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Amazon’s decision to ditch HQ2 is a black eye for NYC's tech scene

Daniel Howley
Technology Editor

Amazon (AMZN) said on Thursday it’s cancelling plans to build one of its headquarters in New York City’s Long Island City neighborhood in Queens following local opposition to the move.

The cancellation will not only impact the city by depriving it of the company’s 25,000 proposed jobs, but it could also have a chilling effect on the region’s technology scene.

“I think the big concern is that Amazon’s decision today does make New York less attractive for tech companies going forward,” said Julie Samuels, executive director of Tech:NYC an industry trade group that promotes tech jobs and policy and was founded by companies including Yahoo Finance parent Verizon Media. “And I think we are going to have a lot of work to do to sure that up.”

With more than 300,000 tech jobs in New York already, the industry certainly isn’t going to collapse in Amazon’s absence. But it won’t help the city’s image as an up-and-coming tech hub, either.

Damaging for New York’s reputation

Amazon spent more than a year hunting for a location for its HQ2, soliciting bids from cities across the country. When the protracted search finally ended, the company announced that it would split its HQ2 between New York and Crystal City in Arlington, Va.

Amazon’s decision to cancel its move into New York followed weeks of campaigning by local and state politicians who felt that the proposed $3 billion in tax breaks offered to the company were far too high, especially for a firm run by the richest person in the world, Jeff Bezos.

Amazon’s new home in Long Island City would have been right across from Cornell University’s Cornell Tech campus on Roosevelt Island.

The announcement that Amazon was to open up a massive campus in New York was followed by news that Google (GOOGGOOGL) would be expanding its own presence in the city, and that Apple (AAPL) would be hiring additional employees for its own city-based efforts. Neither of those companies are expected to change their plans.

While Amazon might not be building its HQ2 in New York, Google already has a significant presence in the city. (Photo by Spencer Platt/Getty Images)

Adding Amazon to the city’s list of tech heavyweights was seen as a way to make New York City a more significant rival to Silicon Valley, and bring along additional tech firms in the e-commerce giant’s wake. Amazon’s reversal could potentially do the opposite.

“It definitely damages the reputation and attractiveness of the city for this kind of talent,” said Bhushan Sethi, joint global leader for PricewaterhouseCooper’s people and organization practice.

“I’d say it’s not good news,” Sethi added. “What we’ve learned about tech talent is they like to go where the ecosystem is. They saw that in Silicon Valley, and we were starting to see investments and decisions like that here. This makes the city less attractive to tech firms and tech talent.”

There are still plenty of tech jobs in the city

Job seekers who live in the city, however, won’t be left high and dry with Amazon skipping town. According to Drew Sussberg, vice president of job recruitment firm JobSpring Partners, there are still plenty of opportunities available for people looking for jobs in the tech industry.

“While Amazon is a very attractive player in the community, they are one of many players,” Sussberg said. “So I don’t think it’s going to derail someone’s motivation to move to New York City because Amazon’s not going to Long Island City.”

If Amazon did end up moving in, Sussberg admits, it could have sent wages for tech jobs skyrocketing in New York.

“The salaries in New York are high — they’re not quite Bay Area high yet — but I think you were going to see a massive inflation in salary in an already competitive market with Amazon coming,” he said. It’s not as though New York City employers dodged a bullet, though, since salaries for tech jobs will continue to increase, but it’s a reprieve from a huge jump.

Samuels, meanwhile, admits that while the city will continue to see job growth in the tech sector regardless of Amazon’s decision, cancelling plans does hurt the number of available opportunities.

“What we were talking about with the Amazon jobs was a unique opportunity,” Samuels said. “So to the extent that job growth will continue to be incremental, that’s great and we want to incentivize that. But it’s a real missed opportunity to go from between 25,000 and 40,000 jobs to zero.”

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Email Daniel Howley at dhowley@oath.com; follow him on Twitter at @DanielHowley. Follow Yahoo Finance on Facebook, Twitter, Instagram, and LinkedIn.finance.yahoo.com/