- Amazon is opening a new headquarters, HQ2, somewhere in North America. It will employ up to 50,000 people, most of them white-collar workers.
- Economists and urban planners say the move could fundamentally change how the selected city ends up functioning, given Amazon’s impact on Seattle over the past two decades.
- Massive economic gains could lead to prosperity for some while displacing others if city officials don’t make room for them.
Amazon recently announced it will spend $US5 billion on its second North American headquarters, which the company said will eventually house 50,000 employees.
Amazon has yet to provide many details about the new headquarters, including its location, as cities are currently free to bid on hosting the new HQ. But based on how Amazon has transformed Seattle over the past two decades, economists and urban planning experts can predict how the move might impact the selected area.
“These types of large-scale moves create an increased number of jobs and economic activity while also impacting affordable housing goals and infrastructure costs,” Brooks Rainwater, the director of the City Solutions and Applied Research Center at the National League of Cities, told Business Insider.
Seattle is a good test case. It’s hard to overstate the impact 40,000 employees working across 33 office buildings, which total 8.1 million square feet, have had throughout the city. As The Seattle Times said in a recent article, Amazon has effectively turned Seattle, the fastest-growing US city, into the country’s largest company town.
Amazon’s growth in Seattle has coincided with increases in rent and housing costs, commute times, and city bus congestion, but also decreases in unemployment. Building owners have stopped renting individual floors in the hopes that Amazon will want to gobble up the whole building. And retail sales in downtown Seattle have gone up thanks to the influx of high wage-earners.
Depending on its size and location, the new headquarters could leave a similar impact on the surrounding community, Rainwater said. Not all of it would necessarily be good. If Amazon picks a city with large surrounding suburbs, such as New York, Philadelphia, or Los Angeles, the company could see the effects of gentrification push out low-income earners and mum-and-pop stores.
Aaron Renn, a senior fellow at the Manhattan Institute for Policy Research, speculated recently that Chicago, Dallas, Philadelphia, and Atlanta could be the strongest contenders. Each has a sizable population near or below the poverty line, however, which should motivate city governments to keep things like affordable housing in mind when bidding.
“While a new Amazon headquarters could be a boon for many communities,” Rainwater said, “city officials will have to weigh the impact it could have on the broader economy and ensure that the economic growth it brings would be both equitable and sustainable.”
Historically, company towns are transformed by the businesses that roll in — people get jobs, the economy kicks into high gear, life is good. When those companies move someplace else, they risk hollowing out the town and leaving thousands unemployed. The economy tanks.
If Amazon left town, Seattle might not feel the effects as much since it also has nearby Microsoft and other tech companies keeping it buoyed (though the economic damage would be still be huge), but in a smaller city that becomes largely dependent on Amazon, an exit could prove ruinous.
“As cities plan for the future, they must ensure economic development is approached equitably, and that it will provide opportunities for all members of their communities,” Rainwater said.
Given that Amazon’s 50,000 employees will be mostly white-collar workers making, on average, north of $US100,000 a year (based on the typical Amazon salary), the chosen city will no doubt have greater spending power. But city officials have a responsibility to ensure the lower- and middle-class workers won’t get priced out, and displaced, by such economic booms, Rainwater said.