Tuesday, August 29, 2017

New Warehouse Jobs Avoid City Center

Are these really innovative?
The big news this week is the announcement about a thousand "innovative" warehouse picking jobs at a new giant facility on the edge of town. In an "Enterprise Zone, it is estimated that
the new $90 million building would be eligible for a $1,235,800 per year tax abatement for three years. After that, the tax bill for the building will be about $1.2 million.
Jobs! Jobs! Jobs!

In the excitement it is perhaps not easy for City Staff and other leaders to be critical about how this fits into the big picture for Salem.

At best, it seems like a deeply mixed bag.

Yup, that's a warehouse
It looks now like our big "corporate center" on the edge of town may actually end up being mainly a warehouse center. Its proximity to I-5 may be the biggest draw.

Car dependent site
The flip side of that proximity to I-5 is the site is very isolated. Walkscore says nothing is in walking distance, transit is difficult with limited service, and the score probably doesn't discount enough the quality of bike lanes on Cordon Road and Lancaster/Aumsville Highway, which of course are on very busy, zoomy streets, and whose bike lanes function only for the most confident or bike-dependent of people.

Right now it's only hourly bus service
N3B also reports that the Chamber is trying to leverage the development for the Salem River Crossing.

But it's hard to see that at $13/hour there will be lots of employees from the hills of West Salem. Second, as a matter of policy, the City needs to make sure there are better housing options nearer to areas where it proposes to put lots of jobs. Subsidizing more distant housing by means of big new bridges and highways is not a good solution. Nothing about this is a good argument for the SRC.

So here we have a great concentration of lower-wage jobs (and by all accounts stressful and unpleasant) at a car-dependent site on the edge of the City, remote from anything else meaningful, all funded with significant government subsidy, both direct and indirect.

Did anyone in the City actually attend the talk last month? Or more interestingly, does anyone from the City who attended the talk have anything to say about the warehouse with explicit reference to the talk? Is its kind of analysis at all helpful? And are big warehouse picking centers on the edge of town really the best City policy for a sustainable and lively city?

The State, which sold the land, has an interest mainly in monetizing the surplus land in any way it can. It is self-interested and does not necessarily have the interests of Salem in mind.

But the City of Salem could think more critically about it. Is this kind of development and this kind of job creation really sustainable? How does this affect downtown? And not just in the near-term, but over the full lifecycle.

And what about increasing automation? 1000 is a great number for press and hype, but the robots are coming, and it seems more likely that human jobs at warehouse picking sites will diminish in number than that they will grow. If our tax and subsidy policy is in part to spur investment in local people and their jobs, are we exporting value rather than importing or creating it?

This new development, then, does not look like something unambiguously wonderful. Even in the most optimistic light, it seems deeply ambiguous and likely to erode other values - like creating more family-wage jobs, like investing in downtown, like shifting to lower-carbon land use and transportation.

Overall, for the city this may very well end more like a depleting development than a creative and prosperous one.

Hopefully economists will chime in later with more incisive analysis and be able to correct or expand on this. At the moment it's hard to be certain about any judgement - more questions here than answers. But it looks like we should be very skeptical about the hype.

Update, Wednesday the 30th

There's a follow-up in the paper today!

The headline is in tension with the body of the piece, however, and the comments on support of the subsidy seems awfully one-sided. Maybe later today or tomorrow I can comment more on them.

Also, on facebook there was a lot of criticism, and I will try to circle back and respond to some of it. Right off, the words "Avoid City Center" were misleading, because certainly it was not the claim here that a warehouse should instead go downtown. That is plainly silly as Tyson rightly points out below in a comment. The claim is instead that the total governmental subsidy, including infrastructure to service the area and the future maintenance obligation, as well as externalized costs like transportation burden on employees, will never be paid back by a facility at this site and with these wages. I'll try to return and clarify on this later in another post.

Update 2

Not sure this will appear in the SJ, maybe only in the Stayton Mail, but an article points out that a good bit of housing will be to the east, in places like Turner, Aumsville, Stayton - though the access will still principally be by car, as the roads aren't bike-friendly from this direction, either:
"[T]he new development fits nicely with Turner's current development mode; in recent years the city has elevated its focus on developing business and residential areas. Add to that the Amazon development which could bring an estimated 1,000 jobs to the area, and the two weave together tidily.

The north end of Turner is currently undergoing a significant infrastructural layout with a new development surrounding a lake, dubbed Crawford Crossing. [City of Turner Business Coordinator DJ] Thommen said the updates will pave the way to the construction of 200 single-family homes and another 130 apartments, located just a few country miles from Amazon’s project....

“Considering the location of this new distribution center, we think this could increase demand for housing in our area,” Aumsville City Administrator Ron Harding said."


Jim Scheppke said...

Hope we can figure out how to tax robots of we don't already. You are right. They are coming. Maybe sooner than we think.

Anonymous said...

The move into Salem falls in line with Amazon's expansion into Oregon, which already includes operations in Portland and Hillsboro. I wonder how it impacts them. The CamperForce Program provides complimentary FHU campsites in 28 states. The program lasts 3-4 months in the winter. I don't see a huge problem with it as Amazon provides the camping space to them free of charge. Therefore, I don't foresee a lot of Rv's converging on our streets. Who even uses camping sites in those months anyway? Its only 3-4 months in the winter for the busy holiday season. What's to be said of any other group that comes to Salem, such as carnies for the fair, etc.? Just sayin'.

Tyson Pruett said...


Robots are already taxed. It is called Personal Property Taxes and every business is subject to them.

