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Which Cities Offer Amazon the Best Talent for HQ2?

Updated November 13, 2018   The speculation and excitement about Amazon’s HQ2 search has been all over the news since they narrowed it down to the top 20 cities. Many were surprised when it was officially announced that HQ2 will be split between two cities; New York and Northern Virginia – with a center of excellence in Nashville. But will this be a good thing or a bad thing for the winning cities? The jury is still out. There are concerns about cost of living increases, a potential lack of benefit to local community members and state tax incentives going to a large corporation rather than residents. Alternatively, there is a lot of excitement within the winning cities about the jobs and prosperity this announcement brings.   

A crucial factor for any organization looking to establish a major presence in a new city is available talent. And that’s one of the reason’s Amazon decided to go with two cities instead of one. The ability to recruit the best talent increases with two locations and it can mitigate the potential criticism about housing issues, congestion and traffic. With the unemployment rate at a low of 3.7 percent, the competition is fierce — particularly in the red hot technology sector. But there are other considerations, as it’s not just about salary anymore. In order to compete in the market, organizations must offer impactful benefits that include meaningful work, flexibility and development opportunities.

Companies need to be cognizant of their pay brand which is how your past, current and prospective employees feel about the pay and rewards at your organization. Your pay brand is not only shaped by the way you pay (including how much and why), but also by how you talk about pay with employees.

Amazon’s HQ2 will certainly create excitement for employees in the winning cities who may be considering a change and, perhaps, also some anxiety for employers who want to retain their top workers. With talent in mind, we decided to dig into PayScale’s data and take a look at the top HQ2 cities on the short list to determine the best potential location.

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In order to identify the locations that offer Amazon the best potential talent for HQ2, we looked at the 25 most common jobs and the 25 most common skills at HQ1 to build a “talent pool.” We then calculated how prevalent these jobs and skills are in the short-listed locations relative to the national average.

However, having potential workers who fit your needs is not enough. You need to convince them that your organization is the best place for them. Therefore, we also determined the percentage of workers in this talent pool who are dissatisfied with their current employer — signaling they may be more inclined to look for better opportunities with a new employer. Analyzing these elements together, we created a ‘Talent Acquisition Index,’ across the 20 metros still in the running for HQ2.


“In today’s tight market, attracting and retaining people is a core strategic initiative for many organizations, but might become even more imperative for companies who find themselves competing with Amazon in the new year.” said Katie Bardaro, Chief Economist at PayScale. “For this reason, we calculated a talent acquisition index that accounts for available workers and their satisfaction with their current employer for cities on the short list. For organizations located in cities with a high talent acquisition index measure, we recommend these employers determine the overall level of employee satisfaction and ensure employees are being paid at or above market value. We also encourage managers to talk openly with staff about their pay and how pay decisions are made at the company to ensure all workers feel good about their deal and don’t look for greener pastures.”

Opportunity for Amazon to Lead on Gender Equity at HQ2

Another important factor to consider is gender equity. Amazon was criticized earlier this year when its board opposed a shareholder proposal to increase the diversity of their board (they’ve since adopted the proposal). Within Amazon, men make up 73 percent of the company’s professional staff and 78 percent of senior executives and managers, according to data Amazon reported publicly. At many major technology companies, women comprise just 25 percent of the overall workforce and the number dips even lower for technology specific jobs.

The closely watched Amazon choice for HQ2 provides an interesting opportunity for the technology leader to turn this around and leapfrog their gender diversity challenges by hiring more equitably from the outset.

“Regardless of location, Amazon will create a real and lasting impact on the local talent market of the city it selects for HQ2 due to the volume of in-demand workers it will hire”

 

We took another look at our data from a gender perspective to determine the percentage of women employed in needed jobs in the finalist locations. The top three cities for this metric were Los Angeles at 47.3 percent, New York at 46.3 percent (one of the winning cities) and Miami at 46.2 percent. The other winning location, Northern Virginia, came in at 40.8 percent.

“It’s no secret the technology industry, as a whole, has a gender problem”, said Katie Bardaro, Chief Economist at PayScale. “It’s encouraging that Amazon, a dominant industry leader, has indicated the company wants to address gender inequity and the gender pay gap at the company. Often times, this inequity stems from a pervasive, unconscious bias. A company with predominantly male workers – or more men at the executive level – will tend to hire or promote more men because it’s consistent with the established culture. HQ2 presents a unique opportunity for Amazon to ‘get it right’ from the beginning by defining programs and processes to create equal representation of men and women across all jobs and seniority levels at the new headquarters. Our data examines which locations provide Amazon the best shot of creating a culture of true gender equity.”  

What to Do When Amazon Arrives

You don’t have to panic. Here’s some guidance to make sure you have a strong and healthy relationship with your employees when Amazon rolls into town.

  1. Use real market data.
  2. Adjust your pay accordingly.
  3. Talk transparently with employees.

No matter which city wins, the impact will be enormous from both an economic and talent perspective. Who do you think the finalist will be? Let us know in the comments below.

Photo courtesy Tnemec Company


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