HQ2 ÷ 2

(Elliott Brown)

Half a loaf, it is often said, is better than none. In some circumstances, half a loaf may be better than the whole loaf. Might Amazon’s decision Tuesday to split its much-touted 50,000-job second headquarters between Washington D.C. and New York City fall into that category?

The e-commerce giant announced it it will divide its second headquarters — pretty much evenly, according to The Wall Street Journal — between the Long Island City neighborhood of Queens and Crystal City, a development in Alexandria, Virginia. Concentrating its talent into two of the country’s most populous metropolitan areas (New York City ranks first in the nation, Washington sixth, and its present strongholds, Seattle and San Francisco, fifteenth and eleventh respectively), Amazon is spreading its headquarters among very large, very expensive and technologically very advanced labor markets. 

Amazon has said it plans over 20 years to create 50,000 jobs averaging $100,000 each in pay at its new HQ2, as Amazon has named its sweepstakes objet. Though miserly in its pay for warehouse jobs throughout the nation, Amazon may well ending up paying more than $100,000 per job for many positions in order to be competitive in the New York City or Washington labor markets.   

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According to a November 5 article in The New York Times, about 1800 people already work for Amazon in advertising, fashion and publishing in New York City, while 2500 “corporate and technical employees” work in Washington and northern Virginia (many there may work in the cloud subsidiary Amazon Web Services, which competes for billion-dollar federal contracts). That breakdown could provide a hint of the division of labor between the two eastern Amazon locations.

In any labor market but New York City, a 25,000 surge of promised mostly-executive employment from Amazon’s presence would be considered epic (like IBM’s labor force in the Hudson Valley was 30 years ago). In New York City, with its 4.5-million workforce, the influx would increase the number of jobs by only one half of one per cent — one worker in every 200. The Amazon announcement on Tuesday will further increase Gotham’s economic diversity, adding significantly to its tech sector. Many of these new workers will compete for expensive New York housing. Others may join the hordes of commuters attracted from more distant locations by the economic opportunities in the city.

 Not everyone was happy about the impact of the half-loaf, worrying that it would still be too large. Queens politicos wanted to make sure that their constituents shared more of the Amazon pot of gold. Others decried the tax inducements Amazon was sure to get. 

“While locating large pools of high-salary white-collar positions in the New York and DC metro areas makes a ton of sense for Amazon, it doesn’t actually make much sense for either greater New York City or greater Washington,” argued Matt Yglesias in Vox. “Amazon’s presence will tend to exacerbate those cities’ crises of housing affordability and overburdened transportation infrastructure.”

The most dyspeptic expression of journalistic discontent thus far may well have been from Hamilton Nolan, who worried in The Guardian that “a massive concentration of tech wealth is like a bomb that will ripple out in concentric circles of cultural destruction.” New York has evolved a complex system of dealing with tens of thousands of Wall Street people “to mostly segregate them in easily avoidable areas of Manhattan and shunt vast numbers of them to the Jersey suburbs at night.” To add a flood of rich young tech people on top of that was just too much, Nolan thought. 

Since 2010, the number of jobs in New York City has increased more than at an unprecedented rate. In 2010 there were 3,730,000 jobs in the Big Apple. Last year there were 4,427,000. That pace of increase has been far greater than the Big Apple’s population increase, which in turn has been far greater than the increase in housing units.

Like it or not, the agglomeration of well-paying jobs in the nation’s most populous metropolitan areas is a fact of economic life. Despite lamentations as to the injustice of it all, more and more high-quality jobs are ending up in the priciest cities, where higher productivity must justify the high expenses. 

Where have the new jobholders come from? Many of them have been commuters, people who live outside Gotham but work there. Every once in a  while, you’ll see in a New York newspaper or magazine a story about “extreme commuters,” folks who spend more than a couple of hours commuting each way every day to a big-city job.

Most Ulster County residents think of most of their neighbors as holding jobs somewhere in our county. They don’t. That’s no longer the case. In 2015, more than 38,000 county residents worked outside Ulster County, while fewer than 31,000 held their primary jobs in the county. The census counted 11,913 Ulster County residents working in the inner New York area (Long Island, New York City, and Westchester and Rockland counties). An additional 17,000 worked in Dutchess or Orange counties. And so forth.

“Seattle wasn’t a big enough place to host this headquarters. It has to be out on the East Coast in the power corridor — the Boston, New York, Washington corridor — and that’s where it went.” Urbanist Richard Florida thinks Amazon wasn’t selecting a single site; the HQ2 selection process “was about building a corporate locational strategy to site many things.” The combination of “a big toehold” in the world capital of New York City and “a foothold in D.C.,” a great place to attract talent and the seat of the American government, had proven an irresistible decision for Amazon, Florida explained. 

What’ll come next? Florida expressed realpolitik cynicism. “Talk about winner-take-all urbanism,” he wrote. “So much for the rise of the rest of the heartland. This is a bicoastal economy where the big go to the biggest and the rich go to the richest.”

New York mayor Bill De Blasio, professed foe of gentrification, argued in a recent interview that his city’s willingness to relax building restrictions in exchange for more housing would enable it to stop Amazon from turning it into another San Francisco — a very attractive city full of wealthy people and long commutes. Good luck on that one. 

The average Amazon employee is in a very different economic situation than HQ1 and prospective HQ2 employees. If the former are competing for loaves, the latter are scrambling for slices. 

In mid-2018, Amazon employed 613,300 people, the majority of whom (“Amazombies”) work in fulfillment and distribution centers at relatively low wages. The company recently promised to pay its full-time American associates $15 an hour. Worldwide, the median Amazon employee made $28,446 in 2018.  

While the biggest cities wrestle over Amazon headquarters facilities, much of the rest of America is competing for the fulfillment and distribution centers. This past year there have been applications for million-square-foot  warehouses in Newburgh and Montgomery in Orange County and in Schodack in Rensselaer County.

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