Amazon’s HQ3 Won’t Be in the US Unless Something Changes
Amazon is nearing a decision on where it will locate its second headquarters — HQ2. The company is planning to spend more than $5 billion and eventually create up to 50,000 high-paying jobs.
The announcement will bring an end to a closely watched competition that sparked important debates about what it would take to win. But it’s not too early to start thinking about HQ3.
Amazon listed specific criteria for selecting the winner, such as: the site and buildings, including specific tax incentives to build them; transportation networks; culture and quality of life; and a labor force with a strong pipeline of talent.
The company gave particular emphasis to sites with a strong university system, asking cities to identify universities and community colleges with relevant degrees and quantify the number of graduates who have attained those degrees over the last three years.
After Cincinnati’s regional development spokesperson, Ed Loyd, received a briefing on why Cincinnati did not make it into the final 20, he stated, “Talent was the most important factor out of everything they looked at.”
Amazon’s 20 finalist cities have a robust high-tech talent pool. Between 2013 and 2015 many of these regions created 10,000 to even 31,000 new high-tech jobs, with many witnessing double-digit growth over this two-year period.
Given Amazon’s hiring record, it’s not surprising that the quality of the labor force that will surround HQ2 is the top priority.
Many of Amazon’s top decision makers — and, indeed, the workforce that has made the company so successful — graduated from colleges and universities five, 10 or 15 years ago when the United States still ranked high internationally in college-degree attainment.
America’s international ranking has been deteriorating rapidly, not so much because the United States has dropped substantially, but because other countries have made enormous investments in higher education and are graduating new entrants into the labor force at much higher rates.
In 1995, the United States was first among OECD member countries in the number of college graduates. By 2012, the U.S. dropped to No. 19 out of the 28 OECD countries.
In five years, it is likely that Amazon will be looking for a third headquarters, or HQ3. Will the company be able to restrict its next competition to North America? It is doubtful, unless the United States gets serious about higher education.
New data from the Lumina Foundation show there were small gains in degree attainment in 2016, but persistent gaps remain by race and ethnicity, with the fastest growing populations lagging the most. Our nation’s diversity is our greatest competitive advantage, but only if we provide opportunities to grow talent and career mobility.
If we are serious about ensuring that Amazon’s HQ2 and HQ3 remain in North America, it is time to invest in higher education.
Only 10 of the leading high-tech cities of the world are in North America, and three of those are in Canada. Unlike the U.S., our northern neighbor continues to be a world leader in higher-education graduation rates.
Amazon will have a hard time denying the other top 25 high-tech cities in the world — such as Berlin, Shenzhen, Bangalore, Stockholm, Seoul and Hong Kong — from competing for the HQ3 site. Doing so would significantly lower the bar for the quality and quantity of high-tech talent.
A group of industry, higher education and government leaders on the National Commission on Financing 21st Century Higher Education published recommendations for how the U.S. can attain an internationally competitive 60 percent postsecondary graduation rate.
Supported by the Lumina Foundation, the commission identified specific policy recommendations designed to increase degree attainment, including the following:
- Realign incentives and retarget existing funds to make the entire system more affordable.
- Create innovative models in the delivery of postsecondary education that can make the entire system more productive.
- Identify options from all levels of government and the private sector to increase funding for higher education.
Now is the perfect time to embrace this international challenge and make higher education a national priority before Amazon’s HQ3 goes to Europe or Asia — and is followed by Google, Apple and other firms that require a highly educated, high-tech labor pool.
Bernadette Gray-Little is chancellor of the University of Kansas. David W. Nelms is chairman and CEO of Discover Financial. Gray-Little and Nelms serve on the nonpartisan National Commission on Financing 21st Century Higher Education, formed by the University of Virginia’s Miller Center of Public Affairs (@Miller_Center).