After about 14 months of analysis, Amazon made a decision on its second corporate headquarters (HQ2), and it isn’t Texas. Many lists of likely locations put Texas at or near the top, but at the end of the day, Amazon chose Crystal City in Northern Virginia and Long Island, New York for HQ2, with each area gaining about 25,000 jobs. Another, smaller location in Nashville will involve about 5,000 jobs. In addition to the sheer numbers, the jobs will be very highly compensated and have substantial spinoff potential.
All along, it looked like Texas was in the hunt. The primary decision factors included things where the state compares fairly well, and Dallas and Austin both made the list of top 20 potential locations. Dallas also made the final short list and offered an incentive package estimated at over $1 billion in value. At the end of the day, however, the decision evidently came down to the size of the technology workforce, particularly in software development and related fields.
The Amazon location would have generated a huge economic stimulus, and it’s worth some reflection on reasons Texas lost out and what we might do to win the next big one. An obvious answer is to continue to grow the economy and develop the state’s workforce from preschool through higher education. Regardless of the industry, a pool of quality workers is a necessary condition for any firm, and the expanding young population in Texas provides the raw material for success. Another important element is to avoid high-profile squabbles over restrictive social legislation or textbook content which can be detrimental in attracting knowledge workers.
Several Texas cities have seen notable growth in technology workers and graduates, but the New York and Washington, D.C. areas have far larger concentrations at present. Texas cities regularly appear on lists of the fastest-growing areas for tech jobs and over time this gap will narrow.
Placing 25,000 or 50,000 new jobs in almost any city would cause some dislocations, particularly if the area’s economy and real estate markets are relatively healthy. The rapid growth in Dallas in recent years suggests that it could have absorbed the expansion better than most areas, but obviously other factors come into play.
Winning the Amazon location would clearly have generated additional jobs, tax receipts, and other benefits for Texas, and missing out on the high-profile Amazon headquarters is a painful loss. It clearly calls for some self-assessment of where we can improve, which can be very useful going forward. Nonetheless, the state is attracting more corporate locations and expansions and is growing in a diverse and sustainable way, which positions Texas very well for the long term.
M. Ray Perryman is president and CEO of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.