New offices in the same old places
“The most exciting business news story of 2018 ended with a whimper,” said Matthew Yglesias in Vox.com. Amazon’s much publicized, yearlong quest for a second headquarters came to a close this week. After a frenzied rivalry that started with 238 contenders, Amazon split its HQ2 between two locations, going with the least surprising choices: New York City and a suburb of Washington, D.C. Locating in places with a large pool of well-educated white-collar workers makes sense for Amazon, but it doesn’t do much for the sites Amazon picked. Already-rich cities are “getting richer while their low-income residents actually get poorer,” as housing becomes even less affordable and transportation is overburdened. Amazon could have gone to a place where economic opportunities are urgently needed. Now the company’s whole search looks like a publicity stunt designed to “entice cities and states to put forward ultragenerous benefits packages”—in exchange for offices that will probably underdeliver on jobs and other economic benefits.
Companies like Amazon need to locate where the employees they want to hire are willing to live, said Josh Barro in NYMag.com. “And a lot of Amazon’s target hires wouldn’t be willing to live in Cleveland. (Sorry, Cleveland.)” Don’t look to the tech industry to save all of America’s cities. Tech draws the most elite grads, who insist on living in New York, San Francisco, or Washington. There are other industries, though, that can be “rebalanced.” Does Bank of America need a big tower in midtown Manhattan, when its headquarters is in North Carolina? “There can be more filmmaking in Atlanta, more aerospace in Wichita, more biotech in the Research Triangle, more advertising in Chicago.” And if you’re really worried about the effect on the new East Coast hubs, said Karen Weise and J. David Goodman in The New York Times, it could have been a lot worse. If Amazon hadn’t picked two locales, it could have brought 50,000 employees to one city. “Picking multiple sites allows it to tap into two pools of talented labor and perhaps avoid being blamed for all of the housing and traffic woes of dominating a single area.” “Why the hell are U.S. cities spending tens of billions of dollars to steal jobs from one another in the first place?” asked Derek Thompson in The Atlantic. New York alone is giving Amazon $1.5 billion in cash and tax credits. Every year, cities and states spend more than $90 billion in tax incentives to lure companies—deals that take funding away from things like schools and infrastructure. Kansas and Missouri spent $500 million fighting to drag Kansas City companies back and forth across the state line, and created zero new jobs. In the end, companies take proffered incentives and often move where they wanted to move anyway, and they don’t even keep up their end of the job creation bargain. “In a starkly divided country, corporate pandering is the last bastion of bipartisanship, an activity enjoyed by both Democrats and Republicans at every level of government.” Corporate America is getting all the help it doesn’t need, and executives like Jeff Bezos don’t care about the cost. “They are winning by the rules of a broken game.”