November 13, 2018 / 4:25 PM / a month ago

Breakingviews - Jeff Bezos spreads jobs and disappointment

People try to catch the 7 train in Long Island City, New York, U.S. November 7, 2018. REUTERS/Eduardo Munoz

NEW YORK (Reuters Breakingviews) - Jeff Bezos is spreading jobs and disappointment by splitting his ballyhooed second headquarters between New York City and greater Washington, D.C. The decision enables the Amazon boss to tap two of the nation’s deepest pools of technology talent. The unconventional choice of two conventional cities also aggravates the socioeconomic divisions that plague America.

Amazon set off a frenzy last year when it asked cities to bid for the so-called HQ2. Fully 238 did so, believing the promised $5 billion investment and 50,000 jobs could transform their communities. But few areas offer the workforce, cultural attractions and transportation links that the company sought. It quickly whittled the field down to 20 finalists, most with sizable tech communities, and ultimately decided to go with two of the largest.

The decision will be expensive for Amazon, even with the more than $2 billion in grants and tax credits that New York and Virginia authorities are providing. Speculators have already been making punts on property in New York’s Long Island City neighborhood and the Crystal City area of Arlington, Virginia, and the cities boast two of the nation’s hottest labor markets. Unemployment in the nation’s capital stands at just 3.3 percent and Google is aggressively expanding its workforce in New York City.

That probably explains why the average salary at Amazon’s new headquarters will be more than $150,000, half again as much as the company originally promised and more than five times the company’s median salary.

Bezos is offering a consolation prize to the heartland by putting a new operations center that will employ 5,000 in Nashville, Tennessee. But the world’s wealthiest man has effectively bypassed flyover country, leaving aside cities like Detroit, where its investment could have been transformative. That gesture of elitism may be noticed by President Donald Trump, a frequent critic of Bezos and his Washington Post.

Amazon is growing at a prodigious rate and spreading plenty of jobs around in cities across the United States, albeit many of them lower-paying warehouse jobs. The bidding exercise has given it a trove of data and insight about what communities will do to attract more of its business. That will pay dividends in the years ahead – mainly, it must be said, to Bezos.

Breakingviews

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