Amazon Splits Second Headquarters

New York, Virginia employers brace for competition for workers

By Theresa Agovino November 14, 2018
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Employers in New York City and the Washington, D.C., area better tighten up their compensation game: Amazon said it will start looking next year in those communities for talent to staff its new headquarters offices. The company says that annual salaries at the new offices will average $150,000.

On Nov. 13, Seattle-based Amazon officially announced it would split its much anticipated second headquarters between the Long Island City area of Queens and the county of Arlington, Va. The retailing behemoth says it will invest $5 billion and hire more than 50,000 employees between the two locales. Queens is one of the city's five boroughs located across the East River from Manhattan, while Arlington is right outside Washington, D.C. The company also announced it would open a unit in Nashville that would create more than 5,000 jobs.

"We are excited to build new headquarters in New York City and Northern Virginia," said Jeff Bezos, Amazon founder and chief executive officer, in a statement. "These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come."

The announcement carried comments from delighted government officials in each state and community about the benefits the company will bring.

"With Amazon committing to expand its headquarters in Long Island City, New York can proudly say that we have attracted one of the largest, most competitive economic development investments in U.S. history," said Gov. Andrew M. Cuomo of New York in a statement. "With an average salary of $150,000 per year for the tens of thousands of new jobs Amazon is creating in Queens, economic opportunity and investment will flourish for the entire region."

It's unlikely that such glee extended to employers in those areas. Amazon pays its employees an average of 20 percent above the national median pay, according to PayScale, a Seattle-based provider of compensation software and data.  

"If you are an existing company, you are facing stiff competition. I understand that anxiety," said Stephanie Douglass, vice president of people at Vungle, a San Francisco tech firm that is consistently tussling with industry giants like Facebook, Google and, sometimes, Amazon for talent.

"It isn't just the benefits," she explained. "The name is a big draw, too."

Amazon had been looking for a second headquarters for more than a year, and its search sparked a frenzied competition between multiple cities to win the contest. Ultimately, it decided to split the headquarters to lessen the impact on local services and expand the potential talent pool.

Katie Bardaro, vice president of data analytics and chief economist at PayScale, said it wasn't especially surprising that Amazon was considering two second headquarters.

"They are looking for niche, in-demand skills that are in short supply," Bardaro said. "When you want those skills quickly, it is a tough thing to bite off."

Tech talent in New York City and Northern Virginia is already paid better than the national average.  According to PayScale, a senior software engineer in New York City earns $129,000 annually while the salary for one in Washington, D.C., or Northern Virginia is $121,000. 

Northern Virginia was always considered a frontrunner thanks to Jeff Bezos' connection to the area. Bezos, Amazon's founder, chairman and chief executive, bought The Washington Post in 2013. And in 2016, Bezos, the world's richest man, paid $23 million for a mansion in D.C.'s exclusive Kalorama neighborhood.

New York City had already established itself as a tech center. Google, Facebook and LinkedIn already have major outposts in the city.

Even though Amazon said it will start hiring next year, employers shouldn't do anything rash, said Alan Johnson, managing director of New York City-based compensation consulting firm Johnson Associates.  

Working in local firms' favor is Amazon's reputation as a grueling place to have a job. The high-pressure atmosphere that has been described in the press may overshadow offers of rich compensation.

Still, don't bash Amazon. "It just makes you look desperate," Johnson said.

Instead, companies should reiterate their mission, vision and values.  "Double down on what makes you a good place to work," he said.

Johnson recommended that executives consider which employees they most want to retain and make sure they are satisfied. He said that many companies don't have significant differentials between compensation awarded to their stars and average employees.

"It is hard to pay some people more and some people less. It is human nature to want to even everything out," Johnson said. "How many people get zero raise? Not enough. How many get to 10 to 15 percent? Not enough."

Don't just throw money at people, though, experts warn. "Talk to them about what is important to them," said Michael McGowan, managing director and practice leader, leadership and talent for BPI Group US, a management and human resources consulting group based in Chicago. "Ask what you can do differently. Get their feedback."

If local employers can't match Amazon's salary, perhaps they can offer other benefits like increased vacation or a flexible work schedule, Douglass said. She added that employers may want to point out other advantages like the ability to work on different teams or work abroad. Let employees know what types of career paths are available.

Douglass said that some employees may leave to join Amazon, but not everyone likes working at a big company. Vungle has about 230 employees, and that smaller scale can be a draw, she said: "Here, people can hang out with the CEO."

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