File Photo: A sign for the new Amazon Go store on 7th Avenue at Amazon's Seattle headquarters in Seattle, Washington, U.S., Jan. 29, 2018. (Xinhua/REUTERS)
By Xinhua Writer Wang Wen
NEW YORK, Nov. 13 (Xinhua) -- Amazon's decision to split its new headquarters and move to the east coast illustrates the company's urgent need to hire enough tech talent in order to usher in a new era of growth, experts said.
The U.S. online retail giant said on Tuesday that it will invest 5 billion U.S. dollars and create more than 50,000 jobs across its two new headquarter locations, namely New York City and Arlington, Virginia, with more than 25,000 employees each.
Hiring at both locations will begin next year, and the average salary for new employees in the areas will be more than 50,000 U.S. dollars, according to the company.
Amazon began searching for its second headquarters in North America last September. In January this year, 20 finalists were sifted out from a total of 238 bids.
The company's original plan was to invest 5 billion dollars and hire 50,000 employees in one location.
The fact that Amazon chose to split its second headquarters evenly in two places instead of nailing one location exposes a tough reality many companies face: the difficulty in finding sufficient tech talent.
Today, companies from auto makers to insurers and healthcare providers in the United States are all working hard to attract and retain talent in fields like software development, machine learning and big data.
Universities have been racing to expand their programs in engineering, data science, artificial intelligence and many more tech-related areas, yet fail to make up for the shortage on the company side.
Ari Ginsberg, professor of entrepreneurship and management at New York University's Stern School of Business, said Amazon's number one criteria for its second headquarters location is access to talent.
He said the company has reached the limits of the growth in its current base in Seattle.
"Growth for the company involves not only more space for employees but also more technology talent," said Ginsberg.
"They had to find an area that is able to supply them with an abundance of technology talent with an innovation ecosystem that includes universities, other high-technology companies, and a start-up culture," he said, adding New York City and Arlington are exactly such areas.
Gad Levanon, chief economist for North America for The Conference Board, said the move might well be a turning point for the cities.
"Regionally, the high-tech is moving east," said Levanon.
New York City has been improving its business environment to attract tech companies and talent in the past decade, trying to transform from a traditional financial and entertainment center to a tech hub on the east coast.
The city has now entered into a virtuous cycle that will allow it to attract more tech companies and tech labor within already large clusters, Ginsberg said.
He is optimistic that Amazon will be able to hire enough of the qualified workers it needs more effectively than in other areas.
The other two major criteria Ginsberg identified as important to Amazon's location choice are the benefits the company could get from local governments and the attractiveness of the locations.
Local governments in both locations have offered the company generous incentives.
Amazon will receive performance-based direct incentives of 1.53 billion dollars based on the company creating 25,000 jobs in Long Island City. The incentives will include a refundable tax credit of up to 1.2 billion dollars and a cash grant of 325 million dollars.
In Arlington, the company will receive performance-based direct incentives of 573 million dollars, also based on the company creating 25,000 jobs.
However, these incentive packages saw split responses.
Lawmakers and local residents criticized New York City's committed incentives in particular, arguing city and state officials should be allocating money for subway repairs and public services instead.
Democratic Representative-elect Alexandria Ocasio-Cortez, who will represent parts of Queens and the Bronx starting in January, wrote a string of tweets and voiced her concerns.
"The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here," Ocasio-Cortez tweeted.
She expressed concerns about the project pushing working-class people out of Queens.
"We need to focus on good healthcare, living wages, affordable rent. Corporations that offer none of those things should be met w/skepticism," She tweeted.
In a joint statement, Senator Michael Gianaris and City Council Member Jimmy Van Bramer said "it is unfathomable" that New York would offer Amazon billions of dollars in incentives when "our subways are crumbling, our children lack school seats, and too many of our neighbors lack adequate health care."
New York State Governor Andrew Cuomo said at a press conference following the announcement that "for every dollar we invest we're going to get back about 9 dollars, give or take, so to find the money that we need to invest in the subways, invest in the schools, etc., this is a big money maker for us."
New York City Mayor Bill de Blasio reassured local residents that affordable housing will remain be available in Long Island City.
Both officials applauded Amazon's decision. De Blasio said the move consolidates New York City as "a great international tech hub." The governor said Amazon's plans are "about being a part of the economy of tomorrow."