Business advocates have warned of backlash to the anti-employer rhetoric emanating from places such as Seattle, which in recent years has approved a variety of burdensome regulations and a progressive income tax. Amazon’s announcement to set up a second headquarters outside that city – and Washington – may very well prove to be an “I told you so” moment.
Amazon currently employs more than 380,000 workers worldwide. Of that, 40,000 employees work in Washington, and roughly half of them are based in Seattle, where the company holds 19 percent of all prime office space. According to the Seattle Times, that is the most office space of any employer in a major U.S. city.
In its September 7 press release, Amazon stated it now plans to invest $5 billion into a second headquarters, of equal in size to its current one in Seattle, that will employ up to 50,000 workers. The company is asking interested cities to send estimated permitting timelines for construction by October 19.
Although Amazon didn’t provide a precise reason for the second headquarters, Seattle-based venture capitalist and Madrona Venture Group Managing Director Matt McIlwain says it’s not hard to read between the lines. He is the head of Opportunity for ALL, a nonprofit that’s funding the legal challenge against Seattle’s progressive income tax.
In a Thursday statement, he wrote: “we recognize there are many factors that went into Amazon’s decision, but the Seattle City Council’s focus on dividing the pie of economic opportunity rather than growing the pie for the city and the region is undoubtedly among them. One only needs to look at the Amazon HQ2 RFP which states ‘A stable & business-friendly environment & tax structure will be high-priority’ to understand the alignment Amazon is looking for with the state and local government for their new headquarters.”
McIlwain’s observation seems to fit with other factors involved. With little more than a month for cities to provide permit deadlines, Amazon intends to settle on a location sometime next year and begin construction work by 2019. When it is finished, employees at the current Seattle headquarters will have the option to stay or move.
However, efforts to unionize Amazon, as Seattle has done with Uber, may have also played a role. That is according to Washington Policy Center’s Small Business Director Erin Shannon. She told Lens “the fact that they’re not looking within Seattle to grow that headquarters or even in Washington to me is quite telling. It could be a move to let unions know ‘we’re done messing with you and we’re not going to continue this long, protracted fight where you’re constantly trying to unionize.’ In our state, you don’t have real stability, you don’t have a real predictable labor force. Workers can choose to unionize at any time.”
She added: “it’ll be interesting to see if they pick a right to work state.”
Amazon certainly won’t have any trouble finding eager bidders. Within hours of the announcement, local lawmakers and municipalities across the U.S. sought to highlight their cities as ideal locations.
“Amazon is a big deal, and states are going to roll out the red carpet,” Shannon said. “You’re not going to see the kind of antibusiness rhetoric being thrown around in those states like you see in Seattle.”
Governor Jay Inslee’s response to Amazon’s announcement via social media was diplomatic, praising the company’s contributions to Washington while adding “we’ll have further discussions with them about possibilities here in Washington state.”
State lawmakers such as Sen. Reuven Carlyle (D-36) reacted optimistically, writing on Facebook that “Given the company and our city growth, I don’t view a second HQ as a negative in any fashion. I welcome the healthy diversification. We’re a grown up global city and we thrive on the energy of change.”
However, state House Minority Leader JT Wilcox (R-2) wrote in a Facebook post that “the basic assumptions around the Washington economy just changed. A rapid expansion in a second HQ, as the announcement seems to indicate, means that one of the greatest engines for economic growth known to history will be growing somewhere else.”
“I think Seattle, and Washington, will find that the challenges around slowing growth will be just as difficult as the challenge of growth was,” he wrote further. “Statewide, we have at least some experience in managing government for lower growth. Seattle has absolutely no governmental spokesmen for budget or tax restraint and as this plays out over the next few years, I believe there will be wrenching change at City Hall. What is also striking is that Amazon has made NO demands on Washington in connection with this. It’s not a shakedown.”
For some, Amazon’s decision evokes memories of 2001, when Boeing moved its headquarters from Seattle to Chicago and later opened a plant in South Carolina.
If that occurred, the effects would be particularly harsh to Seattle, a city that increased its budgetary spending by 30 percent within a four-year period (2012-2016) thanks to increased construction tax revenue. Compounding the loss would be the effect on other industries. A 2015 study by the Washington Technology Industry Association found every tech worker creates seven additional jobs.
Whether Amazon ultimately remains in Seattle, the possibility is one more reason why the state should not rely on a handful of employers for economic growth, Shannon said.
“It’s like the tax relief the state provided Boeing back in 2003,” she said. “Well, that was great, because we wanted to keep Boeing in the state, but a lot of other businesses could have used that relief as well. But they’ve been catering to these certain large players and at the expense of the state’s smaller business or fledgling entrepreneurs who are struggling in our state’s business climate.”