Following Amazon's backtracking on building their second headquarters in the bustling outskirts of New York, City Journal reports that big tech companies have started looking for a new city to turn into the next Silicon Valley. Cutting through Rep. Alexandria Ocasio-Cortez's Anti-Amazon talking points, the problem with big-tech and urban invasion become clear.
The ideal tech town would have a surplus of skilled millennial workers. But these companies are wrong in assuming all the “young motivated labor pools” live in crowded downtown streets. According to a new Brookings study, young people are packing their bags and leaving the biggest cities to settle elsewhere. Instead, young people are moving to mid-sized cities like Charlotte, Phoenix and Nashville.
Amazon and other tech companies should want to branch out from Silicon Valley and create jobs across America. Unfortunately, big cities have unfavorable economic conditions for both millennials and business.
The economic problem with big-tech’s urban invasion is two-fold: Firstly, New York is not a business friendly environment. In fact, according to a Tax Foundation study, New York state has the second-worst business tax climate.
Secondly, despite Amazon's not needing additional subsidies to afford a move to the Big Apple, the two decided to create special incentives, which looked decidedly like old fashioned cronyism to many. Perhaps the subsidies were an attempt to put a Band-Aid on the massive hole left by high business tax—but regardless, small businesses do not get the same special treatment in New York.
Tax payers are left to foot the bill for these deals, and millennials aren’t having it. Tax policy analysts at the Cato Institute argue that “In order to attract business, states could cut or repeal corporate income taxes, which account for only 2% of state and local revenues yet act as a major growth hurdle given how mobile corporate investment is today.”
Maybe it is the high cost-of-living, lack of housing, or the many failed economic policies leaving cities suffering the largest net annual outmigration of post-college millennials. Since millennials owe unprecedented amounts in student loans, some of these high-priced cities are losing the appeal that drew companies like Amazon to New York in the first place.