U.S. Markets close in 3 hrs 43 mins

Amazon has a big problem now that it has scrapped plans for a New York City headquarters

Brian Sozzi

To support its ambitious future of signing up more corporate clients for its Amazon Web Services and offering Prime members same-day delivery, Amazon will need more high-skilled tech workers than ever before.

Unfortunately, those well-paid workers will not come from New York City, at least right now. The internet and cloud services beast said Thursday it will pull out of its New York City development project after significant outcry from locals and various other parties fearing big rent hikes and epic wage inflation. Not helping Amazon’s case on what has become known as “HQ2” is an alleged $4.6 billion-plus tax incentive offered to Amazon by the state government to build the campus.

“After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term,” Amazon said in a statement.

Amazon added “While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”

There’s a race for talent

Amazon had said the sprawling $5 billion campus would create 25,000 jobs over the coming decade. Most of the jobs were to be focused on software engineering, product management, operations, sales and marketing — areas that are vital to uncover Amazon’s next generation of business opportunities.

The company said it would not revisit its decision on HQ2 coming to NYC, instead pushing forward with new sites in Northern Virginia and Nashville. But it will have to at some point reassess. Amazon will have to figure out a way to successfully enter big cities to get the critical skilled talent that is necessary. It’s especially important considering the shortage in high tech talent and subsequent surge in their wages as Amazon rivals Alphabet and Facebook look to plot their futures.

The technology, media and telecom industries may be short about 1.1 million skilled workers globally by 2020, according to new research from Korn Ferry. That may balloon to 4.3 million by 2030.

“The race for talent is the most competitive I have seen in my life,” former Cisco CEO John Chambers told Yahoo Finance. "The pay is unbelievable — if you are in artificial intelligence and are a PHD, you can probably get $1 million a year.”

Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter@BrianSozzi