Amazon’s missed opportunity: failing to put part of HQ2 in a red state

When the company was looking for a second headquarters, it made diversity a key issue.

Amazon.com has been an aggressive advocate for diversity. That includes providing strong support for immigrants, minorities, the LGBTQ community, people with disabilities, the military, women engineers and others.

When the company was looking for a second headquarters, it made diversity a key issue. To achieve long-term success, Amazon said last year, the winning city must have a diverse population and a community that supports it.

Does that also mean diversity in politics, geography and even home prices?

Apparently not, because Amazon chose two locations— New York City and Washington — that have a lot in common with its hometown of Seattle. All three are liberal coastal regions with sky-high apartment rents and home prices, and a strong appeal to college-educated millennials.

Call it a missed opportunity, a lost chance to plant a deeper flag in a red state where Amazon might hear some very different ideas. You don’t have to be a dreamer to believe there’s more than one way to be diverse —and to be diversified.

Imagine if the two winners of the so-called HQ2 competition had been Washington and Dallas … or New York and Raleigh, North Carolina … or Philadelphia and Columbus, Ohio.

Including a city in the South or Midwest would draw different kinds of workers and community partners.

“Amazon missed the mark on geographic diversity,” said Brad Harris, associate professor of management at the Texas Christian University’s Neeley School of Business. “They could have picked up a wider range of perspectives if they’d gone beyond the East Coast. Middle America is quite a bit different.”

This week, Amazon decided to split HQ2 between New York City and the Northern Virginia area near Washington. Amazon will invest about $2.5 billion in each and add 25,000 jobs paying an average of $150,000 a year.

It also announced a smaller project in Nashville, which will get about 5,000 jobs. While big, it’s not near the size of HQ2.

In announcing the winners, Amazon reeled off many attributes, including the “diverse community” in Long Island City. A local Virginia official said winning Amazon validated the community’s commitment to diversity and other values.

Choosing an East Coast capital wasn’t a surprise. Washington was always a favorite in the Amazon sweepstakes because founder Jeff Bezos has close personal ties — he owns The Washington Post and a mansion in the area.

But it was surprising for Amazon to pick two locations that are so similar. The primary explanation was that New York and Washington have the thousands of tech workers Amazon plans to start hiring soon.

Dallas-Fort Worth ranks No. 4 in total tech talent in the U.S., but Washington and New York are far ahead. Their nearby universities also produced twice as many graduates with technology degrees. So the current supply of talent and talent in the pipeline are much greater.

That’s good for Amazon in the short term, but there are trade-offs. For one, it could be more vulnerable to an economic shock.

“You could have a boom in Texas and a recession on the coasts, and we’ve had that before,” said Michael Carroll, director of the Economics Research Group at the University of North Texas. “That’s why companies like to spread risk among various economies.”

Amazon also would be able to access a different labor pool and play to the strengths of each market.

“In New York and Washington, Amazon is going to get pretty much the same kind of people,” Carroll said.

Prospective workers will be diverse in gender, ethnicity and race, and they’ll originate from many nations. But they won’t have the same range in politics as many residents in Texas or North Carolina.

One advantage of a diverse workforce is that it’s supposed to lead to more ideas and innovation, in part because diverse employees bring new points of view.

“At Amazon, we pride ourselves on our peculiar culture,” the company wrote on a website devoted to diversity. “We honor and respect the differences inherent in each Amazonian, and we seek to include those perspectives as we develop new products and services for our customers around the world.”

New York, Washington and Seattle have similar housing costs, which set them apart from many other HQ2 rivals. Compared with Dallas, apartment rents and home prices are two to three times higher. And Raleigh and Columbus are cheaper than Dallas.

Maybe that won’t make a difference when Amazon is hiring in the Northeast corridor. But HQ2 was billed as the equal of Amazon’s Seattle headquarters. Executives could choose to put their teams in any of the cities, and current employees could remain in Seattle or move to the new bases, Amazon said last year.

For them, moving to New York or Washington won’t be a bargain. And as the workforce ages, their preferences will change, said Michael Davis, who teaches at Southern Methodist University’s Cox School of Business.

As hipsters, they may love living in a 24/7 city. But in their 30s, Davis said, “A lot of them are going to want a house with a backyard and a good soccer team for the kids.”

That’s when they may wish they had an option in Dallas or Raleigh or Columbus.