http://www.chicagobusiness.com/
September 13, 2017
Joe Cahill on Business
Whatever it costs to land Amazon's HQ, Chicago should pay it
Amazon's headquarters contest offers Chicago a chance to top its upset win in a similar competition for Boeing's home base 16 years ago. Sweet as that victory was, Amazon's "second headquarters" is a potential watershed with far greater economic ripple effects. Amazon would create more jobs, address growing gaps in the local economy and make Chicago a big-league technology hub.
Amazon has come along when Chicago is at a low point, as did Boeing in 2001. Back then, Chicago's viability as a corporate headquarters center was in doubt. Some big Chicago-based corporations had disappeared in mergers during the previous decade. The city's struggles were lovingly detailed for a national audience in BusinessWeek magazine's infamous "Chicago Blues" cover story in 2000, infuriating then-mayor Richard M. Daley.
Daley responded in the best way possible, orchestrating a winning bid for Boeing's headquarters. Some criticized the $60 million in government subsidies Boeing got, but I say it was money well spent. The surprise victory silenced doubters and confirmed that Chicago has all the essential qualities of a corporate base—international air travel connections, deep talent pools, top-flight universities and diverse cultural amenities. A flock of companies have since moved their headquarters to town, including Archer Daniels Midland, ConAgra, Motorola Solutions and, soon, McDonald's.
Nobody questions Chicago's strengths as a headquarters locale anymore. But deeper concerns hang....
Amazon alone won't solve those problems. Still, reeling in the giant online retailer would be a big step in the right direction, catalyzing growth and showing that Chicago is more than a bag-drop for globetrotting corporate poohbahs.
Unlike Boeing, Amazon would bring far more than just a headquarters. The Seattle-based company says its new installation eventually will employ up to 50,000, vastly exceeding typical corporate office headcounts.
Sadly, Chicago's resurgence as a corporate base coincided with the rise of the minimalist headquarters. Nowadays, companies staff their "corporate centers" with a few hundred MBAs, lawyers and other c-suite types. No longer does the headquarters spawn thousands of lower-level jobs. When Boeing moved 500 corporate jobs to Chicago, tens of thousands of professional, management and manufacturing positions stayed behind in Seattle. ADM left 4,200 workers in Decatur when it moved 70 HQ jobs to Chicago three years ago. Caterpillar is bringing 300 jobs to Deerfield, and leaving 12,000 in Peoria.
Even if Amazon were to create only one-tenth of the jobs it's dangling in front ...
At that pay rate, every 10,000 jobs created by Amazon would inject $1 billion per year into the local economy. About $50 million would flow to Illinois as income tax payments, bolstering depleted state coffers. Spending by Amazon workers also would generate sales and property tax revenues for municipalities. Multiply the numbers by five if Amazon reaches the 50,000-job target. And that doesn't include knock-on effects.
GAME-CHANGER
Amazon also would secure Chicago's digital future. Despite a series of successful tech startups, Chicago still ranks as second-tier at best with the digerati. Graduates of the University of Illinois' renowned computer science program head for the West Coast at an alarming rate. Our tech companies tend to sell out before they get big, leaving us without a flagship in an expanding sector that's generating new jobs while other industries shed workers.
Amazon would become Chicago's tech flagship overnight....
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