A spokesperson for the National Association of Home Builders says:
American tariffs on Canadian softwood lumber have caused housing prices in the United States to jump by an average of $9,000 per home… For every $1,000 increase in the price of a house, 150,000 people are priced out of the market.
What do people do, who can’t buy a house? They rent as nice a place as they can afford, which turns out to be more than a lot of other potential renters can afford. Soon, a certain number of those lower-income people are no longer able to even aspire to be tenants, let alone homeowners, ever.
Inevitably the homelessness statistics grow. And why would developers build for poor people, when they can build for well-paid tenants who are just not quite rich enough to join the owner class?
Whose turn is it?
When Amazon formulated its plan to build a new capital, 238 municipal areas filled out applications. The corporation winnowed them down to 20 candidates (19 American, one Canadian). Many news stories about the competition for the new facility were written before tariffs on lumber, steel, and aluminum were announced, so the calculations and considerations on both sides were made without that information in hand.
Affecting both the construction of the planned second headquarters, and the housing situation in the entire area, this cost increase must generally throw a giant monkey-wrench into any projections. Of course, in the finalist cities, best- and worst-case scenarios are being pitched, and everyone has urgent questions.
If only there were a city with a similar Amazon headquarters, that we could look to for an example of the likely consequences.
There is! The original Amazon super-duper store already exists in Seattle, Washington. Amazon is, in fact, Seattle’s largest private employer. Ben Casselman wrote in the Seattle Times:
The boom has been good for Seattle’s economy, which has experienced years of steady job growth, low unemployment and, unlike much of the country, strong wage gains. But it has also become a far less affordable place to live.
City Councilwoman Kshama Sawant compared Amazon’s effect on Seattle with that of Boeing, another mega corporation that exerts huge local influence, using the phrase “a race to the bottom for the living standards of workers.” She told the press:
Amazon has similarly been using its monopoly power to gobble up swathes of prime Seattle real estate, and extract plum deals from the city’s Democratic establishment. This political establishment has, in the meanwhile, overseen an explosion in homelessness and an acute crisis in affordable housing.
Needless to say, the same also goes on when other parties are in charge of municipal administration. Sawant spoke of such practices as systematic economic extortion and the crushing of labor unions.
It should be remembered that regardless of how corrupt some labor organizations eventually became, they account for a large portion of America’s success. It is fashionable now to credit Henry Ford with inventing the eight-hour day and the five-day week, but he was at best an early adopter. Unions had already existed for years, and eventually they ensured that much of the workforce would come to share in the dignity of not being worked to death.
A discouraging word
Meanwhile, Seattle’s homeless population has increased 4% in a year, to more than 12,000. For Slate.com, April Glaser wrote:
Seattle declared the rise in homelessness in the city a state of emergency more than two years ago, with the medical examiner’s office counting 169 homeless deaths in 2017, an increase of 33 deaths from the year before and more than double the number of homeless deaths from 2012.
Although Seattle is only the 18th largest American city, it ranks #3 in the sheer number of people experiencing homelessness. Of the top 10 homelessness cities, by a strange coincidence, five of them are also on another list — the roster of 20 cities still in the running to be Amazon’s new headquarters.
If a city already has a huge number of unhoused people and Amazon moves in, what happens? No guessing is involved. In Seattle, the corporation’s presence has not demonstrably reduced the number of people experiencing homelessness. In seven years, rents went up 42%. In five years, the median house price doubled. And that was before the new tariffs were announced.
To make matters worse, factions in Seattle tried to pass a new corporate tax whose revenues would have been used to fund services for people experiencing homelessness. In May of last year, all the City Council members voted for it. Amazon called it a “tax on job creation” and exerted pressure by halting construction on a new office building.
The following month, seven our of nine council members rescinded their votes. And apparently, Amazon has been complaining about the inadequacy of the transportation infrastructure and the lack of affordable housing in proximity to its Seattle digs.
John Burbank, Executive Director of the Economic Opportunity Institute, holds that anything resembling a boom “has primarily benefitted tech workers at the top and left everyone else with higher rents, higher property taxes, traffic congestion and a bitter taste in our mouths.” He wrote:
Amazon has been a sociopathic roommate, sucking up our resources and refusing to participate in daily upkeep. Amazon comes to Seattle, creates problems, doesn’t help to fix them, then starts to expand elsewhere over problems it created!
Burbank adds some ominous charts and explains the dismal tax situation in Seattle. Reader comments, as usual, provide additional perspectives. So do their wagers. According to the betting website Oddsshark.com, the hot contenders are Austin, Boston, and Northern Virginia.
Reactions?
Source: “Trump’s lumber tariffs make home ownership too expensive for more than a million Americans,” CBC.ca, 06/22/18
Source: “What Amazon’s HQ2 could mean for winning city’s rents,” SeattleTimes.com, 04/25/18
Source: “Sawant: Homeless ‘explosion’ in Seattle happened as Amazon gobbled up prime real estate,” KIRO7.com, 09/07/17
Source: “‘We’d Spend Hours Each Week Unpacking and Throwing the Food Away”,” Slate.com, 05/22/18
Source: “After losing fight to levy ‘Amazon tax,’ Seattle is back to square one on helping homeless,” USAToday.com, 06/17/18
Source: “Let Amazon Hike Up Rents Somewhere Else,” EOIOnline.org, 09/08/17
Image: Pat Hartman for House the Homeless