Remember the drama “HQ2” from Amazon a couple years ago? City leaders were falling over each over to attract the tech giant to their town.
However, Amazon has fallen so far behind schedule in creating new jobs at its Northern Virginia headquarters that its workforce at those offices shrank last year, the company confirmed, underscoring how a project that it had initially pitched as an economic jolt is instead hitting a slowdown.
Following a much-hyped sweepstakes across North America several years ago, the tech giant made a deal with state and local officials to locate half of its “HQ2” in Arlington, just outside D.C.: In exchange for as much as $750 million in taxpayer subsidies from Virginia, it agreed to build a massive new campus near the Pentagon and fill it with tens of thousands of new employees.
The company was projected to steadily include 25,000 new roles at HQ2 by the conclusion of the decade, as per its contract with the commonwealth. This was supposed to include more than 2,500 new roles the previous year. However, it saw a decrease of over 200 existing roles in Arlington in 2023, likely impacting the financial support it gets from the state. The owner of The Washington Post is the founder of Amazon, Jeff Bezos.
“We made the difficult decision last year to reduce a small percentage of corporate roles and slow down global hiring, which had an impact on our anticipated growth in HQ2,” said Holly Sullivan, the VP of worldwide economic development at the company, in a statement released Monday evening.
Sullivan stated that the company has not let go of its 25,000 jobs target. She referred to the project as “a long-term investment” and mentioned that there are currently 1,000 vacancies at HQ2. This is where two high-rising office towers, part of a total investment of $2 billion, were inaugurated the previous year.
With changes in work habits prompted by the global health crisis and a tightening in the tech sector, the drop in hiring is another challenge to the uplift Amazon had initially set for the region. Despite the start of utility installation last month on an empty lot at HQ2, construction of three more office structures and the futuristic “Helix” designed for that location has been on halt for over a year.
Each spring, Amazon is required to present a report to the state detailing the full hiring development at HQ2 since 2019 in order to receive subsidies.
In its report last year, the company reported hiring 6,939 workers for qualifying jobs from a total of 8,000 positions in Arlington. This year, Amazon has reported filling 6,644 qualifying roles and having 7,791 total employees allocated to HQ2.
The incentives Virginia has arranged for the company are aimed to appreciate its progress towards a target of bringing 25,000 fresh jobs to Arlington by 2030. Moreover, these incentives are structured in a way that ensures the company sustains these new jobs for a minimum of five years.
State authorities are set to pay the firm $22,000 per each permanent position with a typical yearly income of $150,000, as dictated by the agreement. (This salary is intended to rise gradually each year; it capped at $159,205 the previous year.)
The firm’s application during the prior year called for almost $153 million in subsidies from taxpayers to be fulfilled by the end of 2026. The hiring slowdown revealed in the latest report likely indicates that Virginia’s expenditures could decrease by several million dollars if employment growth stagnates over the next eighteen months.
Since the firm issued a “progress update” this year rather than an official application, it is unlikely that Virginia will grant any incentives to the company in 2027. Despite persistently meeting hiring goals for HQ2 ahead of schedule, until 2021, the company opted not to apply for incentives from the state, attributing this to difficulties encountered during the pandemic.
The current year’s report is the first instance of Amazon falling short of its hiring objectives in Arlington.
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