On Thursday, news broke that Amazon was seeking to establish a second corporate hub to complement its massive operation in Seattle. According to the AP’s Joseph Pisani, “the company said…it will spend more than $5 billion to build another headquarters in North America to house as many as 50,000 employees.” Amazon set up a website to field applications from interested cities.
Right on cue, Mayor Jim Kenney announced in a Tweet that Philadelphia would be tossing its hat in the ring:
Notwithstanding Kenney’s hackneyed pun, which is unbecoming of a St. Joseph’s Prep alumnus, the mayor is wise to pursue this opportunity.
Judging by the construction boom currently taking place in Center City, we certainly have the labor capacity to build whatever Amazon requires in terms of office space.
Do we have a population that can fill the thousands of high-skill jobs that Amazon will create? Given that only 25% of the city’s residents can claim to hold a Bachelor’s Degree – for comparison, current Amazon home Seattle’s is 58%, while the other top five markets are all over 30% – this might be an area of concern; however, that number rises considerably when one takes into account the population of the metropolitan area. Moreover, the open jobs will obviously attract applicants from all over the world, who would then relocate to Philadelphia.
One obstacle that will be particularly difficult to navigate is the backwards tax system implemented by our local government. It’s no secret that Philadelphia is a difficult place to set up a business. Taxes are burdensome, which is why a lot of companies set up shop in the suburbs. Our civic leaders are particularly adept at taxing mobile assets (see City Wage Tax, Business Privilege Tax, soda tax, etc.) rather than immobile assets (taxes on real estate, use and occupancy, etc.). If you want to read more about this issue, here’s a 42 page report from 2009 that was presented to Mayor Nutter.
Perhaps as an acknowledgment of their onerous tax system, the city offers numerous incentives to prospective businesses that wish to pitch their proverbial tent in Philadelphia. For example, Philadelphia provides a 10-year tax abatement on new construction in the city, something that is popular with developers. Undoubtedly, our government officials will back up the truck for Amazon, offering generous subsidies and abatements in exchange for the revenue that will flow into the city’s coffers from the new jobs that will be created.
Furthermore, Philadelphia has many of the assets that Amazon has identified in a municipal partner. According to Reuters, the corporate titan is looking for “a metropolitan area of more than a million people with an international airport, good education and mass transit.” The city can reasonably claim to possess three of these metrics. More anecdotally, Philly is situated between New York and Washington D.C., with easy, quick travel to both. It is largely viewed as being on the upswing as a tech hotbed, finishing high in multiple (arbitrary) media rankings, and is generally considered an increasingly desirable destination for young people. Having Comcast and Amazon call the city home would go a long way towards solidifying that standing. Continue Reading
