Amazon announced Thursday that it will build a new headquarters to supplement its existing base in Seattle. The new headquarters, which Amazon calls HQ2, will be located in an American city and is expected to cost $5 billion to build.
Amazon claims that HQ2 will host 50,000 new jobs and that "construction and operation of Amazon HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community."
But while those numbers may or may not be accurate, it's clear that this new project represents a major opportunity for both Amazon and one lucky city.
It's an opportunity for Amazon in that whoever hosts HQ2 will likely offer very generous tax breaks for the privilege. And it's an opportunity for the host city, in that Amazon is a strong and growing company that offers a long term injection of wealth. According to Amazon, "its investments in Seattle from 2010 through 2016 resulted in an additional $38 billion to the city's economy — every dollar invested by Amazon in Seattle generated an additional $1.40 for the city's economy overall."
Still, Amazon's planning document has very precise expectations from potential bidders. These include: "Metropolitan areas with more than one million people. A stable and business-friendly environment. Urban or suburban locations with the potential to attract and retain strong technical talent." Amazon also declares that "a highly educated labor pool is critical and a strong university system is required."
Liberals should pay close heed to those words, after all, many liberal mayors claim that the future of city governance is one that balances higher minimum wages with high corporate taxes. Seattle Mayor Ed Murray is one of them; he pushed a $15 minimum wage law that has cost the poorest the most, and won a tax hike on higher earners earlier this summer. Murray should look in the mirror as he considers why Amazon is looking outside Seattle for HQ2.
Still, Amazon isn't just focused on the taxes. Its proposal expands on the importance of education, requiring city bidders to "include a list of universities and community colleges with relevant degrees and the number of students graduating with those degrees over the last three years. Additionally, include information on your local/regional K-12 education programs related to computer science."
We shouldn't take these expectations for granted. In today's globalized economy, the U.S. economy won't provide for higher living standards and better opportunities unless our workforce has high-value skills. This will require bold reform at both K-12 and college levels so that Americans can become more productive and innovative workers. Unfortunately, the nation's declining labor participation rate points to us heading in the opposite direction.
Anyway, what city will win the race to host HQ2? I think two candidates stand out as offering an educated workforce, connectivity to other cities, a low-tax environment, and high living standards. They are Houston, Texas, and Charlotte, N.C.
What do you think?