Report says Amazon to split second HQ between 2 cities
Retailer might struggle to find workers in one area
SAN FRANCISCO – Amazon is going for pragmatic, not dramatic.
After it became clear that finding a city that could lure 50,000 highly paid tech workers wasn’t as easy as thought, the Seattle company plans to add two headquarters instead of one, to spread the wealth and to give it access to the widest array of technical talent.
Two sources familiar with the process told USA TODAY that Amazon made the decision to shift its placement of a second headquarters co-equal with Seattle from one city to two. It was first reported Monday by the Wall Street Journal.
The two cities aren’t known, nor when they will be named, though the New York Times reported Monday they will be northern Virginia and New York City. But the decision confirms two things Amazon had said. First, it was looking for a second headquarter because it has a need for more talent than it can convince to move to Seattle. Second, Amazon makes decisions based on the facts and isn’t afraid to change if the data show it something new.
“My immediate reaction was that having looked at the numbers, they decided they just couldn’t get the amount of talent they needed in one place,” said Joseph Parilla, a fellow at the Brookings Institution’s Metropolitan Policy Program. “You add that to concerns about increased costs and the congestion effect of having that much investment in one place, and you couple it with what’s been going on in Seattle over the past few years, and you wonder if their calculations changed.”
More than a quarter of Amazon’s U.S. tech and managerial workers are already based outside Seattle. The company has 17 North American tech hubs with at least 17,500 staffers.
Some of the hubs started as an acknowledgment of a special tech expertise that had grown up in a specific area, some because of purchasing a company and leaving the staff in place, and others were simply bowing to the reality that not everyone wants to or can live in Seattle. Amazon’s Atlanta offices focus on fulfillment technologies, while Pittsburgh hosts machine translation research.
As any industry grows, it always becomes what is called “multilocational,” said Michael Storper, a professor of regional and international development at the University of California at Los Angeles Luskin School of Public Affairs. Having Amazon spread its benefits to more regions is favorable, he said.
“In the USA, we need to spread the benefits of economic development out more, because in the past 30 years, the level of inequality between our regions has risen to a point that is higher than in more than 100 years,” Storper said.
Amazon announced its search for a second home in September 2017, saying in its request for proposals that it envisioned investing up to $5 billion in the city it chooses and adding as many as 50,000 new employees, each making an average of $100,000 per year.
While visions of throngs of wealthy taxpayers suddenly appearing in their cities lured many officials, other expressed concerns that an unprecedented flood of young, highly educated, wellpaid workers from elsewhere might destroy the charm and culture of the cities that made them so alluring.
The issue was played out publicly in Seattle, where what The Seattle Times dubbed the “Amazon Prosperity Bomb” was one of the factors behind a bruising, monthslong fight in which Amazon and other businesses squelched a new corporate head tax to fund homeless services.
Anxiety about what Amazon’s arrival might mean in the finalist cities is high in some circles. Multiple companies have done analyses of what Amazon’s HQ2 would do to rents in the chosen city, in some cases raising them by as much as 30 percent.