Amazon's failed NYC HQ2: Lessons for companies and job seekers

Amazon's decision to pull out of its proposed headquarters in New York City could have implications for the tech talent shortage and the future locations of IT jobs.

Amazon's failed NYC HQ2: Lessons for companies and job seekers

Last week, Amazon announced that it was throwing out its plans to build a new HQ2 campus in Long Island City, Queens, due to pressure from the community and local government officials regarding the major tax breaks Amazon was set to receive from the city. The incident offers several lessons for companies and job seekers when it comes to the tech talent shortage and working with a local community.

Even with the current low unemployment rate, the desire for high-paying jobs from reputable companies remains strong in every city, said Brian Kropp, group vice president in Gartner's HR practice.

"Despite what happened in NYC, municipalities and states will likely not give up offering incentives and tax breaks to attract high-quality companies that want to expand and offer high-paying jobs where the talent clearly exists," Kropp said.

SEE: The future of IT jobs: A business leader's guide (Tech Pro Research)

However, considering the intense backlash Amazon experienced in NYC, the lesson for other companies is to ensure that you are investing in the right communication strategy around how these investment decisions are made, Kropp said. "In other words, rather than assuming that employees, candidates, and politicians will automatically be excited about the decision you need to make the business case for why it is a good decision for all involved," he added.

It's important to remember that Amazon's decision to forgo the NYC campus was not driven by a lack of tech talent there, but rather those community pressures, said Tom Gimbel, CEO of LaSalle Network.

"Amazon reneging on their plan to create an HQ2 in NYC might sway some technologists and give them a negative perception of the brand, but I'd guess that by and large top technologists will still want to work for the one of the leading technology companies in the world, and may still try to remotely if it can't be in their backyard," Gimbel said.

When Amazon first announced the HQ2 concept, many people said it was because there was a surplus of tech jobs and a shortage of tech talent in current locations, so expanding to a new market would offer a pipeline of additional talent, Gimbel said.

Amazon's impact on tech hiring

Instead of selecting a new HQ2 location, Amazon now plans to grow across its tech hubs, including those in cities like Boston, Austin, and Vancouver, the New York Times reported. This will allow the company to maintain flexibility and grow when and where it needs to, the report added.

Amazon currently employs 5,000 workers in NYC, about half of which are at a distribution center on Staten Island, but plans to add more jobs in the city in advertising, fashion, and web services, according to the report.

The announcement of HQ2 in NYC impacted many other companies, which began scrambling to retain their own tech talent, Gimbel said.

"They evaluated salaries, benefits, perks, etc. to ensure they could remain competitive and not get their people poached," he added. "At the end of the day, if companies added benefits or increased salaries and can't sustain those things, they are going to lose their talent regardless. For technical talent, you need to have all those things to compete, but it's also about creating an innovative environment, a place where they can continue to learn and grow and try new things."

With a tight labor market and more tech job openings than people to fill them, job seekers may be more willing to move to areas where officials are open to offering programs that attract valued companies offering high-paying positions, Kropp said; they may rather live in a place with multiple types of jobs at multiple companies for more opportunities and choices.

"The tight job market remains very much an 'employee' market. And with the news about Amazon that hasn't changed," Kropp said. "However, the broader theme to take away is a shifting amongst some politicians around the belief that technology companies are always seen as the most desired employers in a community and in a career. This small, incremental shift could be indicating that technology companies and technology employees need to improve their ability to communicate why they are great employers, and how they make the communities that they operate in better off, rather than just assuming that there will be positive good will towards them."

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