Amazon – The facts

Published 10:42 am Wednesday, April 17, 2019

Next week, I will continue summarizing the economic successes that have occurred in the last few years within the region. However, this week I wanted to clarify some things that folks may not understand about Amazon’s Virginia headquarters.

These are the facts:

Amazon agreed to hire 25,000 new employees in Virginia at a starting salary of $150,000 annually. In return, Virginia will provide an incentive of $22,000 for each job. However, my legislation does not allow any incentive to be paid until 2024. The effect of this is that no tax dollars will be diverted from any state programs. In fact, there are no risks because no incentive will be paid until those employees have been working for about 18 months. During that time, the employees will have generated almost that much in state payroll taxes. There is no consideration for other taxes paid to Virginia such as sales tax or to the localities near them that will pay local real estate or personal property taxes.

In the course of a 20- year span, this equates to a total payroll of more than $75 billion with those employees paying income tax of close to $4 billion. That is a return of more than $7 for each dollar invested.

How does this deal help our area?

Because of the way Virginia funds our schools, this will help our schools in Southern Virginia far more than those in Northern Virginia. Additionally, the contract requires Amazon to create the jobs in Virginia but does not require that they be in the $3 billion headquarters in Arlington. Some of those jobs might well be elsewhere in the state with employees telecommuting to that office.

Why was I the sponsor of the required legislation?

The Major Employment Initiative Commission (MEI), which I chair, is charged with reviewing economic opportunities to prevent the governor’s administration from over committing to projects that might not produce the investment or jobs that they are promising.

Amazon announced in the fall of 2017 that they were interested in establishing a second headquarters that would employ 50,000 people. A total of 240 communities submitted proposals. Six of those were in Virginia: one in Tidewater, two in Richmond, and three in Northern Virginia. Amazon narrowed their consideration to 50 sites that interested them. Three of those were those in Northern Virginia. Our proposal was focused on education and training as well as housing near the selected site.

Additionally, Virginia agreed to place a metro station in that area that would better serve Amazon and the Pentagon.

Virginia also committed to better focus our colleges to train the skills that Amazon and other high-tech companies need. Several colleges have committed to provide that training. Virginia Tech is taking the lead by establishing a campus in the area. Other colleges are lining up to be part of this effort.

Some argue that we should not give anything to attract businesses to Virginia. However, with other states making offers, we must remain competitive. Others argue that we should only assist companies to come to rural Virginia that needs the jobs. However, companies will choose to go where they believe they will find the assets that best serves their needs. The focus of our communities is to do all that they can to make their communities as attractive and welcoming as possible. In just the last few years, we, in this region, have lost out to competing states because we were not prepared with sites that have the needed infrastructure. We have made progress as I’ve shared in my previous columns, but there is still work to be done. We need to continue that momentum to make Southern Virginia more attractive to businesses looking to expand or locate in Virginia.

Frank Ruff represents Lunenburg in the state Senate. His email address is Sen.Ruff@