Charlie Harper: Georgia Competitive For Amazon – And Others

Charlie Harper

Tuesday, September 12th, 2017

For the past several weeks we’ve taken a look at Georgia’s tax structure with a focus on how it affects Georgia’s competitiveness.  Last week, an announcement moved this study from an project in the abstract to a live exercise.

Amazon, the one time online bookseller turned corporate behemoth, announced it is seeking a site for a second headquarters location.  At stake, according to their press release, is a prize that will include up to 50,000 high wage jobs, $5 Billion in corporate investment, and up to 8 million square feet of office space over the next decade.

To put that into perspective, Georgia’s tallest building is Atlanta’s Bank of America tower.  This would be the equivalent of filling that building more than six times.  Amazon’s very public announcement and Request for Proposal has set up a contest for a veritable economic development holy grail. 

Amazon has indicated what it wants from a host.  It should be a metropolitan area containing at least 1 Million people.  It must have a “stable and business-friendly” environment.  The area must provide “the potential to attract and retain strong technical talent.”  Access to an international airport is a must.

While all of that applies to metro Atlanta, Amazon also wants a location with direct access to transit.  Cobb and Gwinnett Counties have long believed their suburban locations have provided a relative cost advantage for large corporate campuses.  With yet another large-scale employer starting a HQ search with transit access a priority, these two counties will need to take a long look in the mirror and ask themselves if they are as attractive as they think they are, or once were.

CNBC’s John W Shoen went through Amazon’s RFP and ranked potential metropolitan areas based on Amazon’s priorities of job growth, labor force, universities, airports, and mass transit.  The top five in order were New York City, Atlanta, Chicago, San Francisco, and Boston.

This is where we bring the concept of competitiveness with respect to tax structure and business environment, which were not included in Schoen’s rankings.  It’s difficult to see how New York City or Chicago meet the criteria for a stable or business friendly environment.  From a cost of living standpoint alone, it’s difficult to see Amazon attempting to add 50,000 jobs in the San Francisco area that stubbornly refuses to address the need for workforce housing.

Looking through Schoen’s rankings, an off the cuff list of Atlanta’s competitors when adjusting for areas that would be called business friendly would include metro Washington DC (ranked by Schoen as 6th), Dallas (8th), Miami (9th), Denver (11th), Raleigh (12th), Houston (14th), and Orlando (16th).  For those that believe we must eliminate our income tax to remain competitive “like Tennessee”, I would point them to Schoen’s ranking of Nashville, which he lists at 30th.

The point here isn’t to say that taxation isn’t important, but again to reemphasize where and why it is important.  Every state must decide how much to tax, and what services to provide for those taxes.  Georgia offers the world standard in logistics networks and quality schools and universities for the tax dollars we extract.  The measure of competitiveness is not from a singular tax rate, but of relative value per dollar spent.

Were this just an objective contest, it’s arguable that a location in metro Atlanta would be awarded Amazon’s new HQ without much of a contest.  And yet, multiple states will make their own position prettier by offering lucrative incentives.  Georgia will put its best foot forward and do the same.  When the winner is announced, some will argue that Georgia offered too much.  If Georgia isn’t the ultimate victor, others will no doubt argue that we didn’t offer enough.

In the end, this isn’t really about Amazon. They are certainly a worthy company that would fit well with other HQ’s of Home Depot, Coca Cola, UPS, Delta, Chick-Fil-A, and the many other recognizable brands that call Atlanta home.

The ultimate measure of competitiveness is how Georgia is attracting and retaining the employers that don’t make headlines because of their scale.  Last year, Metro Atlanta led the country for the highest rate of job growth, with more than 85,000 new jobs created.

That’s a sign that we’re already winning the competitiveness battle - All day, every day.

Charlie Harper is the publisher of and the Executive Director of PolicyBEST, which focuses on policy issues of Business Climate, Education, Science & Medicine, and Transportation.