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Our Opinion

Our Opinion: As tech sector crunch reaches Pittsfield, Wayfair call center closure should prompt deeper debate about economic development strategy

The opening of Wayfair’s Pittsfield call center was celebrated as a sign of business in the Berkshires moving in the right direction. A bit more than three years later, Wayfair announced Monday it will close its call center in the Clock Tower Business Center when the lease is up in July.

UPDATED: Wayfair is planning to close its customer call center in Pittsfield when the company's lease for the space expires in July. Mayor Linda M. Tyer said the city was informed of Wayfair’s intentions Monday. “Clearly, it’s discouraging news, because as you know Wayfair came into the community with quite a bit of fanfare,” she said.

It’s discouraging news, and that discouragement should be channeled into some serious soul-searching about balancing economic development goals with realistic expectations and strategies. Before tackling the broader philosophical questions, though, a more pressing financial question must be answered sooner rather than later: Exactly what is the status of the $31 million in tax credits that Massachusetts offered Wayfair in hopes of growing jobs in the commonwealth?

Wayfair received those investment tax credits — totaling $31,350,000 to be precise — from the state’s Economic Assistance Council with the projection that the company would have 300 employees at its Pittsfield call center and add 3,000 jobs at its headquarters in Boston by last year. While Wayfair saw a similar pandemic-era growth spurt as its tech-based peers, reality ultimately got in the way of those goals. Three years after its opening, the soon-shuttering Pittsfield call center has a few dozen employees. The numbers in Boston are well under the target as well, and will be even more so after layoffs there are completed.

The slight silver lining is that while Wayfair is eliminating 1,750 jobs companywide, most of their positions in Pittsfield are surviving at least for now — they’re just going entirely remote when the call center closes in July.

While it’s good that most of those employed by Wayfair in the Berkshires will retain their jobs, it underscores looming questions about how the work-from-home revolution will shake out in communities looking to holistically develop their economic picture and grow their tax base.

Going remote has potential benefits for worker and employer alike. The former perhaps realizes a bit more autonomy and skips the commute; the latter gets to radically cut down on overhead like rent or property taxes, utilities and office supplies. In fact, Wayfair’s downsizing announcements led to a surge in its stock price, which jumped 20 percent last week with the news that the cuts will will save the firm about $750 million a year.

But from where are those corporate savings drawn? Arguably, they at least partially eat into the communitywide economic ripples that cities like Pittsfield hope to see when a big company plants a flag there. Yes, Wayfair doesn’t have to pay rent and its employees won’t have to commute to the Clock Tower Business Center. But that means those mixed-use business incubators — important pieces of the city’s tax base — lose out on clients and therefore rent revenue. Meanwhile, the knock-on economic impact from having a workforce collectively located downtown — workers getting lunch at downtown eateries or local contractors doing repair and renovation jobs — are impinged as well.

This isn’t an argument for or against remote work. We simply must acknowledge that any sea change, including the work-from-home revolution, carries both benefits and drawbacks. That update to the status quo should compel us to update our calculus on what we can reasonably expect in return on public investments like tax breaks. When it comes to justifying big business incentives with public money, we believe it’s often a questionable tactic of gambling taxpayers’ money to pick winners and losers in the market.

Nevertheless, the reality is that as long as other states continue to offer corporate enticements, Massachusetts can’t remain competitive without also doing so.

But the commonwealth should be far more judicious in handing out those carrots seeded with public money, especially in this precarious economic moment encapsulated by Wayfair’s downsizing. Our leaders must think even more critically about exactly what economic impact we can reasonably expect to see from offering up our public dollars in the form of juicy tax breaks. That means maintaining a healthy skepticism while crafting incentive agreements as to whether incoming companies can hit ambitious job-making goals agreed to in moments of optimism, as well as updating our conception of what those jobs mean for the big picture of cities seeking economic growth in the 21st century.

Those elements will be tough to get our arms around until the tech sector stabilizes and the new work-from-home paradigm solidifies. One thing we must get our arms around now, though, is the status of that massive investment tax package the state offered Wayfair. No city money was tied up in that package, but the Executive Office of Housing and Economic Development, which operates the state council that bestowed the tax credits, owes all Bay Staters a full accounting.

Has Wayfair, despite falling well short of the agreed-upon job-creation goals in Pittsfield and beyond, already claimed those credits and taken that money? If so, some or all? And, if necessary, what is the protocol for clawing back an appropriate amount — or have the commonwealth’s taxpayers essentially lost a big bet hastily placed for them by the state? We don’t know, but the people of Massachusetts need those questions answered now.

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