Amazon HQ2: A Tale of Two Cities

In November 2018, Amazon selected two cities to place their new locations, or “HQ2”s: Long Island City, a neighborhood in Queens, New York, and Crystal City, a neighborhood in Arlington, VA. This decision was the result of a September 2017 competition in which 238 cities and states bid to be the site of Amazon’s new locations. The competition was fierce, given that Amazon promised thousands of jobs with a six-figure average paycheck for new employees. New York Governor Andrew Cuomo was so dedicated to New York’s victory that he joked, “I’ll change my name to Amazon Cuomo if that’s what it takes. Because [a New York headquarters] would be a great economic boost.”

However, soon after New York was announced as the winner of a new Amazon HQ2, local politicians and residents began speaking out against the allegedly detrimental effects that the Amazon HQ2 would have on New York City. Despite the fact that Amazon promised in an agreement with New York State Urban Development Corporation to provide “infrastructure funding; workforce development initiatives; internship programs; and [that it would hire] women, [support] minority-owned businesses, and local residents,” locals pointed out that Amazon was creating primarily high-level jobs that would only exacerbate the pre-existing wealth disparity within the city. Meanwhile, as per the deal that Amazon cut with Cuomo, Amazon would receive $48,000 in tax breaks for every job they create. While Amazon would receive this major tax break, New York City is experiencing a wide-scale gentrification and housing crisis as many are being priced out of their homes. Residents feared that Amazon HQ2 in Long Island City, a neighborhood that is already experiencing a massive increase of wealthy, young people moving to the area, would only serve to make the issue far worse. And their fears are not unfounded; a widely cited study completed in 2006 by the National Bureau of Economic Research found that “In tight housing markets, the poor do worse when the rich get richer.”

As the outrage grew amongst New York City residents, one of the brightest stars of the new Congress entered the discourse. Representative Alexandria Ocasio-Cortez tweeted about the outrage that her constituents in Queens felt about Amazon moving into their community. Ocasio-Cortez then took a central role in the effort to kill the agreement that Amazon had made with the New York government; she used her considerable popularity to bring attention to the situation and strategized with community leaders to mobilize residents.

A few weeks after Ocasio-Cortez and others voiced their opposition to the plan, Amazon workers who were already living and working in New York City came forward to expose the uncomfortable and dangerous conditions that Amazon management allowed for in their Staten Island warehouse. The workers then announced their plan to unionize and demand better working conditions.

As discontent with Amazon and their HQ2 plans grew in Queens and in all of New York City, New York officials stood by their decision to make a deal with Amazon. Cuomo released a statement in which he acknowledged the concerns but re-affirmed his position: “I appreciate the anxiety of the neighboring community. Any large development will cause disruption if steps are not taken to mitigate these issues. However, the answer for a smart society is not to stop growing but rather to manage the growth and its consequences.” For Amazon, however, the pressure was too much: in February, they announced that they would no longer be building HQ2 in Long Island City.

This was a major blow for Cuomo and Mayor Bill de Blasio, who both were outspoken on their support for the deal; Cuomo called the loss “the greatest tragedy that I have seen since I have been in government.” But even for Ocasio-Cortez and others who opposed it, this was not a complete victory. It is unclear whether or not Ocasio-Cortez expected that her and her supporters’ efforts would make Amazon pull out of the deal completely, rather than renegotiate more equitable terms. Soon after the news of Amazon’s departure broke, a conservative group called the Job Creators Network started buying billboards in New York City’s Times Square that criticized Ocasio-Cortez, claiming she lost the city twenty-five thousand jobs and $4 billion in wages. The criticism of Ocasio-Cortez did not exclusively come from conservatives. Cuomo, a Democrat, made a tongue-in-cheek comment that “[A] small group [of] politicians put their own narrow political interests above their community—which poll after poll showed overwhelmingly supported bringing Amazon to Long Island City—the state's economic future and the best interests of the people of this state."

As the dust settles, it seems like this situation was a loss for everyone involved. Amazon did not get their Long Island City HQ2 and has antagonized residents of New York City. Originally, New York City residents were threatening to boycott Amazon if they built HQ2; now, residents are threatening to boycott them if they do not build HQ2. Either way, Amazon emerges from this failed deal with a tarnished reputation and many angry customers. Cuomo, de Blasio, and other New York officials who supported the deal have nothing to show for it and may have alienated themselves from the liberal voters who did not want Amazon to come to New York City. Even Ocasio-Cortez and her supporters, who are technically the victors, will be blamed for any perceived losses of the HQ2 deal, in addition to being called out via billboard. Given that Ocasio-Cortez has shown promise for a long career in politics, the Amazon situation could be a thorn in her side for years to come.

There is, however, one party involved that may have emerged from this debacle with a net gain. Residents and officials of Crystal City, the Arlington, Virginia location for HQ2, are looking forward to the arrival of the new headquarters as Amazon plans to proceed with their plans. In Crystal City, there were also concerns about gentrification and about not having the infrastructure to accommodate the growth of the neighborhood. However, in this case, officials acknowledge and are making plans to increase affordable housing and develop infrastructure. Moreover, Crystal City is in a different position than Long Island City: revitalization is more necessary there, rather than Long Island City, which has already experienced explosive growth. Terry Clower, director of the Center for Regional Analysis at George Mason University, summed it up: “It increases our challenges the region faces in supplying affordable housing for our resident workforce and solidifying our transportation system to handle increased demand . . . In reality, these are good problems to be facing, certainly better than declining demand for labor and loss of housing value.”

Crystal City will be a test case that the rest of America will be watching: if Amazon and the local government make good on their promises, the area should experience massive economic growth that is just as beneficial to current residents as it is to the high-paid Amazon workers who will move there. If this works, cities across the country are likely to be more receptive to future ventures like this. If not, then Ocasio-Cortez is vindicated, and Amazon and other corporate giants will find themselves out of favor with the public.

The featured image is courtesy of Wikipedia user Brianc333a, and licensed under Creative Commons 4.0. The original can be found here.