As for the blog, meh. No space for this downtown plus no business, individual or cyclist wants that level of semi traffic trying to make its way from downtown to I-5 or heaven forbid over the bridge into West Salem. Somebody always has to be negative I guess.

Susann Kaltwasser said...

There are a bunch of apartments going in at Cordon and Macleay Road, so maybe there might be some connections there for workers.

My assumption is that the people who praise these kinds of developments have not worked $12/hour jobs in a very long time. They are not aware of how hard the work can be.

Finally, I fear that the news of 1000 jobs will attract more people to come to the area seeking those jobs and since most won't get them, they will stretch our already thin housing supply.

Campers and mobile home parks? Is that what we will soon see cropping up along Cordon Road.

I'm not thrilled, but it seems to be the way things go when you don't really have a Comprehensive Plan that is implemented.

Walker said...

Mother Jones and, IIRC, Harpers had excellent pieces exploring the so-called lives of the Ama-droids (warehouse stock pickers), who are worked like chaingang slaves and discarded just as rapidly. Grueling, grueling work in sweatshop conditions with the worst of Taylorism stopwatch speed-ups 24/7. Having done exactly this sort of work in my all-too-distant youth, I can say that these are not the jobs of the future but rather of the past -- like, the past in Egypt during the building of the Pyramids. I hope whoever is writing the contracts for the tax giveaways to Amazon has the wit to require claw backs of all tax breaks when the workers become actual robots rather than metaphorical ones. And for god's sake, make sure that Amazon doesn't get to do the "dark store" drill like Wal-Mart does, emptying a space to drop the tax valuation but forbidding any repurposing.

Like the "tax cut" crowd in Washington D.C., the Bridgeasaurus Boondogglus crowd have a nostrum for all seasons -- the same nostrum, rain or shine, no matter the problem, the solution is always the same (tax cuts! 3rd Bridge!). There is NOTHING that they won't claim justifies a gigantic $1B boondoggle corporate welfare project to enrich developers and contractors.

Salem Breakfast on Bikes said...

Updated with clip from the new piece today about tax breaks.

Anonymous said...

Why didn't we demand that Amazon hire locals? The last thing we need is 1000 more people moving here! Salem is at capacity. (This huge building destroyed farm land and wildlife habitat.)

Unknown said...

Cautiously optimistic. Too many unanswered questions. Tax abatement's have been shown academically to be a huge net negative to the community they are supposed to serve. $13.75 an hour does not necessarily qualify as a family wage. Full-time that would equal less than $30,000 a year. That is below cost of living for a family of four. For a single person it is just above the cost of living for Salem. Looking online it looks like some of the jobs offered (not sure what amount) at Amazon fulfillment centers are "full-time" at 32 hours. That equals about $22,000 a year, which is well below the average of living. So without knowing exactly how many hours each individual is going to work or the exact pay it is difficult to know whether these jobs are actually "family wage" or not.

Anonymous said...

Mincozzi's talk was well attended by city and state folks. Marion and Polk country employees were notably absent. City employees I spoke with at the State Street Corridor meeting seemed receptive about the concept of an Urban3-style ROI and value/acre analysis. It would be beyond useful to be able to evaluate development plans from data rather than emotion or handwavy politics.

Seems like the city and state have the money, the county has the data, and no one (yet) has the political will to bring the entities together to develop unified vision.

Salem Breakfast on Bikes said...

Added bit on Turner, Aumsville, Stayton.

Tyson Pruett said...

Lets get real about the "Tax Breaks". This article could just as easily have been titled "Salem sets stage for $1,200,000 in additional tax revenue in three years". This is not a tax reduction, this is a tax deferral. There is no reduction in current tax revenue, they just have cemented a plan to defer the application of taxation for three years.

Walker said...
This comment has been removed by a blog administrator.
Salem Breakfast on Bikes said...

[please keep discussion to policy matters!]

From Walker:


Almost every city and state in America has been slammed by a multilevel scandal, one that involves taxes, jobs, and corporate and political accountability. Under the guise of ""economic development,"" big companies have gotten extraordinary tax breaks, from property tax abatements to land write-downs. Promises of job creation in exchange for these tax breaks have proven hollow, with companies continuing to downsize and outsource at record levels. Government officials are no help - they're well compensated major players in this troubling drama. This timely book explores these abuses in depth, but also offers hope with a series of commonsense reforms that would give taxpayers powerful new tools to reverse this situation - and redirect monies in ways that will really pay off. By popularizing these grassroots reforms - which are already taking hold - this book is taking a movement that is percolating in the states and putting it on the national stage.

Walker said...

Here's another good resource: From Michael Schuman of the Institute for Local Self-Reliance

Anonymous said...

The Oregonian is reporting that Sanyo/Panasonic Solar is totally closing:


There have been multiple rounds of layoffs with a total subsidy of over $40 million since 2008.

Walker said...

Strong Towns has good comments on the Amazon HQ Sweepstakes, similar to our situation at a larger scale.


Salem Breakfast on Bikes said...

Here's an interesting claim from the Columbia Journalism Review, "Big Tech's Bid to Control FOIA":

"Amazon’s employment base in Ohio has grown to more than 6,000, but it hasn’t ushered in an era of shared prosperity. One in 10 Amazon workers in Ohio are receiving benefits through the Supplemental Nutrition Assistance Program, according to a recent report by Policy Matters Ohio. And instead of bringing economic revival, Amazon drives wages down by an average of 3 percent in cities and towns where it opens fulfillment centers, according to a recent analysis by The Economist."