Dozens of cities are working frantically to land Amazon’s second headquarters, raising a weighty question with no easy answer: Is it worth it?
Amazon is promising a $5 billion investment and the creation of 50,000 jobs over the next 15 years. But the winning city would have to provide Amazon with generous tax breaks and other incentives that can erode a city’s tax base.
Most economists say the answer is a qualified yes—that an Amazon headquarters is a rare case in which a package of at least modest enticements could repay a city over time. That’s particularly true compared with other projects that often receive public financial aid like sports stadiums to manufacturing plants, which generally return lesser, if any, benefits over the long run.
For the right city, winning Amazon’s second headquarters could help it attain the rarefied status of “tech hub,” with the prospect of highly skilled, well-paid workers by the thousands spending freely, upgrading a city’s urban core and fueling job growth beyond Amazon itself.
Other companies would likely move, over time, to that city, including employers that partner with Amazon in such cutting-edge fields as virtual reality and artificial intelligence. Some Amazon employees would also likely leave the company to launch their own startups, thereby producing additional job growth.
Those trends, in theory, could help attract more highly educated residents in a virtuous cycle that helps increase salaries and home values. It’s that hope that has triggered excitement from major cities like New York and Boston to midsize cities like Baton Rouge—and even tiny towns like Maumee, Ohio. The deadline for submissions is Thursday.
