The "Amazon Tax" and Seattle's Failure to Pass It

Luddites have existed for centuries, often decrying new advances in technology as likely to push people out of the job market and into poverty and destitution. Thankfully this has proven untrue for the entirety of the time Luddites have existed, but we are moving into a new phase that is not likely to follow those old trends. If you haven't read Life 3.0: Being Human in the Age of Artificial Intelligence, you should. A few passages from the book are striking:

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...the vast majority of today's occupations are ones that already existed a century ago, and when we sort them by the number of jobs they provide, we have to go all the way down to twenty-first place in the list until we encounter a new occupation: software developers, who make up less than 1% of the U.S. job market.

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The main trend on the job market isn't that we're moving into entirely new professions. Rather, we're crowding into those pieces of terrain that haven't yet been submerged by the rising tide of technology.

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The book is highly optimistic of the possibilities of A.I. to create a world where people are wealthier than they ever have been while having to work less than they ever have in the past, but there are hurdles that have to be overcome. One is, what do you do with people as technology displaces workers from the workforce, but not enough wealth has been yet created to provide enough income to people to replace the wages they have lost. Also, many people derive the meaning to their existence from the work they do, so even if you replace the lost wages and can cover things like medical insurance, how do you replace the lost meaning from no longer being needed to perform a function for society to continue to function.

What if you can't even replace the wages? USA Today had a good article on the failure of the so called "Amazon tax," which is a good foreshadowing of the reluctance of these companies that are accumulating wealth at astounding levels, while having fewer employees than past manufacturing companies that many of us grew up knowing.

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After a bruising, month-long fight in which Amazon and other businesses squelched a new corporate head tax to fund homeless services, Seattle is struggling to find a path forward to deal with a crisis that's exploded in recent years.

Other metropolitan areas with rapidly rising housing costs are also grappling with residents priced out of the market. But Seattle's tax situation puts it in an especially difficult position when it comes to raising funds to help its homeless residents.

It could also be a warning to the 20 cities currently vying to become home to Seattle's second headquarters. Amazon stopped construction on a 17-story office building during the debate over the tax. It would have cost big businesses $275 per employee per year and was approved by a unanimous vote of the Seattle City Council on May 14, then rescinded by seven of nine members of that same council on June 12.

The construction pause "was a concrete action as opposed to just a threat," said Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a Washington D.C. non-partisan non-profit focused on federal, state and local tax reform issues.

"It seems pretty clear now that whoever 'wins' the HQ2 battle is very likely going to be giving Amazon a free pass on a wide variety of state and local taxes for some period of time," he said.

Called "the Amazon tax" by many in Seattle, the corporate head tax was meant to raise revenue to deal with the homeless crisis in the city and Seattle's King county. A count in January found 12,112 unsheltered people in the county, up 4% from a year ago.

The numbers come even as unemployment in the county is at 3%, the lowest in the state, according to the Washington State Employment Security Department.

The problem is two-fold, say experts.

Housing is becoming less affordable, leading to more homelessness. At the same time Washington's tax laws gave cities few options when it comes to raising funds for more housing.

Rents in the city have risen 42% over the past seven years, fueled by the growth in high wage earners such as the many white collar workers at Amazon.com.

In 2011, 35% of county rental units would have been affordable to to households earning below 50% of the median area income. In 2017 that affordability was just 18%, according to a report released in May by the consulting firm McKinsey & Co. that was commissioned by the Seattle Metropolitan Chamber of Commerce.

This is similar to the homelessness problem in many coastal cities, especially those with tech-fueled economies. Those rent increases have been partly driven up by an influx of well-paid tech workers. In Seattle, for example, software developer is now the most common job in the area, having overtaken retail salesperson, according to research by the Seattle Times.

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"This is not the story of the last 15 years, this is the story of the last five years. This is that dramatic. This is that recent," said Alison Eisinger, executive director of the Seattle/King County Coalition on Homelessness.

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Unresolved is the larger issue of how cities can deal with the huge urban impacts of unmitigated tech growth. Although the Seattle City Council has avoided political fallout, housing and homelessness remain issues that will need to be addressed, said William Riggs, a planning strategist and professor at the University of San Francisco.

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Technology is not going to go away. It's not going to slow down or hold less sway over the economy. I have been to several conferences of late and the best solution these fricking tech gurus can come us with is universal income, even though companies like Amazon, foreshadowing a near future, is showing that the companies accumulating the wealth are loathe to part with it. So, what is the path forward in an economy that is going to throw everything we know on its head, and when dealing with politicians that are too easy to buy and not willing to break open the wallets of these companies to deal with a homelessness crisis they are creating?

This is a real problem, and one that we aren't looking at.