After 14 months, Amazon’s HQ2 hunt ended with a split decision in Washington, D.C. and New York City. What did we learn?
In October, a group of Americans were asked to rank which U.S. institution they trusted the most. Researchers from Georgetown and NYU were curious to see if there was anything left in 2018 that an increasingly polarized public still considered honorable. It wasn’t religion, Congress, or the press. The military scored highly, topping the Republican pool’s list. But across party lines, one brand secured the broadest allegiance, at least for the 5,400 respondents that took the survey: Amazon.com.
Amazon’s high grade—ranked first for Democrats, and third for Republicans—might come as a surprise. On the right, the company has been a frequent target of President Donald Trump’s ire. And on the left, it’s been condemned for a host of corporate offenses, such as providing ICE with facial recognition technology, treating workers like robots, and union-busting. This year, as Amazon’s valuation hit $1 trillion and founder Jeff Bezos officially became the world’s richest man, it helped disappear a business tax in Seattle designed to help homeless people and allegedly lobbied hard against toughening Washington state’s pay equity law. And yes, this was the year Amazon’s North America-wide search for a second headquarters came to an unceremonious close, triggering a national debate about the corporate tax incentives it was allowed to solicit.
What to make of this? Not much, perhaps. “Trust” isn’t the same as “respect,” and many of the categories in this survey (like “nonprofits”) were impossibly vague and broad. Expressing faith in Amazon is more like acknowledging its power and usefulness. And no labor-rights scandal or HQ2 anticlimax could shatter that faith, which is really the same confidence invested in the tech sector itself: It’s the idea that the minds and machines of Silicon Valley collectively represent the most agile problem-solver of our age.
Amazon arguably plays this game better than anyone, betting that by making shopping, eating, and watching TV easier for individuals, it can also prove it’s a force for good in communities. Yes, this is a company that has reportedly patented a wrist-tracker to limit workers’ bathroom time, but damn, that two-day shipping is convenient! (How much do we trust Amazon? Many millions of us are happy to install the company’s always-listening voice-robots in our most intimate private spaces.) In Seattle, even as Amazon takes heat for widening inequality and fueling a homelessness crisis, it’s praised for reinvigorating the economy and rebranding the city in a shimmer of cool. Politicians there are loathe to alienate it.
Though the survey was conducted before November’s big reveal of HQs 2 and 3, that saga can be read in the context of trust, too. Amazon managed to convince 238 cities and states and municipalities to participate in a pretend competition that they should properly have identified as a tragicomic grift from the beginning.
You can’t really blame them. Research out of the Brookings Institution shows that the bulk of post-recession employment gains since the recession have been concentrated in just 2 percent of the United States, and that “the same top 10 metros captured almost have of the new tech jobs created from 2015 to 2017.” In its Request for Proposals, Amazon implied that cities everywhere would truly be considered on their merits. City and state leaders nationwide got caught up in the thrilling notion that a tech superpower could sweep in and transform their economies with 50,000 jobs.
So did the media tasked with covering their bids: Here at CityLab, the Amazon HQ2 desk churned out about 40 posts chronicling the competition.
The bid I think about most is Kansas City’s. In October 2017, its then-mayor, Sly James, bought 1,000 Amazon products, rated each 5 stars, and wrote reviews for every one, with earnestly crafted Kansas City-themed quips. “Here in KC, we’re ranked as one of the 20 Happiest Cities to Work in Right Now,” the mayor commented on the children’s book Alexander and the Terrible, Horrible, No Good, Very Bad Day. ”[S]o lucky for us, the chance of having a Terrible, Horrible, Very Bad Day at work is less.” He couldn’t offer to funnel Amazon employees’ income taxes back to the company, like Chicago did, or to let the company control what projects its tax dollars funded, like Fresno did, or just hand over $8.5 billion, like Maryland did. His was a simple, good faith ploy. When 20 finalist cities were chosen by Amazon in January 2018, Kansas City didn’t make the list.
Neither did Danbury, Connecticut; or Pomona, California; or Frisco, Texas, whose mayors all produced pleading videos dismissed as “embarrassing” by the Washington Post. The finalists were, instead, the usual suspects: American “superstars,” with a few wild cards thrown in, plus Toronto. In the end, the company split the 50,000-job prize in half, and picked two of the most obvious places in the country to share it.
So, after 14 months of discourse around the company’s lack of transparency, the shadiness of the non-disclosure agreements it asked city and state leaders to sign, and the fundamental outrageousness of giving public money to a company owned by the wealthiest soul on the planet, what did we learn?
For one thing, the decision confirmed the conventional wisdom that the sweepstakes was meant to upend. The key factors in these type of decisions aren’t tax incentives or promotional videos—they’re features like usable public transit systems and vibrant urban centers. Hosting several thousand employees of the interested company already also helps. Tech settles with tech; the rich get richer; and everyone else gets left behind. As Emily Badger wrote in the New York Times, the HQ2 hunt revealed the “deepening suspicion of many communities that the costs of urban prosperity outweigh the benefits.”
