights.”
But Amazon also draws much of the blame for pushing up housing costs and homelessness, aggravating traffic and even diluting Seattle’s identity as a quirky, laid-back city. Its contradictory record offers a guide to what northern Virginia and the Washington region can expect as the company builds a headquarters facility in Arlington, Virginia, bringing with it at least 25,000 jobs during the next 10 to 12 years.
Seattle has “a sort of schizophrenic feeling about this hometown company,” City Council member Lisa Herbold said. “A lot of people believe that all growth is inherently good and don’t question what model of growth is good for cities that are already high-cost. .… There are (other) people who have a lot of concerns.”
In the Central District, barber Earl Lancaster said he is “blessed” because he will be able to remain in the community where he has worked for decades. A bank building nearby has offered him space on its ground floor to keep his shop open.
“It’s a bittersweet feeling,” said Lancaster, 51. “A lot of businesses that were here, they can’t afford to stay around anymore.”
Customer Jason Turner criticized Amazon founder Jeff Bezos for not using his wealth to do more to preserve the neighborhood. (Bezos owns the Washington Post.)
“I would say to Mr. Bezos: ‘Look at the community you’re in. Look at what you’re doing to us. Just contribute to the longevity and culture that sustained this city for years,’ ”Turner said. “We just want to be able to stay in the community we established.”
Criticism of the company came to a head last year when it played a prominent role in a business coalition that successfully blocked a City Council effort to impose what came to be called the “Amazon tax,” a levy on large employers that would have been used to fund efforts to fight homelessness.
Asked to respond to critics in the Central District, a senior Amazon executive said no one set out to gentrify the neighborhood.
“I don’t think it was ever anyone’s intention … to displace anyone,” said John Schoettler, vice president of global real estate for Amazon. “It comes down to basic economics and supply and demand. … We don’t have enough supply for the demand of housing.”
Schoettler said it was primarily the city’s responsibility to use tax revenue from Amazon and other companies to deal with the city’s shortage of affordable housing.
“Every time that we build a building and put a shovel in the ground, there are funds that go for affordable housing that are controlled by the city,” he said. “It’s up to them to be building those units. … We’re not in the business to build housing.”
Maturing philanthropist
Amazon’s efforts to be a forward-thinking corporate citizen have attracted support. It prides itself on being innovative; the Day 1 building is named for a company slogan, “It’s Always Day 1.”
The company has won applause for its urban “placemaking,” or locating its dozens of buildings in downtown neighborhoods rather than isolated suburban campuses. Its buildings in the South Lake Union and Denny Triangle districts have dining facilities capable of holding only a third of the employees at each facility, to encourage workers to venture out and patronize neighborhood establishments.
“They brought fun, attractive restaurants into that area,” said Louise Chernin, president and chief executive of the Greater Seattle Business Association, the area’s LGBTQ chamber of commerce, which includes many small businesses near Amazon’s buildings.
“You want to be angry at the big company because they’ve come in and disrupted things, but they’ve also created 45,000 jobs,” Chernin said. “The (Amazon) people who moved here shop. They eat out a lot.”
Amazon has actively promoted the use of public transit, such as by paying the full cost of its employees’ fare cards for light rail, buses and ferries – a perk that it is considering extending to new employees in Arlington. The company boasts that only a quarter of its Seattle employees commute to work by driving solo. Nearly 1 in 3 use transit, and more than 1 in 5 walk.
The company has promoted social causes such as gay rights, in line with Seattle’s political and cultural leanings. Its interest in environmentalism is evident in its construction of three biospheres – multistory, glass-enclosed conservatories where employees can take their laptops and work or relax, surrounded by 40,000 plants.
Accused of being stingy in its philanthropy, Amazon has made contributions to causes such as fighting family homelessness and supporting public schools.
After the city declared a state of emergency over homelessness in 2015, Amazon donated a former motel that it owned to Mary’s Place, which provides shelters for homeless families. In one of Amazon’s new buildings being erected downtown, Mary’s Place will have the bottom eight floors, providing room for 250 to 300 beds.
Last fall, Amazon surprised the Alliance for Education, a foundation that raises money for the city’s public schools, with a $2 million donation to create a “Right Now Needs Fund.” The fund gives principals up to $25,000 to provide students immediate assistance for items ranging from a coat or eyeglasses to food and medical care.
The company’s philanthropic initiatives reflected a desire to be more publicly engaged as it matured, after an early period when it focused mainly on its internal growth, according to business leaders and nonprofit executives.
Schoettler, the Amazon executive, acknowledged the company had become more open about its efforts.
“We’ve always been doing things (for the community), but perhaps we were doing them more quietly,” Schoettler said. “As our footprint in Seattle started to grow and there were other challenges and needs of the community, there were opportunities that arose that perhaps took on more of a bigger presence, like Mary’s Place.”
Bezos, whose net worth reportedly exceeds $140 billion, increased his individual philanthropic giving in September by announcing he and his then-wife, MacKenzie, would contribute $2 billion to a fund to assist homeless families and preschools for low-income communities. (The couple divorced this month.) The fund’s first round of donations, for homeless families, totaled $97.5 million for organizations in 16 states and Washington, D.C., according to its website. One award of $2.5 million went to a group in Seattle, the Refugee Women’s Alliance.
The impact of wealth
Such individual initiatives by Amazon in Seattle, though welcome, seem modest compared with the company’s momentous impact on the city’s overall economy and social structure, analysts say.
