#BensTake: What Can We Learn from Amazon HQ2?

#BensTake: What Can We Learn from Amazon HQ2?

Amazon could leverage its new headquarters to promote inclusive growth. But if the company won’t, then cities in the running should put equity front and center.


Amazon recently announced the cities still in the running for the company’s second headquarters, setting off a new wave of frenzied speculation. Over 200 cities applied, and the list is down to 20. Only one will win. What then happens for the prospective cities still grappling with slow job creation and wage stagnation? Do they wait for the next RFP?

Cities are waiting for a knight in shining armor to solve their economic woes. This strategy is based on a popular “urban myth”: that a local economy can sustain itself and grow in the long-run by attracting established businesses away from other regions. On the contrary, research from the Kauffman Foundation has shown that recruiting companies—even providing incentives like tax breaks—doesn’t correlate with job creation. In fact, analysis of job creation patterns in California, from 1992 to 2006, found that the overwhelming majority of state job growth came from the birth of new firms or the expansion of existing ones, not from firms moving to the state. Data increasingly shows the importance and power of fully leveraging your existing assets–keeping “place” in the forefront as a tool for change.

We see the same dynamic with other gargantuan, subsidized investments like sports stadiums. Most economists agree that, in the long-run, these projects don’t translate into sustained economic growth. And they can worsen a city’s existing challenges, such as affordable housing. Mega projects like these can actually drive financial instability for many and massive displacement for low-income families and families of color, in particular.

And the opportunity costs are staggering. Most cities in the HQ2 running are offering Amazon economic incentives valued in the billions of dollars (offsetting a huge portion of the $5 billion investment). Those billions of dollars could be going to health initiatives, infrastructure investment, education and more—long-term investments that we know sustain the economic security of residents and can even help reverse long-standing racial disparities. Richard Florida and Amy Liu, among others, have already made this case convincingly.

That’s why, if HQ2 is to be a net positive wherever it lands, equity must be front and center. Without efforts to ensure that job creation is inclusive, such growth will undoubtedly replicate patterns of racial inequities, and widen income and wealth gaps. Amazon could lead the charge by putting pressure on cities to consider strategies for inclusivity in their pitches. As Brookings Fellows Andre Perry and Martha Ross aptly point out, “by targeting the factors of diversity and inclusion, Bezos can create a model for companies to follow that maximizes the talent that our changing racial demographics present.”

But if Bezos won’t, then it’s on the cities to take both historical inequities and today’s rapidly changing demographics into consideration as they prepare for HQ2. Rather than touting massive incentives, they should be competing to demonstrate that they are the best stewards of their residents’ tax dollars, and that means using all the resources in their own back yards to generate sustainable, inclusive economic growth.

Facebook
Twitter
LinkedIn
Email

Latest Articles

Supporting and Growing Overlooked Entrepreneurs with Urban Innovation Fund

In 2012, Julie Lein and Clara Brenner started Tumml, an urban ventures accelerator with a mission to empower entrepreneurs to solve urban problems. Through their experience with Tumml, Julie and Clara saw how investors can overlook certain types of entrepreneurs, mostly women and people of color. Building on their experience, Lein and Brenner founded Urban Innovation Fund (UIF) as first-time …

1863 Ventures Seeks to Close the ‘Friends and Family’ Financing Gap for New Majority Entrepreneurs

Melissa Bradley understands how barriers to capital for entrepreneurs of color hurt our economy and our communities. “There is clearly a cost if we do not invest in diversity,” said Bradley, founder of 1863 Ventures. “We miss out on great returns when we are not inclusive in our investment theses. There are opportunity costs for all of us.” She cites …

A Vision for Systemic Change in the Twin Cities: An Interview with Marcus Pope

JK:We’re celebrating your new role as President of Youthprise! Can you tell us a bit about Youthprise? MP: I’ll start by sharing Youthprise’s mission, which is to increase equity with and for Minnesota’s Indigenous, low income, and racially diverse youth. We take the “with and for” very seriously; half of our board members are young people between the ages of …

The Legacy of Wealth Inequities in the Brown and Flynn Families: A Hypothetical Exploration

The first post in a two-part series explores the potential of capital to undo the historical legacy of inequities. Race is a complex issue that continues to drive many of the socioeconomic outcomes in the US. For example, if you are a person of color born in the United States, your zip code is more of a predictor of your …

Get Updates

We want to stay in touch with you! Sign up for our email list to receive updates on the progress we’re making with our network of partners, as well as helpful resources and blog posts.

Name