On November 13th, e-commerce giant Amazon announced it will split its new headquarters between Long Island City in New York and Crystal City in Virginia. This major decision ends a tight competition between cities and states across the country who have been offering the company huge tax breaks and incentive programs since 2017.
But in the end, Virginia offered the best deal: a multi-million dollar direct state incentive package, which Gov. Ralph Northam announced Tuesday, November 13th, promising $550 million in direct state incentives as long as the company creates 25,000 high-paying jobs and makes a capital investment of up to $2.5 billion in the state over the next 20 years. He also revealed that the package will provide for $1.1 billion in state investments in higher education across Virginia and $195 million in transportation improvements for northern cities. Amazon will receive additional incentives (just a slight $200 million more) if they create over 12,000 more jobs in the future expansion of the headquarters, which they haven't promised yet.
So, that's a lot of information and numbers. From the numbers, it sounds good, right? Or wait, maybe it sounds bad. The creation of more jobs is obviously a good thing, but what about that huge incentives package? It's hard to tell how Amazon's presence will affect Crystal City and the state as a whole just yet, but many are anticipating a drastic impact.
On one hand, Gov. Northam called Amazon's choice a big win for the state, one that will bring in many immediate jobs and spur entrepreneurial activity. Virginia's incentives package includes investments in the state's public education and transportation infrastructure, which will only help to grow a strong workforce, a stable and competitive business climate, and a top-tier higher education system.
Todd Haymore, a former secretary of Commerce and Trade, wrote a column in the Richmond Times-Dispatch declaring Amazon's "HQ2" will benefit not only Northern Virginia but the entire state. He wrote that the project will propel new technology investment throughout the state and only affirm Virginia's title as the "Silicon Valley of the East Coast." And because the headquarters will need a skilled workforce, Amazon and Virginia agreed that colleges such as Virginia Tech, George Mason University, and Virginia Commonwealth University will be building new centers and programs to increase the number of people getting degrees in computer science and engineering. Haymore also said that the new jobs available will grow an educated workforce, stabilize taxes, provide reasonable costs of living, and establish high quality of life metrics.
Looking at the thousands of new jobs and the billions to be invested in education, transportation, public health, and safety, it's no wonder why some are ecstatic about Virginia's upcoming HQ2. Others, however, are gravely concerned about the site's potential effects on housing, traffic, and wage inequality in the state.
Michael Hobbs wrote for the Huffington Post about Amazon's effect in Seattle: he acknowledged that while Amazon did grow the city's job market and per-capita income, it was undeniable that the growth disproportionately disadvantaged poor residents. Housing prices in Seattle were pushed way up, "turning homeowners into millionaires and renters into refugees." The homeless crisis got so bad that the mayor declared it an emergency. So it's no wonder why many Virginians are concerned, especially considering Arlington's existing housing shortage due to steeply rising prices and tight restrictions on building apartments.
The Seattle-based music artist who goes by the name "Spekulation" echoed these concerns when he tweeted, "Dear New York and DC, Amazon isn't bringing you 50,000 high paying jobs. They're bringing 50,000 people with high paying jobs to where you currently live. This won't help your community, it will replace your community."
Michael Hobbs also wrote that, with the addition of high-paying jobs, thousands more low-paying jobs will be created underneath to supplement. This could pose a problem in Virginia, whose minimum wage is $7.25 an hour with no policies guaranteeing sick paid leave or family leave. If basic working conditions aren't improved, he said, Amazon's investment will only create a more impoverished and insecure workforce.
Another major concern is the effect HQ2 could have on traffic in the area. As a lifelong resident of Virginia, I can tell you that the traffic – not only in the northern region but in the south too – is absolutely a disaster. During rush hour, a holiday, the weekend, or at any other random time, traffic can stall to the point where it takes more than an hour to go a little more than a mile. Transportation conditions could improve with the investments in the state's incentives package, but it's yet to be seen.
Regardless of where you live in Virginia, there's no doubt that Amazon's stake in Crystal City will massively affect the entire region. Whether those effects will be positive or negative, we'll just have to wait and see.
