Amazon has announced that Crystal City, a neighborhood of Arlington, Va., is a finalist for its search for an HQ2 location. In other words, it knows which side of its bread is buttered: government regulations.
The choice of Crystal City is interesting for several reasons — primarily in this case because the choice was reportedly made despite Amazon being offered less in subsidies from Crystal City than other locations it turned down.
The thing about Crystal City is location. Crystal City is about as close as you can get to Washington, D.C., without being in the city limits. Crystal City is only three metro stops away from downtown (granted, with delays, that can still be a while). Over the next decade, Washington is going to make a lot of decisions that are going to have huge affects on Amazon’s bottom line.
Is Amazon too big? Is it paying enough in wages? Are drones safe? Can they use bigger trucks for deliveries? Can they use driverless trucks? How much should they pay in healthcare? Taxes? Should they pay more to ship goods? Why haven’t they sold more of my book, Profit Motive?
These are all questions and policies that are already being discussed and debated. The Department of Transportation just released new rules a few weeks ago involving autonomous cars and testing. The House is already considering tax reform 2.0 (although, that is likely to be derailed following Election Day). The “Twin-33,” one of the ways that Amazon could move more goods, is already a subject that DOT employees are ready for when it is mentioned. President Trump has pushed the USPS to up the rates that it charges Amazon to ship goods (despite the money that USPS makes from Amazon). And healthcare costs are out of control, something that it is likely a daily discussion at a company the size of Amazon.
Amazon is so big and this search for HQ2 so economically important that it is kind of hard to imagine that most of us remember when they focused merely on books. However, now they account for more than $250 billion in e-commerce, or almost 50 percent of the total e-commerce market. They aren’t looking to give up much market share anytime soon. In fact, the next closest competitor is eBay, which only has 6.6 percent of the market.
All of this large economic footprint and large list of contentious public policy issues means that HQ2’s proximity to Washington, D.C., would be beneficial for Amazon. It is much easier to show the “benefits” of Amazon when all of a congressman’s neighbors work for Amazon. It is easier to show its advanced systems off when the trip is minutes instead of days. And, it is easier to fight a giant like the government when you are close to it — keep your friends close and your enemies closer.
Crystal City isn’t a good option for every business or for all reasons. For me specifically, it is likely to help make my commute even more unbearable. It might make coming across the river into Virginia even less likely for D.C. and Maryland residents. However, because of the increased demand for housing and competition for jobs, it will assuredly mean a good deal to the metropolitan Washington economy as a whole.
Amazon also included New York and Dallas as its finalists and announced it will expand to two locations instead of just one, splitting the employees evenly, 25,000 and 25,000. That means that Crystal City now has 66 percent chance of landing HQ2 and the 25,000 jobs it will bring.
If you look at the decision between the three, however, and the benefits of proximity to Washington, D.C., Crystal City can probably go ahead and pop the bubbly while watching Dallas and New York fight over their share.
Here’s to a long commute, shorter shipping times, and an even better economy!
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
