Amazon has released its list of 20 finalists to host its second headquarters — and the massive influx of new residents that comes with it. However, although the various city councils for these 20 finalists are currently patting themselves on the back, there are reasons they should perhaps temper their excitement.
First, a list of 20 finalists is not really a final list at all. When Amazon announced it would build a second headquarters, they probably had these 20 cities in mind already — they just wanted to create buzz and competition. Now they have convinced 20 cities they each have a chance, which will cause them to compete to offer more favorable tax incentives. It’s a brilliant negotiating strategy by Amazon, because they are creating competition that might not have existed had they just announced they were deciding between 5 or 6 cities — which is probably what they are actually doing.
Second, luring in Amazon might not result in the financial boon it’s hyped up to be. Nevertheless, cities are falling all over themselves to offer massive tax breaks to Amazon. For example, Boston has proposed a taxpayer-funded “Amazon Task Force” of paid staffers whose job is to represent Amazon’s interests to the city government. However, these types of special benefits seem rarely to pay off in a meaningful way. Take sports stadiums as an example. Cities are slowly realizing that funding stadiums really only benefits a wealthy team to the detriment of the taxpayers. When will they realize that offering special perks to corporations like this is much the same?
Which brings us to one more potential pitfall: the inevitable culture change. Amazon’s employees are likely to be young, wealthy, Silicon Valley types who know nothing of the city they are moving to. If they moved from San Francisco or Seattle to New York, nobody would know the difference. But importing tens of thousands of these people to a city like Raleigh or Dallas will bring a culture shock to those region’s residents. And as Seattle shows, hosting a company like Amazon is not always a good thing. Seattle’s housing prices have skyrocketed, pushing middle- and lower-class families out and causing a spike in homelessness. While it’s true that businesses would pop up around Amazon and bring millions into the local economy, the question is: at what cost? Is it really worth it for a culturally-unique city like Pittsburgh or Nashville to dilute its identity and displace its citizens to gain this behemoth?
It’s always been difficult to trust a massive company like Amazon, which tries to strangle every industry it puts its fingers on. These cities should show a little more caution before jumping in headfirst.
Photo credit: Robert Scoble via Flickr, CC BY 2.0