Amazon HQ2 project will give Va. economy $14B boost, study says
Virginia’s half of Amazon’s HQ2 equals $14.2 billion in economic activity for the state over the next new 12 study. years, according to a
The Seattle-based company’s decision to build half of its coveted new headquarters in Arlington County will create 59,308
jobs in the state, more than double the 25,000 direct jobs the retailer will fill at the National Landing site in Crystal City and Pentagon City, said the report by Chmura Economics & Analytics in Richmond.
“The entire state of Virginia will benefit from Amazon’s decision to locate part of its second headquarters in Northern Virginia,” said Christine Chmura, the firm’s CEO and chief economist, in a column to run Monday in the Metro Business section of the Richmond Times-Dispatch.
The Virginia Chamber Foundation and McGuireWoods Consulting commissioned the study and released it to coincide with the foundation’s annual Virginia Economic Summit in Williamsburg on Friday.
The keynote speakers at the summit are Gov. Ralph Northam, who announced the company’s choice of Northern Virginia on Nov. 13 in Arlington, and Holly Sullivan, head of worldwide economic development for Amazon.
The decision culminated a frenzied, 14-month search that resembled a continental treasure hunt, with 240 metropolitan areas in North America pitching sites for a project that promised $5 billion in direct investments and creation of 50,000 jobs for one of the world’s biggest companies.
The Richmond, Hampton Roads and Northern Virginia regions pitched 10 sites in October 2017, but only Northern Virginia remained in the hunt after the company narrowed the field to 20 regions at the beginning of the year. Those included multiple sites in Northern Virginia and Washington, D.C., as well as one in Montgomery County, Md.
In the end, Amazon split the project between Arlington and Long Island City, in the Queens borough of New York City, which came as a relief to Virginia officials concerned about the size of direct incentives pledged to the company and the region’s ability to absorb the surge in population.
Virginia promised $550 million in direct incentives for 25,000 jobs, each paying an average of $150,000 a year, but only after the jobs were created and the tax revenues were generated to cover the state payout.
Even so, the deal has come under fire from some taxpayers, such as independent booksellers in mortal competition with Amazon, and some elected officials, primarily in parts of the state that won’t be affected directly.
Chmura estimates the project will generate $1.83 billion in state income and sales tax revenues from 2019 through 2030, when annual collections are forecast to reach $346.7 million — “an amount that will continue to grow in the years going forward,” she writes in her column.
“In addition to benefiting the state treasury, the increased tax revenue will directly benefit the funding across the state of local education systems, higher education institutions and transportation infrastructure,” she writes.
The project agreement includes a second phase that would produce an additional 13,850 jobs. The analysis estimates that the state received $13.3 million in tax revenue for every 1,000 additional jobs created by the project.
The study estimates the project will generate $8.4 billion in direct economic activity over 12 years and $5.8 billion in indirect and induced activity.
In Arlington alone, that means an average growth rate of 2.2 percent a year, a percentage point higher than projected before the announcement, based only on the new jobs created by Amazon, Chmura said.
The analysis does not include the promised $1.1 billion in new state spending at higher education institutions across Virginia to produce up to 35,000 new undergraduate and graduate degrees in computer science and related fields to provide a “tech talent pipeline” to fill jobs at Amazon and other high-tech companies.
However, the economist writes, “This project will also cement Virginia’s position as a high-tech center on the East Coast, attracting high-paying jobs and highly skilled individuals to the state, benefiting Virginians for generations to come.”