The Amazon Contest

Allow me to wander from my usual space of technology and share some thoughts on the Amazon.com announcement.

The announcement is for their 'HQ2', an office building (or complex) with 50,000 well-paid employees that is up for grabs to a lucky metropolitan area. City planners across the country are salivating over winning such an employer for their struggling town. Amazon has announced the criteria that they will consider for the "winner", including educated workforce, transit, and cost of living.

The one thing that I haven't seen is an analysis of the workforce numbers. From this one factor alone, we can narrow the hopeful cities to a handful.

Amazon.com wants their HQ2 complex to employee 50,000 people. That means that they will either hire the people locally or they will relocate them. Let's assume that they relocate one-third of the employees in HQ2. (The relocated could be current employees at other Amazon.com offices or new hires from out of the HQ2 area.)

That leaves about 33,000 people to hire. Assuming that they hire half as entry-level, they will need the other half to be experienced. (I'm assuming that Amazon.com will not relocate entry-level personnel.)

The winning city will have to supply 16,000 experienced professionals and 16,000 entry-level people. That's not an easy lift, and not one that many cities can offer. It means that the city (or metro area) must have a large population of professionals -- larger than 16,000 because not everyone will be willing to leave their current position and enlist with Amazon.com. (And Amazon.com may be unwilling to hire all candidates.)

If we assume that only one in ten professionals are willing to move, then Amazon.com needs a metro area with at least 160,000 professionals. (Or, if Amazon.com expected to pick one in ten candidates, the result is the same.)

And don't forget the relocated employees. They will need housing. Middle class, ready to own, housing -- not "fixer uppers" or "investment opportunities". A few relocatees may choose the "buy and invest" option, but most are going to want a house that is ready to go. How many cities have 15,000 modern housing units available?

These two numbers -- available housing and available talent -- set the entrance fee. Without them, metro areas cannot compete, no matter how good the schools or the transit system or the tax abatement.

So when Amazon.com announces the location of HQ2, I won't be surprised if it has a large population of professionals and a large supply of housing. I also won't be surprised if it doesn't have some the other attributes that Amazon.com put on the list, such as incentives and tax structure.