Over the last year, Amazon has dangled in front of cities the possibility that they could host the company’s “second headquarters”—a massive $5 billion facility that would provide 50,000 white-collar jobs. On Tuesday, Amazon confirmed what had been widely reported: nobody would be getting this massive prize. Instead, the expansion would be split in half, with New York City and Arlington, Virginia, (just outside Washington, DC) each getting smaller facilities that will employ around 25,000 people each.
Amazon’s Seattle offices will continue to be the company’s largest and will continue to be Amazon’s headquarters by any reasonable definition. But pretending to have three “headquarters” undoubtedly makes it easier for Amazon to coax taxpayer dollars out of local governments.
The announcement is underwhelming in other ways, too. The Washington, DC, area has been widely seen as the frontrunner since the competition was announced last year. When Amazon announced a list of 20 finalists, the region claimed three of those 20 spots, with separate entries for Northern Virginia; Montgomery County, Maryland; and the district itself. Amazon CEO Jeff Bezos bought The Washington Post in 2013 and bought the largest house in Washington, DC, in 2016.
Meanwhile, the New York metro area is home to the second-largest concentration of technology talent after the San Francisco Bay Area, and Bezos owns a home in Manhattan. Amazon listed Newark, New Jersey, in addition to New York City itself, among its 20 finalists—a sign that the New York area was also getting serious consideration.
The New York and Washington, DC, metropolitan areas enjoy a disproportionate share of the nation’s high-paying jobs and suffer from some of the region’s highest housing costs. The decisions to create Amazon jobs there won’t have a big impact on either region, but at the margin it will widen the gap between the nation’s most prosperous cities and everywhere else. In choosing these two cities, Amazon rejected cities like Columbus, Indianapolis, and Philadelphia that really could have used an infusion of high-paying jobs.
The decision will do nothing to rebut critics who charged that Amazon’s “HQ2” search was little more than a cynical shell game to extract maximum economic concessions from cities. Pursuing simultaneous negotiations with more than a dozen other cities gave Amazon maximum leverage in its negotiations with officials in the Washington, DC, and New York metropolitan areas.
The tactic seems to have worked, as governments in both locations have offered Amazon hundreds of millions of dollars in incentives to locate their new offices there. Virginia officials appear to have driven a harder bargain than their rivals in New York. Amazon says it’s getting $1.5 billion in government incentives for its New York expansion, whereas Virginia is offering a comparatively modest $573 million in direct incentives.