Massive e-commerce site, Amazon, has been in search of a secondary headquarter location since September 2017. The corporation recently announced that instead of choosing one single location, they will split HQ2 and build two offices in both New York City and Arlington, Virginia. The company claimed that by picking the two cities that they did, they will be able to attract and recruit top talent. Amazon will invest a combined total of $10 billion between the two new buildings, creating more than 50,000 jobs that pay an average of $150,000. In addition to new headquarters, Amazon also plans to positively impact the economy by opening an operations center in Nashville, Tennessee, creating another 5,000 jobs. Despite the expected economic growth, Amazon is still in the business of making money, which policy makers should be weary of.
The company engaged in an “Olympic-style” search that lasted over a year and received 238 bids from different cities in both the United States and Canada. By doing so, Amazon also gained insight into which locations, continent-wide, would be interested in negotiating future deals regarding additional offices, warehouses, and data centers. Amazon received that many bids for HQ2’s location by promising tens of thousands of six-figure paying jobs. Unfortunately, the proposed salary is similar to New York City and Arlington’s current average wages of $160,000 and $100,100 according to the Bureau of Labor Statistics.
CEO, Jeff Bezos, famously started Amazon in Seattle, Washington partly because of close proximity to Microsoft and its recruiting pool. Although it is unclear how big Amazon’s outposts will grow on the East Coast, there will be a massive influx of 25,000 “highly paid techies” to the chosen HQ2 locations. This will make Amazon the highest-profile, fast-growing employer in history. The company disclosed that their selection centered around a highly-educated pool of potential employees, convenient access to international airports, mass transit, and business-friendly tax structure. In addition, Amazon also considered financial incentives such as free land or tax breaks from city, state, or private funds. Financial incentives also played a major role as Amazon claimed it will receive $1.525 billion from New York state and $573 million from Arlington in state and local incentives.
Following Amazon’s announcement, locals in each city are already concerned with the effect it will have on housing and traffic. Amazon currently occupies 8 million square feet in Seattle in the heart of the city. If this trend were to continue in New York City and Arlington, real estate costs are likely to increase as well as local’s commute time.
Amazon is receiving criticism from New York state senators and council members for “offering massive corporate welfare from scarce public resources to one of the wealthiest corporations in the world at a time of great need”, noting that, “this whole tournament has been a sham”. The goal is that the development of both HQ2’s will increase resident wealth, thus increasing spending on local business and opportunity for new ones. The reality is that existing wealthy corporations will use corporate subsidies to lower costs of projects they would have pursued anyway. Forgoing too many future taxes from a project as large as Amazon HQ2 is likely to strain local budgets for public services and cause taxes to increase for local residents.
As a result of Amazon’s announcement, it is important to consider whether the company has become too big and powerful. Not too long ago, Amazon warehouse employees reportedly made $28,446 globally, which is just above the US poverty line for a family of four. Following intense criticism, Amazon became the largest company to commit to a $15 minimum wage, which will positively affect nearly 250,000 current employees. Of course, a price floor is a step in the right direction but as the massive HQ2 project gains momentum, congress and state prosecutors need to continue putting a tighter focus on the e-commerce company. If not, Amazon could potentially gain too much access and control of details aspects of people’s lives (if that haven’t already).