The choice was also a relief, for some. With only 25,000 workers each, the new HQs will be more glorified office expansions than full-fledged satellite campuses. Their housing markets will be better prepared to handle the influx. Long Island City has developed real estate faster than any other New York borough this year, and Crystal City’s most pressing urban problem is its vast swaths of empty office space. The D.C. region has grown by the equivalent of 12 Amazons since 2000, according to the D.C. Policy Center, adding an average of 34,000 people per year. New York has added an average of about 64,000 a year since 2010. Amazon’s 25,000 workers—many of them sourced from within the region, and others moving in slowly—might not make a cosmic dent.
That’s been little consolation for the immigrant communities in Long Island City who fear that rents will rise and policing will become more oppressive. Nor residents of the Queensbridge House, the nation’s largest public housing development, which will soon be Amazon’s forgotten neighbor. And especially not for the many low-wage workers in both New York and D.C. that have already been priced out of job-rich areas. For them, the damage from the region’s inequitable growth has already been done. As Alex Baca wrote in Vox,
Amazon is merely exposing what’s been true for decades: that accessible, affordable housing; frequent, reliable transit; well-protected jobs that pay living wages; and land use laws that support environmentally sustainable growth are talking points, but not necessarily priorities for elected officials. [The D.C.] region needed these fundamentals long before HQ2 was a twinkle in anyone’s eye, and would need them whether or not Amazon existed.
The first part of change, to be fair, is admitting that it’s needed. Some cities took their HQ2 rejections as constructive criticism, vowing to take the hint that they need to build more, and better, infrastructure. Amazon might now give the winning cities that push, too.
There’s another dimension to the downgrade, though: Didn’t cities want Amazon’s impact to be transformative? Crystal City has lost 17,000 jobs in the past five years to military base realignment, and Long Island City’s building boom hasn’t been paired with growth fast enough to fill it. Adding 25,000 jobs over the course of almost a decade might not be enough to make any sort of tangible economic impact in these—or many—cities. (The jobs’ worth will also be determined by who gets them, and what benefits they’ll include.)
And, as the stock market teeters and tariffs tighten, no company can predict the hiring decisions of the future. Foxconn already proved in Harrisburg, Pennsylvania that pledging jobs doesn’t always mean delivering them. If Amazon hires fewer people, the company will suffer too, getting fewer tax breaks. But what, then, would have been the point of it all?
Out of the ashes of 14 months of Amazon-fueled debate, some faint outline of how to do all this better is emerging. New York City leaders are fighting to stall or shrink the incentive packages offered by state leaders; and to eliminate the use of non-disclosure agreements in economic development deals. Nationally, economic experts and legislators have renewed calls to make bidding wars like Amazon’s entirely illegal, advocating for the federal government to tax relocation incentives at 100 percent to reduce their power as a negotiating tactic.
Rival tech companies, too, now leap at the opportunity to cast themselves as Amazon foils. Apple’s choice to build its second campus in Austin, Texas, might further a suburban-urban divide and cultivate auto use, but at least they can say they only got around $25 million from the deal. Google’s agreement to build a campus in San Jose involves no tax incentives at all, and might even include a mandate to build affordable housing downtown. (It’s been more quiet about its downtown expansion in New York, which could net it at least $150 million in handouts.)
The new focus on promising harm-reduction along with expansion might not do much to repair the already-fraught relationship between tech and the people of the Bay Area. There, the dynamic is already “framed as us-versus-them,” Catherine Bracy, the co-founder and executive director of the Bay Area-based tech organizing group TechEquity Collaborative, told me last month. Tech is seen as “the interloper, and the cause of all of our problems.”
Amazon’s expansion in Virginia and New York gives it a unique opportunity to forge a new image of what a tech company does in a city. A lot of people will be watching. The company has promised measures that, if faithfully executed, could preempt some of its predicted negative effects—implementing programs to encourage public transportation use for Virginia employees; and connecting New York City public housing residents with tech training programs. It will build a public school in Long Island City. Bezos won’t return his New York State tax breaks, but New York’s city council might not give him his helipad.
In the wake of HQ2, cities can also start setting their own terms for economic symbiosis. In November, both San Francisco and Mountain View passed contentious taxes on their tech-heavy business sector to fund homelessness initiatives, succeeding where Seattle failed. Other places are choosing to focus less on tech-dominant growth—not for any higher moral reason, necessarily, just because they’ve found (or have been forced to look for) other paths. Towns in rural Michigan are building smaller-scale tech accelerators, to train up a workforce where the public school system has failed. In Tulsa, Oklahoma, the city will try paying individual freelancers to move to their city, hoping to spur local entrepreneurship.
But it’s not clear that this represents a paradigm shift for tech-driven economies, and for the tech companies that drive them. Our enduring faith in the Amazons of the world can’t be underestimated. Between November and December of 2018, Quinnipiac University asked a group of about 1,000 registered New York City voters to share their thoughts on the impending Amazon move. When the results were tallied, a little less than half approved of the incentives offered, and even fewer expressed support for Mayor Bill de Blasio and Governor Andrew Cuomo. But more than half of the people surveyed approved of the move.