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U.S. Cities Enter Bidding War to Lure Second Amazon Headquarters

Business

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Jeff Bezos has announced plans for a second major office, bringing more than 50,000 jobs to a to-be-determined metropolitan area.

In the same week that Gap Inc. announced plans to eliminate 175 stores across the U.S., Amazon founder and CEO Jeff Bezos said the e-commerce juggernaut has initiated a search for a home base for its second corporate headquarters, called HQ2.

The winning city stands to benefit from the economic boost that comes with being home to one of the world’s most powerful and promising businesses, with an immediate impact of creating 50,000 jobs in the area. Earlier in 2017, Amazon declared that it would create 100,000 full-time jobs in the next 18 months.

While much of the political narrative as of late has centered on the United States’ loss of manufacturing jobs, the retail sector has been especially hard hit by technology and the tides of globalization. CNN reports that 46 percent of retail jobs evaporated between 2001 and 2016, in large part due to consumers’ declining interest in traditional retail experiences, like shopping malls, in favor of more seamless online experiences, such as those afforded by Amazon.

Among the early contenders include Philadelphia, a city of 1.5 million people, and Baltimore, currently home to a fellow retail success story, Under Armour. In Bezos’ call for host cities, he outlined that they’re seeking a city with at least 1 million residents. Given Amazon’s foothold in the Pacific Northwest, setting up shop in the Northeast, Mid-Atlantic or Midwest seems feasible.

The news seems to have instilled hope in mid-sized cities and urban areas that have struggled to create jobs—especially those in technology—as startups continue to concentrate along the coasts in places like New York, San Francisco, and Los Angeles. Some cities, like Detroit and Buffalo, have enjoyed moderate success in bringing innovation to their regions, and large companies are doing their part to help. LinkedIn recently announced the opening of a Detroit office, for example.

With this hope will come greater competition for talent in cities that are already bustling tech hubs. Jennifer Hyman, founder of Rent the Runway, expressed concern on Twitter that Amazon could threaten to gobble up in-demand talent in New York. Still, others take the position that a rising tide would lift all ships and that Amazon’s move will have an immediate impact for the better, wherever it is the company happens to land.

The latest news from Amazon seems to follow the somewhat paradoxical trend of the company’s explosive growth over the past several years. Amid fears that Amazon is amassing too much power and crushing all competitors in its wake—a recent article in The Onion sardonically encapsulates this notion—the benefits of its success continue to be shared by consumers and by the economy on the whole.

University of Southern California professor Jonathan Taplin, SMWLA speaker and author of “Move Fast and Break Things,” explains that Amazon’s growth, and relative deregulation, is due to the fact that unlike traditional monopolies, the company’s power has proven to drive down prices, instead of inflating them (as is the case with traditional monopolies). Amazon’s stock price broke $1,000 this year, and following its recent acquisition of Whole Foods for $16 billion, the company has already slashed prices in many markets.

Still, Taplin warns that the lack of competition is deterring upstarts from getting in the game and harming the creative community. Other critics take issue with Bezos’ tactic of inviting cities to pitch the company, which might create a bidding war over who can offer the most tax breaks and incentives to Amazon.

Amazon will make a decision in six months. Curious if your city is in the running? Check out Recode‘s predictions regarding the most promising contenders.




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