Amazon on the Chattahoochee: Why Atlanta Might* Win the HQ2 Battle

All this could be yours. The world is your brown cardboard oyster
All this could be yours. The world is your brown cardboard oyster

Amazon recently announced that Atlanta had made the shortlist of cities that might land the online retail giant’s “second headquarters,” a sequel to its original home in Seattle.  Cities and counties across the United States and Canada have been vying for the project, which would not only generate significant investment—reportedly 5 billion dollars—and a large number of jobs, but also the tax revenues and spending power that affluent tech workers bring with them.

Efforts to win the bid became increasingly desperate. Newark, New Jersey offered 7 billion dollars in tax incentives—quite a bargain to score a 5 billion dollar investment.  Chula Vista, California proposed giving away a ton of free land; Fresno said it would pool tax revenues in a fund jointly managed by the city and the company. Stonecrest, a small town in metro Atlanta, actually pledged to change its name to Amazon (!) if the company came there.

Such job-hunting antics are not new for American cities, of course.  For much of the twentieth century, communities in the South were known for “smokestack hunting,” hoping to woo any outside capital and industry to the chronically depressed region with the promise of low wages, no unions, and various incentive packages, such as tax breaks, worker training, and even the construction of free buildings. (Historian James Cobb wrote about such efforts in his classic book Selling the South: The Southern Crusade for Industrial Development, 1936-1990.)  The mad race to lure jobs and investment has only accelerated across the United States, as cities compete with each other—and localities all over the world—to bag employers that can bolster urban economies.

That Atlanta would be a top candidate for the site is not surprising to this writer.  My recent work increasingly deals with the history of high-tech development and the strategies that cities have pursued to recruit employers—as well as the priorities that businesses consider when deciding where to locate.  Especially since the rise of the postindustrial economy since the 1960s, firms have taken into consideration more and more “quality of life” issues—the availability of arts, culture, education, and other amenities—in order to effectively lure highly educated, professional workers.

Some of the advantages of Atlanta are obvious.  It boasts the world’s busiest airport, a title it has held since at least 2000, though metrics vary, and for a company like Amazon that will value both ease of business travel and excellent facilities for cargo shipping, proximity to Hartsfield-Jackson is a boon.  The cost of living may be increasing in Atlanta over the last decade, but housing remains significantly more accessible and affordable there than in Seattle or other cities competing for the site, such as Boston and Chicago.

Perhaps as significant is access to an educated pool of labor.  Advanced industries like Amazon have favored locating in places where universities generate a ready supply of skilled workers, especially as engineering, scientific, and other professional jobs became important to them.  Most prominently, a pipeline of Georgia Tech grads into Amazon’s HQ2 is bound to be appealing—while the city’s numerous other respected institutions, from Emory to Clark Atlanta to Georgia State, add to the stock of fresh-faced college graduates ready to strive and (not insignificantly) work for potentially less than their peers in places like Silicon Valley or New York.

Richard Florida, Margaret Pugh O’Mara, and other urbanists have argued for years about the central importance of higher education institutions for postindustrial economic growth in cities.  Notably, Detroit staked a great deal on currying favor with the Seattle tech behemoth with generous incentives, including an extraordinary offer to let Amazon keep all of its employees’ state income taxes for twenty years, yet the Motor City’s fewer major colleges and universities likely put it at a disadvantage with Atlanta. (There is Wayne State University; the University of Michigan in Ann Arbor is relatively nearby, but Michigan State is almost an hour and a half away.) Employers, especially in tech, want skilled workers who are ready at hand to hire, and research suggests that areas with many innovative workers and firms tend to generate networks of interaction that help promote greater entrepreneurship.

the gulch atlanta
All this could be yours. The world is your denuded, post-urban-renewal, postindustrial oyster

On the other hand, Atlanta has its disadvantages.  Decision-makers in the Great Northwest cannot be impressed by a city where rain is considered inclement weather, let alone where life grinds to a halt for a days like it did during 2014’s Snowpocalypse.  On a good day, Atlanta boasts a reputation for grinding traffic and relatively poor mass-transit infrastructure.  The struggles of the Atlanta Public School system may not appeal to affluent workers who place a huge premium on children’s education and—critically—have the mobility and privilege to choose where to live and work. (Of course, future Amazon ATLiens could easily raise their children in Decatur or Cobb County, like the upper-middle-class transplants who preceded them.)

Most important, Atlanta has never quite developed the profile of a tech mecca.  As O’Mara revealed in her seminal 2007 book Cities of Knowledge, city and university leaders hoped to build a center of advanced industries and research facilities around Georgia Tech in the 1960s, but ran into chronic barriers around race, real estate, and local politics.  The area thus was less able to generate real agglomeration, which is an economic term for the way that many firms in related or complementary industries cluster together in a particular area in a cycle that feeds on itself, attracting additional workers and investment.

Atlanta has seen increasing start-up activity and committed efforts by Georgia State, Georgia Tech, and other institutions to foster tech entrepreneurship in recent years, such as the Atlanta Technology Development Center or the CollabTech incubators. But the city has not yet become known as a major hub of tech activity in the way that Seattle, Austin, or North Carolina’s Research Triangle of Raleigh-Durham have since the 1960s.

Atlanta will have to overcome the (not incorrect) perception that its infrastructure in education and transportation are inadequate.  As historians such as Kevin Kruse have shown, both of those deficits are, at least in part, the legacy of the city and state’s intractable fracture over race—the “white flight” that led the middle class out of Atlanta, as well as a persistent unwillingness to fund infrastructure that would benefit the working poor and people of color, like public transit.  As the Republican sage Donald Rumsfeld once said, “You go to war with the army you have.”  Atlantans are going into the Amazon bidding war with the city and the history they have.

kasim reed
All this could be yours. The world is your cantankerous, ill-tempered big-city urban mayor who blocked me on Twitter oyster

For better or worse, though, I suspect the South’s Empire City has a strong chance of winning the site—for reasons of geography, air travel, cost of living, and the supply of skilled labor.  If Amazon does come to Atlanta—and especially if it locates close to Downtown or Midtown—it will almost certainly have a large impact, both in terms of accelerating gentrification and putting greater stress on the city’s already wobbly physical infrastructure. Parts of the city may end up swallowed by the company, much as large chunks of Seattle have already become Amazonia.

Moreover, the company’s reputation for bullying publishers and grossly exploiting workers in its giant warehouse fulfillment centers—where ambulances have been parked outside facilities to treat workers suffering from heat stress and overexhaustion—should give Atlantans pause.  (Even Amazon’s more privileged white-collar employees do not necessarily escape its hardball tactics for driving productivity.)  Surely, it would be a coup for local leaders to land the headquarters of one of the world’s biggest and most iconic companies—a validation of the city’s image.  And attracting the high-income workers who will work there would be a boost for the local economy, both in consumer spending and tax revenue.  But is it worth doing whatever it takes to win the favor of a huge, increasingly monopolistic company with dubious business and labor practices?

The history of the South suggests that it probably is.  In classic smokestack-chasing fashion, the city’s leaders will be popping the champagne in unfettered and orgiastic celebration if they succeed in getting Amazon’s HQ2.  Thank goodness for two-day delivery.