The arrival of tens of thousands of well-paid workers – earning what residents call “tech money,” or average total compensation of more than $150,000 a year for Amazon employees – has sent rents and housing prices soaring. The effect has been compounded as other tech giants – including Google, Expedia and Facebook – have expanded operations here to tap the tech talent attracted by Amazon.
Tim Thomas, a sociologist and demographer at the University of Washington who has studied Amazon’s impact, said a tipping point occurred in 2012, two years after Amazon moved into the South Lake Union area.
“There were a lot of areas that saw a massive injection of wealthy people,” Thomas said. “Rents went up. We also saw a spike in evictions. Affordable housing started to decline.”
Between 2013 and 2017, average rent for a one-bedroom apartment in the Seattle metro area rose 67 percent, from $913 a month to $1,528, according to the National Low Income Housing Coalition.
The effect has been felt even far from the company’s downtown towers. In two years, Chris Adam, a 28-year-old welder, has seen rent for his 500-square-foot studio apartment in south Seattle jump to $750 a month from $500. He said he has been threatened with eviction five times for late rent but has always managed to scrape together enough to avoid being thrown out. He does not blame tech companies for their success but wishes they would contribute more to helping folks like him.
“I can’t say I hold a grudge against Amazon or Google, specifically,” said Adam, who earned less than $40,000 last year. But he added, “If you make a lot of money in this society, you should chip in.”
The most visible social impact has been the increase in homelessness. Hundreds of tents for homeless people can be seen along the region’s freeways and in city parks.
A 50-year-old home health-care worker said she has been living in her car, currently a 1993 Honda Civic, for nearly three years. She said she lost her one-bedroom apartment of 11 years when the landlord renovated the building and her rent more than doubled, to $1,600 a month.
The apartment building, in the Ballard neighborhood, is on a bus route convenient for Amazon workers.
“A lot of the Amazon people are on that route,” said the woman, who asked that her name not be used, to protect her privacy. “The whole area has been completely built up and changed.”
Like Adam, she does not bear a grudge against Amazon, but she said the company could pay more attention.
“I can’t really say I harbor so much animosity toward those people,” she said. “They chose different career paths than I did, more lucrative ones. I feel like they don’t know what else is going on in the area and they’re turning kind of a blind eye to things.”
Critics fault Amazon with not doing enough. They contrast its behavior with that of Microsoft, based in the Seattle suburb of Redmond. In January, Microsoft pledged $500 million to address homelessness and build affordable housing units in Seattle and the greater Puget Sound area.
“Amazon is a big part of the growth that’s happened in the region, and that’s the biggest part of what’s driving homelessness up,” said Rachael Myers, executive director of the Washington Low Income Housing Alliance. “Amazon hasn’t really been at the table in trying to figure out how to mitigate the impacts that they’re contributing to.”
But Myers said the debate over the tax to help fight homelessness also revealed Seattle’s respect and appreciation for Amazon. Polls show most of the public opposed the tax, leading the City Council to reverse itself and repeal the measure a month after it was approved.
“Even though people complain about Amazon being so big and sort of taking over everything, people feel a lot of pride in this hometown company that’s done so well,” Myers said.
‘Serious inequality’
Amazon’s impact extends beyond housing. Despite the company’s commitment to transit, its growth has swamped Seattle’s transportation network. Roads around some of the company’s buildings are clogged by what residents call “Amazon traffic.” Voters in 2016 approved higher taxes to fund a historic $54 billion investment in light rail and other transit, an initiative that Amazon supported. But city leaders acknowledge it will take years to catch up with demand.
As in other prosperous, tech-oriented cities, the boom has exacerbated the gap between affluent and low-income residents.
Over the past five years, Seattle has ranked third in the nation in the widening of the income gap between the richest 20 percent of households and the poorest 20 percent, according to an analysis of census data by Bloomberg. San Francisco and San Jose ranked first and second.
The tech industry’s political clout, combined with the city’s apparent inability to reduce homelessness, has spurred resentment.
“There’s a clear understanding that the political establishment has utterly failed to address the housing crisis,” said City Council member Kshama Sawant, one of Amazon’s most outspoken critics. “You have a situation of very serious inequality where a handful of corporations and billionaires have almost complete control over political outcomes in the city.”
For Amazon’s supporters, the changes are an inevitable byproduct of desirable economic growth.
“These are the challenges you want in a city,” said Jon Scholes, president and chief executive of the Downtown Seattle Association, the principal downtown business organization. (Amazon’s Schoettler is a board member.)
“We have beautiful problems here that other cities are dying to have,” Scholes said.
Asked what Arlington should expect with Amazon’s arrival, Scholes said the company, though generally private, will be more engaged in civic life than it was at first in Seattle.
“They’ve got an apparatus in place,” he said. “They’ve had successes when they’ve stepped out.”
Scholes also warned that Arlington should be prepared for Amazon to grow faster than projected, as it did in Seattle. He noted the company has many business units on technology’s cutting edge.
“I’d say be ready for it,” Scholes said. “They’re a company of companies, and any one of them can take off.”
Schoettler played down that possibility, saying that “25,000 jobs over a 10-year period of time, that’s a tremendous amount of recruiting and bringing folks on and training them.”
But he didn’t rule it out. “I don’t have a crystal ball,” he said.