Wayfair's Pittsfield jobs promise from 2019 still unrealized, despite tax breaks
In October 2019, online furniture giant Wayfair opened a call center in Berkshire County. The state of Massachusetts gave the company more than $31 million in tax credits to create 3,300 jobs in the state, including 300 in Pittsfield.
“One of the things that I think will make Wayfair a great member of the community is that we tend to look for really talented, ambitious, collaborative, friendly people,” said Wayfair CEO Niraj Shah, who grew up in Pittsfield, at a 2019 press conference.
But Wayfair has not hired nearly enough people in western Massachusetts to fulfill its promise. Greg Ryan of the Boston Business Journal looked into this. He said the company may be held accountable for missing its hiring targets.
Greg Ryan, Boston Business Journal: It's complicated because of COVID. Since the pandemic, the state panel that oversees this tax break program, they've adopted a policy that's more lenient for companies in terms of hitting their job targets.
There's also some leeway. If you say you're going to create 3,300 jobs, if you fall a little bit short of that, you can still keep your full tax break. But for the most part, if you fall a good deal short of hitting your job targets, the state panel is supposed to consider clawing back some of that tax break.
Carrie Healy, NEPM: So Wayfair did report to the state last year that they were unable to follow through with the 300 employees in Pittsfield that they had promised, due to COVID. What did state officials do when they learned the company fell short of that target?
A state spokesperson told me that the state panel that oversees this tax break program [is] currently reviewing the annual reports that came in. These reports just came in in the past few weeks. I think they're due April 1. So that's still to be determined whether the state does take action. I believe this is the first year that Wayfair has not met its obligations under that $31 million tax break. So they may get another year to get themselves in compliance, but we'll have to see what the state does.
Tons of businesses now are allowing remote work options for folks who won't be returning to the office. What's the latest with the Wayfair situation in Pittsfield?
I was told by the business development manager in Pittsfield that just a few weeks ago, in early April, Wayfair started having people who work at the call center in Pittsfield come back into the office. As of last month, they had 52 people based in Pittsfield in that call center. They're supposed to have 300 under the tax break.
Shortly after COVID hit in 2020, they pivoted to a virtual model for their call centers. Wayfair did very good business, especially early in the pandemic when people were stuck at home and buying all sorts of furniture and they had to hire quickly to staff their call centers to deal with that high volume. So they hired people virtually. They hired people wherever they could.
And so, at this point, I think they're at 52 workers in Pittsfield, and I think there are about 60 or so around there, within a 50-mile radius of Pittsfield, who work virtually. And they are hiring in Pittsfield, as well.
Could this be the canary in the coal mine as more workplaces become remote? Meaning, could Pittsfield's loss of jobs in this case eventually affect state policies moving forward with these tax breaks?
I think so. The state panel that oversees this ... earlier this year adopted a policy where a fully remote worker does not count toward a job target. But that's only for future tax breaks. So, not for existing tax breaks, like for Wayfair's.
But I think there is going to have to be a reckoning because Wayfair is certainly not the only company that's received a tax break from the state that's facing this predicament where things have changed massively since the pandemic. Jobs that were thought to be brick-and-mortar jobs, people are doing them virtually now.
And so, it's going to be really tough for state economic development officials. Because they gave out these tax breaks for economic development purposes in places like Pittsfield to bring a company — a big tech company like Wayfair — to other parts of the state, besides Boston. I don't know whether they're going to claw back these tax breaks or whether they will be lenient and understanding about the changes in policies at companies. But it's something they're going to have to reckon with over the next few years.
I wonder how a tax break like that can work in a largely remote work environment.
I know. It's a hard question to answer. I think, in some cases, companies may just give up the tax break. [...] It's also a question going forward. If the state wants to build up a tech presence in gateway cities, how does it do that if a company can hire a job for … anywhere? So, the state really may have to rethink how it uses the tax break program.