Now that the rush and excitement of bidding for Amazon’s HQ2 has passed, some cities are taking a closer look at the reality of a retail giant moving into the backyard. With 20 or more options in the Great Lakes region alone, residents of nine states and two countries face some difficult questions:
Where will all the money go?
Per Amazon’s own claims, the estimated $5 billion investment will be wrapped up in construction of their physical location, 50,000 high-paying jobs, and additional infrastructure improvements for their new hometown. While the construction portion of that $5 bil seems fairly obvious, Amazon has yet to disclose whether they will limit bidding to local construction contractors or open up bidding the site to national companies. If the bid goes to a national company, many jobs may be contracted out to locals who will only see a small fraction of the total cost of construction.
As for the 50,000 high-paying jobs, Amazon says it is looking for a deep bench of already skilled white-collar tech-sector workers.
“Talent is a second major consideration,” writes Joseph Parilla of Brookings. “Innovation is a key distinguisher of Amazon from competitors, and that depends on top technical and managerial talent. The RFP notes that a ‘highly educated labor pool is critical’ and that the site must be able to attract and retain ‘technical talent.’ In this regard, a region must be able to offer a highly educated labor force, and that labor force must be large and deep enough to not be overwhelmed by the volume of Amazon’s worker needs.”
The lead-time on Amazon’s decision and ground breaking gives talented people from around the nation time to just move in, on the hopes of a job offer. This increases the influx of people to Amazon’s choice city and possibly edge out true local’s ability to compete for these limited high-dollar jobs.
Where will all these people live? Will my rent or increase?
Seattle’s ever-increasing rent is no secret, and more than a few experts point a blaming finger at tech companies trying to run before they can walk. In all, rents in the city of Seattle are up 57 percent in the last six years.
ApartmentList.com took particular note of these numbers in the wake of Amazon’s bidding war and had some good news for our favorite come back city:
“If the new Amazon HQ2 came to town,” the report says, “Detroit would see moderate rather than severe rent increases, largely because of its high vacancy rate of 11 percent and its ability to add new housing stock rapidly. Most of the rent increase in Detroit would be caused by the influx of Amazon workers with much higher wages than the current area median and the ability of Amazon workers to pay more than the metro’s current median rent. These workers would increase the demand for new luxury construction.”
Detroit does not top many data-driven lists of most likely choices for Amazon, but it does outrank all others in immediate availability of housing. Many in the city hope Amazon CEO take a leaf from Shinola’s book and make the investment decision from the heart rather than the head.
Lately, [Kartsotis, Shinola’s CEO] has been spending so much time in Detroit, he bought a house here, joining the four Bedrock executives who have moved from Plano in the past two years. "Here the executives will eat with you and conversate," says Krystal Bibb, a 32-year-old Detroiter who was laid off from a Ford plant where she says she hardly ever spoke with managers. She was first hired by Shinola as a part-time night janitor, then worked her way up to quality supervisor in the watch factory, where employees make between $11.50 and $14 an hour, well above Michigan's $8.50 minimum wage. "I never thought I'd be doing anything other than cleaning sinks," she says. "I never thought I'd be a supervisor anywhere."
Kartsotis claims people like Bibb are his primary motivation for growing the brand. As he puts it, wrapped up in his plan to sell Shinola's "affordable luxury" products is actually a sophisticated strategy for job creation. He brings in outside partners, like Ronda (and potentially GE), to train his U.S. workers in complex manufacturing skills that were long ago offshored. He says the more the company grows, the more new job posts he'll have to fill, the more skills training he'll provide, and the more supply chains he can help reshore. "The competition came here and took our manufacturing overseas," Kartsotis says. "Fifty years later, I'm trying to get it back and use their experts to build our factories."
What impact will 50,000 more people have on already strained natural resources?
This summer’s algae bloom on Lake Erie was not a surprise to locals, but did decimate tourism for the area. The bloom’s now regular occurrence can be traced to increased populations, decreased green infrastructure due to urban development, and rising lake temperatures due to climate change. The Great Lakes Commission recently poured money into funding research and development of urban projects to stem the flow of nutrient rich run-off from entering Lake Erie. Some criticize this as too little too late, and are even more horrified with the influx of people and construction to the delicate ecosystem of the Great Lakes. With all five major cities in the Great Lakes region topping lists of likely picks, impacts on these finite resources must be considered. Unfortunately, environmental impacts of Amazon’s choice have yet to be thoroughly addressed on the national stage.
What do you think?
Is the Great Lakes ready to become Amazon's HQ2? Before giving Amazon free-reign over our entire region, should we demand some accountability? Let us know on Facebook.