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As Amazon Snubs New York, It Is Growing in 17 Other Cities

The Wall Street Journal. logo The Wall Street Journal. 2/20/2019 Jay Greene
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Amazon.com Inc.’s decision to abandon its $2.5 billion plan for a New York City headquarters could disrupt redevelopment and dash hopes for a surge in hiring in the neighborhood of Long Island City. One entity unlikely to suffer much: Amazon itself.

The e-commerce giant expects to continue hiring even if it doesn’t build a campus jewel in Queens that makes good on its pledge of bringing 25,000 new jobs to the area. It is moving forward with plans to add as many employees to its other so-called HQ2 selection, the Crystal City neighborhood of Arlington, Va., just across the Potomac River from Washington.

And Amazon plans to boost hiring in the 17 other cities in the U.S. and Canada it considers technology hubs—areas in which it has at least 80 tech workers. It already has approximately 7,000 tech workers in the San Francisco Bay Area, 1,000 in Austin, Texas, and 1,800 in Boston.

Amazon still could face blowback. It was given a black eye both from the attention some politicians and community activists brought to the incentive package it won from New York, as well as from its public retreat in the face of the opposition. And Amazon’s misfire could give prospective new employees pause as the company engages in a war for engineering talent with Alphabet Inc. and Facebook Inc., some researchers say.

“At the margin, it might hurt,” said Richard Florida, a University of Toronto professor who studies urban economic development.

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For a company whose global head count has more than quintupled in the past five years to nearly 648,000, walking from the New York deal is unlikely to either slow its ascent or stop its hiring in the city. The company has more than 800 open positions in New York.

For one thing, Amazon planned to hire slowly. It had projected adding just 700 employees in 2019 to the Long Island City campus and not reach its 25,000 target until 2028, The Wall Street Journal previously has reported. And, Amazon already has significant operations in the city, including workers in advertising technology, publishing and fashion.

In its announcement Thursday canceling the deal, Amazon said it would still bulk up its New York staff of more than 5,000, of which about 2,500 are tech workers. Amazon has put its footprint in New York without a campus, leasing space in several office buildings, including its latest location a few blocks from Madison Square Garden in Midtown Manhattan.

Amazon’s expansion “is a long game that will play out over decades,” said Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology’s Sloan School of Management.

a river with a city in the background© Jason Andrew for The Wall Street Journal

Amazon could build in New York the way Alphabet’s Google did last fall, when the search giant said it would double its workforce there to more than 14,000 employees over 10 years, he said. Without talk of tax incentives and other perks hanging over its move, Google faced none of the heat Amazon endured.

Amazon “can still expand in New York. But it doesn’t have to be an HQ2 kind of announcement,” Mr. Brynjolfsson said.

Spreading out beyond New York was in the cards anyway. The fight for technology workers isn’t just among Silicon Valley peers. From auto makers to insurance to health care, companies are duking it out for people with expertise in software development and other fields.

When Amazon began its HQ2 process, the Seattle-based company planned to settle on just one location. But with a goal of hiring 50,000 workers, Amazon opted for two, deciding that would make it easier to recruit the best tech talent.

If anything changes, it might be how companies approach cities going forward. Amazon Chief Executive Jeff Bezos’ HQ2 campaign was inspired in part by Tesla Inc.’s 2014 location hunt for its $5 billion battery factory. The auto maker settled on Nevada, which pledged more than $1.3 billion in tax incentives.

Tech giants shouldn’t expect to automatically be embraced by communities merely because they are creating new jobs.

“The tech industry grew up in areas that were very low friction,” said Margaret O’Mara, a history professor at the University of Washington and author of “The Code: Silicon Valley and the Remaking of America,” due out this year. “Now there’s a reckoning that Amazon may not have anticipated.”

Write to Jay Greene at Jay.Greene@wsj.com

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