New York City could be the biggest winner of tech’s West Coast exodus | Industry
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That’s if, as reports indicate, Amazon chooses New York’s Long Island City neighborhood as one of two places where it will add about 25,000 employees over the next several years. The move would be part of the company’s recent decision to “split” its much-hyped second headquarters between two cities. (Though that decision would actually mean Seattle remains Amazon’s true headquarters, making the two HQ2s just really large branch offices).
And Google is gearing up to add thousands of employees in the Big Apple, the Wall Street Journal reported last night. The search giant is close to buying or leasing new office space that would have room for up to 12,000 new employees. That, combined with other office space Google has recently purchased, would give it room for about 20,000 employees in New York City.
Office expansions don’t typically get a lot of coverage, but the news that Amazon and Google — U.S. companies with some of the largest market caps — are betting their futures on New York City should set off alarm bells in other cities across the country that are hoping to grow their own tech industries.
Over the past year, Amazon, in the highly publicized search for its second headquarters, and Google, in a much more subtle announcement on an earnings call, have essentially said that they’re getting too big for their respective hometowns of Seattle and Mountain View. This comes as the cost of living in these areas continues to rise and it has become nearly impossible for many Bay Area workers to buy a house. In fact, surveys have shown a significant percentage of workers in the Bay Area and Silicon Valley are considering moving elsewhere.
But if tech companies and their workers are becoming dissatisfied with the Bay Area because of its high cost of living, logic would dictate that they are looking for somewhere with a much lower cost of living. That was the basis of the pitches by cities like Detroit, which offered Amazon hundreds of millions in subsidies and discounted office space. These incentives, along with a lower cost of living, would seem to make cities like Detroit ideal locations for Amazon to set up shop.
And as VentureBeat has reported over this year, companies in places like Pittsburgh and Denver — aided by their local economic development groups — are trying to capitalize on this Bay Area dissatisfaction by pitching Bay Area workers on the lower cost of living in their respective cities.
But as Google and Amazon’s expansion choices may soon prove, tech companies are apparently okay moving to a city with a high cost of living — it just has to be slightly lower than that of the Bay Area’s, which isn’t hard to do.
Access to a large pool of tech talent is still the deciding factor when large tech companies are looking to expand — not how low the cost of living is, not how favorable regulations are, not how low taxes are (though those can all be useful tools in helping grow local startup communities). Amazon reportedly decided to split its HQ2 between two cities because it was concerned that its top choices — Long Island City and Crystal City, Virginia (just outside of Washington, D.C.) — wouldn’t be able to provide enough talent to fill the 50,000 jobs it has planned.
If Amazon doesn’t think that two of the largest metropolitan areas in the U.S. have enough tech talent, it should be abundantly clear to cities in the Heartland that training more tech workers needs to be a top priority. My advice? Invest more in research universities, while also creating alternative pathways for students who want to get into the tech industry without getting a four-year degree. Find ways to recruit both in-state and out-of-state college students to meet with your local tech startups and consider launching a career in your city.
In VentureBeat’s reporting earlier this year on Utah’s growing tech community, one of the sentiments most commonly echoed by tech workers in the region is that they felt comfortable taking a job with a Utah startup once they knew there were other companies there they’d be interested in working for, should their job with their current company fall through.
If Heartland cities fail to meet the talent needs of large tech companies and more of these giants decamp to New York City or D.C. or other slightly less expensive coastal cities, it won’t just be bad for the Midwest. It will be bad for the rest of the country, as the highest-paying jobs will be simply exchanged between the same few cities. As the New York Times put it — “the rich get richer, and they get Amazon.”