In Seattle, Amazon Shrugs

The city attempts to wring more money from its employers rather than fix its housing problems.


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Alex Milan Tracy/Sipa USA/Newscom

We're not yet halfway through 2018, but this year's winner of the Chutzpah Award should probably go to Kshama Sawant, a member of the Seattle City Council. On Monday the city slapped large companies with a new employee head tax to address the city's homelessness problem. Amazon employs more than 45,000 residents and will have to cough up millions for the privilege of doing so. It recently suspended construction on a new downtown office tower while the council deliberated.

Sawant called this "extortion." This is a little bit like the guy who kills his parents and then pleads for mercy because he's an orphan—only worse. It's more like the guy who kills his parents and then accuses them of murdering him.

Seattle does have a huge homeless problem: More than 11,000 people have no place to live. Some people have tried to blame this on Amazon, claiming that "since 2010, when Amazon opened its first headquarters in the South Lake Union area of Seattle, housing costs have skyrocketed." But while Amazon's growth might have exacerbated housing costs, it hardly started the spike.

Mike Rosenberg, the Seattle Times' real estate reporter, noted recently that the population of King County (of which Seattle is the county seat) has grown 26 percent since 2000. For many decades the median number of people for every home on the market had been around 230, he says, but today the area has more than 1,000 people for every home on the market.

So demand has skyrocketed. But supply has remained short, thanks to Seattle's own policies: 69 percent of the city's residential properties are single-family homes. In Boston, the comparable figure is 14 percent; in Brooklyn, it's 20 percent. This is because the vast bulk of Seattle's residential land is zoned for single-family homes, rather than apartments or condos. As Rosenberg explains: "Under the current laws, expanded housing is essentially banned in those … areas … because only single-family homes are allowed there, and there's no room left to build more of them."

This concentrates multi-family properties (apartment buildings and the like) in the few isolated areas that are left, creating a bidding war for those living quarters as well. An article in The Huffington Post cites research by the Zillow real-estate company suggesting that for every 5 percent hike in the rental rates in Seattle, 258 people become homeless. Moreover: Rents rose almost three times that much just last year.

The obvious, sensible solution to a spike in demand would entail letting supply rise to meet it: Relax zoning and other forms of restrictive regulation to allow denser, multi-family buildings in more places around the city.

So of course Seattle's leaders have decided they should tax Amazon instead. Then they can use the money for affordable-housing efforts. Or at least that's the theory.

Naturally, Amazon—and many other companies, including Zillow—object to being asked to solve a problem they did not create. So Amazon pushed "pause" on a construction project that would provide work space for another 7,000 employees. For this, it has been subject to protests and accused of "extortion," "holding Seattle hostage," and "hardball tactics."

Well. Amazon already is doing a great deal to fend off homelessness. For starters, it is employing tens of thousands of people—thereby providing them with steady income with which to pay their mortgage or rent.

On top of that, Amazon has given millions to the city's affordable-housing fund and millions more to two organizations that help the homeless. (To which Seattle officials say: Yeah, but what have you done for us lately?)

But more to the point: If Amazon declines to pay the tax, the city will take it to court. If Amazon continues not to pay, then it could be subject to liens on its property and, eventually, seizure of the property. Some people, such as actor Wesley Snipes, have even served time in prison for failing to pay their taxes, but it's not clear if Amazon's officers would face similar jeopardy over the head tax.

Extortion is simply obtaining money through force or the threat of force. So if anybody is practicing extortion in this case it is Seattle, not Amazon. Amazon isn't threatening anyone with force, and it isn't demanding money from anyone else. (At least not in Seattle; the company's shameless gold-digging for its second headquarters, known as HQ2, is another story entirely.) Seattle is doing both.

In fact, by debating whether it will continue to grow in Seattle, Amazon is merely taking a page out of Ayn Rand's Atlas Shrugged: It is, after a fashion, threatening to go on strike.

Reportedly, Rand said she wrote the book to show how badly "the world needs prime movers." The linguistic overlap with Amazon Prime is coincidental, but apt.