As we reported earlier, Amazon revealed that the company received 238 proposals from cities and regions across North America for its second headquarters, dubbed Amazon HQ2. Nearly all the US states except Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont and Wyoming have shown interest, while seven cities in Canada and three from Mexico have also joined the race.
The overwhelming response is a sign of how desperate states have become to attract big businesses, and the jobs they bring along with them. Amazon says that it will invest $5 billion in construction, and expects its HQ2 to hold as many as 50,000 high paying jobs.
Amazon did make a nice pitch by providing, in detail, the impact their first headquarters had on Seattle and its economy. Amazon says that it has more than 40,000 employees working in the Seattle headquarters, while it created 53,000 indirect jobs. The company also spent $3.7 billion towards buildings and infrastructure.
No matter who wins the bid, it will be a massive boost to that city’s or town’s economy. And let’s not forget, once Amazon steps in, that in itself will be a huge attraction for other companies to move in to the city.
But looking at it from Amazon’s perspective, why start in a new location when they can very well expand their presence in Seattle?
According to Payscale.com, the cost of living in Seattle is 45% higher than national average. Average rent for an two bedroom apartment in Seattle is $2,805, while a single bedroom will you set you back by $2,048.
The higher the cost of living, the more Amazon will have to keep paying if it wants to retain talent. As cities keeps attracting more and more people, the odds are quite high for the already sky-high prices to keep inching up rather than down.
From Amazon’s perspective, moving into another city is certainly bound to reduce labor costs over expanding its footprint in Seattle.
And it’s not just the cost, either. Finding talent in a new city will be much easier than fighting for the next tech resource in Seattle. New talent from a new location, preferably with several universities nearby, will almost guarantee a steady flow of incoming candidates.
As you can see, efficiency and economy are what Amazon is after with respect to HQ2, much like what it seeks for its core retail business.
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