Made in Chesapeake, VA

The Amazon Effect

Virginia is for Amazon Lovers photo

HQ2

Amazon is making a major impact on Virginia in many ways. In November of 2018,
Amazon announced Arlington, VA would be the location of its second U.S.
headquarters (also known as “HQ2”). Amazon will invest approximately $2.5
billion on the headquarters in National Landing. The decision to locate HQ2 in
Northern Virginia will have a major effect on the state.
The online retailer’s investment in Virginia will generate many benefits. Job
growth is one of the leading benefits with the creation of 25,000 new jobs over
the next 12 years. Below are more benefits, as highlighted by “The Northern
Virginia Proposal for Amazon’s New Headquarters”:

• A transformational opportunity to drive diversification and innovation
throughout Virginia
• Retention of college grads and reversal of out-migration trend
• Doubling of Virginia’s tech-talent pipeline, benefiting all tech firms
• Post-performance incentives, with positive General Fund revenues from
day one
• Transportation commitments funded by non-General Fund sources
• $1.2B+ in net new General Fund $s after all obligations (over 20 years at
25k jobs)
• Scale and character of growth aligned with existing community plans
• ~$700 million in new Higher Ed and K12 funding outside of NOVA

Growing concerns

Although the benefits are attractive, there are concerns about Amazon’s
expansion into Northern Virginia. Many citizens are concerned about increased
traffic and the escalation of housing costs. Virginia plans to mitigate these
concerns with state and local investments. In addition, the Commonwealth of
Virginia is “committed to match the scale and structure of the financial
commitment for HQ2 with the ambition of the project through a combination of
company commitments and investments in our state and regional
competitiveness for all technology firms and corporate headquarters”. Virginia
will also launch a series of initiatives to aid with growing tech talent and
infrastructure.

New Investments in Higher Education

On November 7, 2019, Governor Ralph Northam announced that Virginia would
invest in “the Commonwealth’s tech talent pipeline” to create 31,000 new
computer science graduates over 20 years.

Virginia’s “Tech Talent Investment
Program” (TTIP), will commit up to $1.1 billion. This will more than double the
annual number of graduates with bachelor’s and master’s degrees in computer
science and closely related fields. Governor Northam signed agreements with the
11 universities below to solidify TTIP.

• Virginia Tech
• George Mason University
• The University of Virginia
• William & Mary
• Old Dominion University
• Virginia Commonwealth University
• James Madison University
• Radford University
• Christopher Newport University
• Virginia State University
• Norfolk State University

While this announcement is encouraging, it does present staffing challenges for
universities. Many of the universities are beginning to feel the pressure to hire
more qualified faculty. In a January 31, 2020 article from Virginia Business titled
“Now hiring: Computer science faculty”, Cal Ribbens, head of Virginia Tech’s
computer science department, said, “there’s a ripple effect in the undergraduate
level all across campus. Increased computer engineering enrollment will require
more math and physics faculty”. In this same article, Virginia Tech and George
Mason University discussed their faculty recruitment and retention approaches to
meet the demand. Companies in the region may encounter similar challenges
when they seek to recruit tech talent. Employers may see themselves in bidding
wars for talent until the rate of graduates increase.

Amazon’s HQ2 creates the possibility for unique opportunities and partnerships in
the public sector, tech community and higher education. Along with these
opportunities are challenges in infrastructure and the development and retention
of tech talent. Problem solvers are only limited by their creativity and their ability
to persevere to sustainable solutions.

Keane L. Streat
Contributor

3/4/2020