As a consistent critic of corporate subsidies, I had a mixed reaction to Amazon’s request for bids to attract their proposed second headquarters.
The promise of up to 50,000 high paying jobs is incredible; something no state would ignore. But nobody knows whether those jobs will actually materialize. Businesses often promise the moon to gain handouts from taxpayers as is evident in Wisconsin’s massive subsidy to Foxconn.
Even if Amazon does come to Minnesota, along with the jobs and economic boost there would also be serious negative impacts from the project. For example, an already tight housing market in the Twin Cities would get much worse. Low income workers at other businesses would not receive significant pay increases because of Amazon’s arrival, so many would be priced out of the rental market, creating more homelessness. Low income workers usually see more costs because of these subsidies, but few benefits.
Another major concern is that the competition between states ends up with a bidding war to see who will promise the biggest taxpayer subsidy. I share Governor Dayton’s desire that Minnesota’s bid be “restrained” in offering financial incentives. Such economic subsidies to one business come at the expense of other businesses and individual taxpayers.
Having said that, there is a way in which Minnesota could offer a bid that would be attractive to Amazon and everyone else in Minnesota.
Amazon, like every other American business, is being choked by the high cost of health care for employees. A 2010 survey of Minnesota employers found that the expense of health coverage was the most significant obstacle to business expansion.
As a result, I reached out to the people pulling together Minnesota’s Amazon bid to encourage them to include, front and center, a commitment to adopt a universal health care system, such as our proposed Minnesota Health Plan.
The Minnesota Health Plan would ensure that all Amazon employees would have comprehensive cradle-to-grave care, including dental care. It would give every Amazon employee the ability to select their doctors and hospitals, without network limitations. Amazon employees would not face co-pays or deductibles and could get care without worrying about whether they could afford it.
And, every Minnesotan would receive the same benefit!
Amazon’s headquarters would be freed from the waste of time and resources negotiating new insurance plans every year, and the subsequent need to educate their employees on what is covered, what their co-pays and deductibles are, and who is in- or out-of-network. Again, this benefit would apply to every Minnesota business.
Because Amazon employees would have access to the care they need when they need it, Amazon could count on a healthier, more productive workforce. So could every other Minnesota business.
Equally important, although it may appear counterintuitive, it is significantly less expensive to provide health care for everyone than to continue our dysfunctional health insurance system. These lower costs are clear from both economic studies in the United States and real-world evidence from international comparisons. Amazon would have to pay its fair share, as would everyone else, but they would pay much less than under the current system.
This could be a game-changing bid. Because health care costs are far higher for business than corporate taxes are, providing universal health care may save Amazon more than the corporate tax breaks likely to be offered by other states. Amazon would save significant money from the start and the savings grow over time.
Amazon stated in their Request for Proposal that they seek “communities that think big and creatively.” Minnesota’s bid to Amazon would be wise to take this bold approach rather than offering corporate subsidies.
Should Amazon end up going elsewhere, Minnesota families and businesses would still gain the incredible benefit of a less expensive health care system that delivers comprehensive care to all. We need to address the health economics crisis soon. Amazon’s bid makes this a good a time to start.