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November 8, 2018

Amazon HQ2 could hurt those in need. Here's how the winning city can make sure it doesn't

Jeff Bezos was so obsessed with Amazon's growth in the mid-1990s that he had the firm's motto, "Get Big Fast" imprinted on t-shirts for all his employees. Two decades later, Amazon is outgrowing its current home of Seattle so rapidly that it has spent the past year running a competition to select a new US city in which to build its 50,000-person "HQ2."

Now reports suggest that the search may end with Amazon splitting the headquarters between two East Coast megaregions --- the Northern Virginia suburbs outside of Washington, D.C., and Long Island City in New York City's borough of Queens.

The leaders of these cities should internalize warnings from Seattle. Commentators there have taken to calling Amazon's expansion a "prosperity bomb," reflecting both the massive impact of the company's growth and the heat of the ensuing fights about how that growth should be managed and distributed across the city.

In one scenario, Amazon could simply drop another prosperity bomb on these two already-prosperous markets, producing a regressive explosion that heightens inequality, spurs gentrification and diminishes social cohesion. In another scenario, Amazon HQ2 and HQ3 could serve more as a controlled power source --- one that economically energizes a broad base of residents and local communities.

How could a "grand bargain" like this unfold as Amazon and local leaders in New York and Virginia bear down on the final stretch? Here are three core pillars for local leaders and the company itself to consider:

Use Amazon to seed the next Amazon, and build wealth among local entrepreneurs

Amazon's presence will have a gravitational pull on other companies, spin off new businesses, and create demand for local suppliers. In Seattle, Amazon has helped support the tech cluster by investing in the Alexa Accelerator, a partnership with Techstars that helps startups incorporate Amazon's popular Alexa artificial intelligence platform into their businesses. Economic development organizations, accelerators and incubators in each city can work to help nurture tech entrepreneurship around Amazon through similar partnerships.

Amazon's massive footprint will also create opportunities for local businesses in the winning city that do everything from food preparation to event planning to legal services. City officials should establish a mechanism to connect Amazon to local suppliers as the company considers procurement and vendor decisions at the new headquarters.

Prepare current residents for employment opportunities

One of Amazon's biggest challenges is finding the necessary talent to support its growth, and this presents a tremendous opportunity for local residents and leaders in education and training. Amazon should partner with local education, workforce development and economic development entities to prepare as many current residents as possible for the tens of thousands of jobs these new locations will create. These partnerships can build from Amazon's technical apprenticeship program, and draw upon leading-edge digital skill providers like Per Scholas and General Assembly already operating in the community.

Longer term, Amazon should also co-invest in partnerships with local school districts to expose children to STEM education through mentorship programs with Amazon employees and career exposure days at the campus. Amazon could extend these efforts to formal, work-based learning opportunities for young people, such as internships, externships and apprenticeships. Oftentimes, these types of employer-educator partnerships exist as pockets of innovation, but Amazon's resource base and talent requirements offer an opportunity for greater scale in these offerings.

Boost housing supply to ameliorate growing pains

Even with the most ambitious workforce development efforts imaginable, most local residents will not directly benefit from Amazon's investment. For them, there are well-founded concerns that their cost of living will increase as new arrivals bid up the price of housing.

The good news, as my colleague Jenny Schuetz notes, is that Amazon's site selection team picked sites that were already planning for densification and new development.

Yet even with expanded market-rate housing development, HQ2 and HQ3 are still likely to exacerbate affordability challenges. A portion of the tax revenue generated by Amazon's arrival ought to be set aside for a fund to preserve and expand affordable housing. Of course, the size of this investment fund depends on the ability to actually secure tax revenue from Amazon, which will be determined by the size of the tax incentive package provided.

We have few details about the Northern Virginia bid, but this summary of New York's proposal suggests that the city is intentionally leveraging Amazon to further broaden goals related to education and skills, innovation and industry, and neighborhood development.

At this point, many would point out that this entire process suggests that Amazon cares little about the well-being of US cities, and has simply sought to extract the best deal for its bottom line. But here we are, and, if Amazon ultimately confirms those markets, leaders in Northern Virginia and New York have signed up to try to make this work. If done right, these two global metros could attract a transformative company while investing in shared regional assets that not only benefit Amazon but also workers, communities and other businesses.

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