If you’ve been on the internet in the past few months, you’ve already heard that Amazon is opening a massive new facility. Hundreds of cities across the U.S. have applied, hoping to get the chance to be the retail giant's next headquarters.
Last week, Amazon revealed their top 20 contenders, and the list ranges from long-established metropolitan areas like New York and Chicago, to emerging tech hubs like Denver and Austin. Bold outer boroughs of major metropolitan areas like Montgomery County, Maryland and Northern Virginia also threw their hats into the ring in a noble attempt to bring much-needed revenue and jobs to their community.
To help Amazon work through this varied list, we thought we’d share some data on the matter, direct from a reliable source: The 2015 Census.
The 2015 Census data (from this Data Block) offers a look into demographic data revolving around population, education, income, and diversity at a very granular level.
Of the metrics presented from the Census, we selected 4 key factors to examine for each of our Amazon contenders. The factors listed below represent factors that any company looking to open an office of this size should consider.
We took these factors and evaluated the top contenders in the nation from Amazon’s shortlist. For every factor, each city was assigned a score from 1-5 based on the quintile that the city fell into. The sum of these scores were used to determine the overall rank of each city.
And with 24 out of a possible 25 points, the Chicago Metropolitan Area emerged as a clear winner. Chicago was closely followed by Los Angeles and Atlanta, both with 22 points.
Chicago’s highly educated population and large amount of available housing makes it a perfect fit for Amazon’s expected 50,000-person workforce.
While these factors were not comprehensive, they provide us with a better lens to determine the overall suitability of a city to be the next Amazon HQ. Take a look at our rubric to see how our top pick Chicago ranked against other cities:
|Metropolitan Area||Population Density||Housing Vacancies||Diversity (Race)||Education (Bachelors)||Education (Masters)||Total Score|
|Los Angeles, CA||3||5||4||5||5||22|
|New York City, NY||1||5||5||5||5||21|
|Montgomery County, MD||2||1||4||1||3||11|
How did we arrive at these numbers? Let’s dive deeper into the census data.
Amazon’s new office will be designed to hold 50,000 employees. While in reality, this population will be a combination of local hires and relocated hires and their families, an upper threshold for the local population increase could, theoretically, be as much as 100,000+ people.
Which of the cities above has enough growing room to handle that large of an influx of new people?
Denver tops the list with the lowest population density (ratio of average number of people per square mile) of the group followed closely by Austin. On the other end of the spectrum are New York City and DC, cities which already possess an extremely high population density.
Equally as important as the existing population is the availability of housing for the relocated hires.
So what about housing vacancies in these cities?
Chicago, our top pick, and Miami have by far the most available housing and could easily handle a significant increase in households. Cities like DC or Montgomery County on the other hand may have to rapidly adjust and invest in real estate projects to accommodate new Amazon workers.
The likelihood of Amazon bringing in ALL relocated hires for this new outpost is very unlikely, so another important consideration is the existing workforces of each city. We decided to look at the education level of each city’s current population to see what Amazon can potentially tap into.
How many Undergraduate and Graduate degree holders already live in these cities?
Areas like Northern Virginia and Montgomery County tend to have a higher % of the population (>30%) with a Bachelor’s degree or higher. But for the sake of Amazon’s move, we ranked metropolitan areas with a bigger population of degree holders (even with a slightly lower % of population with degrees) higher on the list. Chicago and LA are both looking pretty good with some of the highest number of college grads of the group!
Amazon’s ideal workforce is made up of a diverse group of people. All of the cities that we’ve looked at have an almost equal distribution of Gender ratios -- so we felt best to remove Gender from our ranking algorithm. This doesn’t necessarily hold true for race.
Could a particular location's lack of diversity deter Amazon from attracting and relocating the best talent?
New York City and Washington DC top the diversity list, both with over 50% of their populations made up of non-white individuals. But the drop-off on this list is steep. Our top pick, Chicago ranks in the second highest Quintile with only 32% of the population identifying as non-white, and Pittsburgh is in last place, with only 11% of their population identifying as non-white.
While this is not a definitive pro-con evaluation of the potential cities for Amazon’s HQ2 -- other considerations like tax benefits and household prices are among those that come to mind -- our rankings provide a stepping stone to look at these cities more objectively and provide a way for Amazon to keep their employees and the local community in mind while expanding.
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