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Cities dream of wooing Amazon, but is it worth it?
For over a year, cities across North America have competed to lure Amazon's next headquarters, which the company said would bring up to 50,000 jobs to the chosen site. But as Paul Solman explains, new reports indicate the company may choose two smaller locations instead of one. John Yang speaks to the University of Toronto's Richard Florida, who has been critical of the bid process, for analysis.
So, where will Amazon build its second headquarters? It is a question that has gotten renewed attention in recent days, amid reports that the company may select more than one new location.
Big companies often make news when they ask cities to compete for their coveted jobs and facilities, but Amazon will be a very big fish in whatever pond it lands in, so to speak. Billions of dollars and potentially 50,000 jobs are at stake.
John Yang has our conversation in a moment.
But, first, our economics correspondent, Paul Solman, starts us off.
It's part of our series Making Sense, which airs every Thursday.
Hey, Alexa, where should Amazon locate HQ2?
In Frisco, Texas.
The competition for Amazon HQ2 began over a year ago; 238 cities and regions were in the running. Many made quirky, some might say desperate, pitch videos.
Frisco is a city that thinks outside the box.
Others offered Amazon billions of dollars in tax breaks.
Case in point, former New Jersey Governor Chris Christie's Newark bid:
Fmr. Gov. Chris Christie, R-N.J.:
All of the economic incentives put together from the city and the state would realize $7 billion in potential credits against Amazon state and city taxes.
Southern Arizona promoters sent the company a cactus, while other places touted traits they're not usually known for.
Las Vegas is well-positioned to be a catalyst for the most advanced smart city technology in America.
In January, Amazon narrowed the list of contenders from 238 to 20. Now comes a new twist. The company reportedly plans to split HQ2 between two sites, which, according to The New York Times, are expected to be Crystal City, Virginia, outside Washington, D.C., and Long Island City, Queens, New York.
Instead of 50,000 workers in one place, each locale would get 25,000. Both locations would give Amazon what it wants: access to major metro areas with public transportation and tech talent from which to draw.
And they each have unofficial appeal: Amazon CEO Jeff Bezos has ties to both areas.
Last fall, Matt Cabrey of Select Greater Philadelphia hoped that would lure HQ2 to his neck of the woods.
One of the things that's often under-recognized, it's not just the city where it's located, or it's not just the town or the office park. It's where the CEO and where the C-suite want to live.
Well, Jeff Bezos has a connection to Washington, D.C., owns The Washington Post, has a house down there, right?
He does. And he's a Princeton grad, and he has other family connections in the greater Philadelphia region. So those kinds of factors may actually be part of this decision-making.
But nothing is final. So, even in New York, Governor Andrew Cuomo continued his hard sell this week.
Gov. Andrew Cuomo, D-N.Y.:
I think it would be an economic asset for the entire state. I have said to them personally I will do whatever I need to do to make it a reality. I offered to change the name of my oldest-born.
Cara is a nice name, but I would change it to Amazon Cara. Or maybe Cara Amazon. We have to talk about it. No, I didn't offer up Cara. I did offer up I would change my name. I have gotten tired of Andrew anyway. Amazon Cuomo, I would change it to.
An official announcement is expected any day.
This is economics correspondent Paul Solman.
For a closer look at the way both Amazon and the various cities involved approached the site-selection process, and what's at stake for both sides, we turn to Richard Florida, an urban studies theorist and a professor at the University of Toronto's School of Cities. He's co-founder and editor-at-large of "The Atlantic"'s CityLab, a publication focused on urban life and development.
And we should note that he has advised two of the cities who bid for the Amazon headquarters.
Mr. Florida, thanks for joining us.
You have said and you have written that this was never really about a second headquarters for Amazon. What do you mean by that?
No, I think this was Amazon's way of going out to ultimately 236 cities and crowdsourcing information on thousands of sites across the U.S. and Canada and North America, because Amazon is siting all sorts of facilities.
I think HQ2 is a ruse. And, obviously, it's becoming clear, when they decided to split it. They were going to site a headquarters. They were going to site other regional headquarters. They were going to site logistics and production facilities, R&D hubs.
And I think that is really was this about was, is crowdsourcing information sites, on labor market, talent pools, gathering information on incentives that allows Amazon to site a whole lot of things in the near term.
Well, in fact, Amazon has — has announced they're putting about 6,000 jobs in some of the 218 cities that didn't make the final 20, which — but when you say ruse, it sounds like it's deceptive, it's somehow false, it's hurtful.
How is putting jobs in these cities that didn't make the final cut hurtful to them?
Look, it's pretty clear to not just me, but most urban experts, Amazon knew where it was going to go from the beginning.
Now, maybe it didn't know it was going to go to Crystal City, Virginia, and Long Island City, New York. But if you thought about it for a minute — and I'm not the only one — other urban experts said, maybe there were 10 or 15 metro areas it could go for.
But back in January of this year, when the short list came out, I was able to predict this. I said Amazon is going to go either — now, my prediction was quite wrong, because I never envisioned a split — either to Washington, D.C., where Jeff Bezos owns The Washington Post and a $23 million dollar mansion, or New York City, the greatest global city in the world, the center of headquarters, with more headquarters than any other metro, where Jeff Bezos owns a condominium in the Time Warner Center.
So, if I could see that back in January — and I'm not the only one — I think it was clear they knew where they wanted to go. Why put 236 cities through this?
And, by the way, it costs those cities money. They had to have board time, staff time, consulting time all putting this together, because I think Amazon had something bigger in mind. They wanted to get to know all of these cities. They wanted the best database on economic development and site selection.
And, ultimately, they're going to site a whole lot of things and maybe extract some incentives from these cities in the process.
Let's talk about those incentives. Are the incentives that the cities are offering and the states are offering — and we heard Governor Cuomo in that tape piece say that it would be a great economic asset.
Is it worth getting the headquarters to give up those tax incentives, those other — other incentives?
No, absolutely not.
The level of incentives that Governor Christie was talking about, $5 billion, I think — the state of Maryland, I believe, put $7 billion on the table — there's no way that 25,000 or 50,000 jobs are worth that.
But here's the thing. I actually think Amazon played this just right. Amazon did what it needed to do as a company. The real fault — and when I began to speak out on this — was the U.S. mayors and governors, people I know and I like, progressive mayors, Bill de Blasio, and many others who have talked about addressing inequality, dealing with housing unaffordability, upgrading low-wage jobs, having a higher minimum wage, these mayors know one another.
They go to conferences like the U.S. Conference of Mayors. Why not have an agreement between the 20, a nonaggression pact, I called it, and say, we're not going to give Amazon incentives, we're going to compete on the merits? We will make investments in education. We will make investments in public space. We will make investments in transit.
But why are we going to hand out hundreds of millions or billions to a trillion-dollar company and the world's richest man? That — it was really the thing that galled me on this and many other people, was the way our progressive cities and mayors, our blue cities and mayors, really caved into this competition.
Richard Florida from the University of Toronto, thanks so much.
Thank you very much. A pleasure being with you.
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Paul Solman has been a business, economics and occasional art correspondent for the PBS NewsHour since 1985.
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