My latest column is online in the May issue of Governing magazine. It’s a few lessons I takeaway from what we’ve seen so far in the Amazon HQ2 sweepstakes. Here’s an excerpt:
First, tax incentives and other giveaways are here to stay. Many people have decried the immense public subsidies that communities and regions have offered to Amazon. I personally signed an open letter organized by urbanist Richard Florida calling on cities to forgo subsidies. But let’s be realistic: For deals like this, it’s essentially impossible for cities and states to resist. It’s like being caught in the prisoner’s dilemma, when two parties acting in their own self-interest take actions that result in a negative outcome for both.
Second, talent is still king. Amazon’s selection of 20 finalists was heavily driven by where the company believed it could readily find the talent it needs to fill 50,000 high-paying white-collar jobs. This includes huge cities with large labor forces, but also smaller cities that have been developing the kind of talent Amazon might want to hire. This is most evident in the Midwest, which despite being slower-growing overall had four finalist cities: Chicago, Columbus, Indianapolis and Pittsburgh. The last three were among the top cities in the region for growth since 2000 among people ages 25-34 with college degrees. Detroit, despite being bigger than all three, didn’t make the cut because of the talent factor. Since 2000, Detroit ranked last in Midwest growth for young adults with college degrees.
Click through to read the whole thing.