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Ah, Amazon

Some thoughts about
our latest Big Idea


Do we want Amazon to build its new headquarters here?

For some people – including a lot of local business leaders and politicians – the easy answer is a whopping big YES. Amazon's Request for Proposals says the company will hire "as many as 50,000 new fulltime employees with an average annual total compensation of $100,000." For a city whose former principal employer once had more than 60,000 employees and now has only 1700, what's not to like about the possibility of bringing in 50,000 tech workers?

And so, among more than 200 submissions, Amazon executives will look at a proposal from "Rochester-Buffalo," meaning, I guess, someplace in Rochester, in Buffalo, or a site in between. (Batavia?)

Part of Amazon's still-expanding headquarters in downtown Seattle. - PHOTO PROVIDED
  • Part of Amazon's still-expanding headquarters in downtown Seattle.
We do have a lot that Amazon wants: a strong university system with tech specialties that could be a good fit for the company; a diverse population; available land; "recreational opportunities, educational opportunities, and an overall high quality of life" (Amazon's words)....

Given the competition, though, I'm not sure we have much of a chance. Amazon is looking for a place similar to Seattle, one with a lot of skilled workers and a culture of entrepreneurship. Amazon didn't create Seattle. Microsoft was there first. So were other innovators in their fields, like Nordstroms. So was Boeing.

"When outsiders gaze covetously at Seattle’s Amazon boom," notes a recent Politico report, "what they’re really seeing isn’t the effect of a single company, but of a chain reaction." The presence of some has attracted others, which have attracted others....

Still, maybe the stars will align. Maybe Amazon CEO Jeff Bezos will decide to do something really bold and put HQ2 in a city that really needs more high-paying jobs. But what would we have to give up?

The answer: Most of us don't know. The proposals aren't public. What we do know is that Amazon expects us to give up something. The third item in the section of the RFP titled "Key Preferences and Decision Drivers" is this:

"Identify incentive programs available for the Project at the state/provincial and local level. Outline the type of incentive (i.e. land, site preparation, tax credits/exemptions relocation grants, workforce grants, utility incentives/grants, permitting, and fee reductions) and the amount."

That doesn't sound like loose change.

While we wait to learn whether Rochester-Buffalo makes the first cut, then, we might think about some potential downsides of an HQ2 – if we don't plan carefully.

"The upside to the Amazon HQ2 settling in your city is 50,000 new high-paying jobs," says Apartment List's Rentonomics newsletter, "but these new workers may suck up every apartment in sight and drive up rents." Rental rates in Seattle – home of Amazon's HQ1 and its 40,000 employees – have gone up 65 percent since 2010, says Rentonomics.

The price of homes in Seattle has gone up 69 percent since 2012, Politico reports, and traffic congestion is the fourth worst in the nation.

And while those tech salaries are something to brag about, Seattle's income disparity has also grown, says Politico. And Seattle's homeless population is serious and highly visible.

Many Rochesterians don't have the skills Amazon will want for those $100,000-a-year jobs. What will Amazon's presence do for them?

If Rochester-Buffalo wins the bidding war, who will provide the benefits Amazon demands? The winning city? The State of New York? Where's that money going to come from?

Will the tax subsidies and all the rest mean less money for schools, libraries, police, firefighters, street cleaning, and public sponsorship of concerts?

Rochester needs those 50,000 jobs; no question about it. I'd let out a big whoop of joy if Amazon chose us – if HQ2 benefitted the whole community. If spin-offs included jobs for people who are now unemployed. If non-techies could still afford to live here 10 years from now. If the folks who put together our HQ2 proposal had thought all this through.

Did they?