Cities and the Lessons of the Great Amazon Hunt

They need to be nimbler than ever, looking for better ways to leverage local talent and institutions to ensure that their residents are the real winners.
October 17, 2017
Former Secretary of Defense Ash Carter being given a tour of Amazon's headquarters in Seattle. (Flickr/Jim Mattis)
By Stephen Goldsmith  |  Contributor
Professor of practice at the Harvard Kennedy School and director of the Innovations in American Government Program

Few if any economic-development opportunities in the last quarter-century match the significance of Amazon's hunt for a location to accommodate a $5 billion second corporate headquarters, employing tens of thousands, to complement its current Seattle base. Despite the unique circumstances of the project -- a once-in-a-generation company undertaking an equally rare project -- one can still glean important lessons from the process.

As that process unfolds, it will test the capabilities of local governments to collaborate, not only among their own agencies and community institutions but also across their metropolitan regions. The nimbleness of their bureaucracies will play a large role in everything from permitting processes to a willingness to quickly re-think regional transportation options. The efficiency with which public services are delivered will be in the spotlight. And with substantial financial incentives virtually certain to be in play, there will be more of a premium than ever on effectively leveraging taxpayer money to produce revenues for better schools, streets and public safety.

The good news is that Amazon's site-selection criteria align with most mayors' highest priorities for improving livability in their cities. The company's request for proposals emphasizes the need for diverse housing choices, reliable multimodal transportation and substantial cultural amenities.

Metropolitan areas with strong connections to university-generated talent pools will find themselves best prepared to accommodate the future of employment, and the buzz around the current Amazon search should energize cities to focus on furthering these relationships. Around the country, we see large- and small-scale examples of mayors doing just that. Phoenix Mayor Greg Stanton, for example, accelerated a downtown transformation through a partnership with Arizona State University to create a new ASU campus and innovation district.

In addition, mayors increasingly are working more closely with their local community colleges and advocating for changes in how their courses prepare more of their residents for emerging jobs. They're also looking to begin even sooner, at the high-school level, to develop the local talent pipeline. Los Angeles' Roosevelt High School provides a good example through a foundation-backed initiative that teaches students how to use geomapping software, helping them develop the interest and capabilities to take on careers in tech.

 

A more challenging set of questions deals with social equity. What levers do city and state leaders have to produce not only good jobs for the already well trained and fortunate but also ladders of opportunity for others? The nature of a deal can either aggravate or mitigate income disparity. A large number of new, high-paying new jobs will also produce indirect job gains in retail and the service sector, such as restaurants. That's an important and necessary gain, but if we are serious about narrowing the income gap, incentives need to be tailored to provide chances for upward mobility.

To that end, it's critical that incentives deals -- both for new companies drawn to a city and for existing firms expanding their local operations -- require commitments in terms of engaging local labor and sourcing local businesses, particularly women- and minority-run companies, as is set out in the community benefit agreement between Under Armour and the city of Baltimore.

Amazon's current search is a unique phenomenon, but the issues it raises will be increasingly common. While mayors bank heavily on attracting innovative companies that bring new growth and the best and brightest from around the world, they need to carefully consider the terms of their invitations. Incentives packages should benefit the people who pay for them -- the city's current residents -- and should be accompanied by policies that prioritize workforce development. Doubling down on quality-of-life initiatives while working creatively to increase the skills of current residents will produce many more city winners than just the one that emerges victorious from the Amazon contest.