What Will Amazon’s Impact Be on D.C. Area Businesses?

Feb 14, 2019

In 2018, the Virginia Chamber Foundation commissioned a study titled, “Economic Impact of Amazon’s Major Corporate Headquarters in Virginia and the Washington MSA.” Their findings? The total economic impact of Amazon HQ2 will be $14.2 billion in Virginia. While this is great news for the region’s economy, what does it mean to businesses already operating in the area?

The location of the new headquarters is beneficial to many in the area. Crystal City lost 17,000 jobs over five years due to the military’s base realignment and closure initiative. The area has been readying itself for a large influx of workers. “We were looking for a location with strong local and regional talent—particularly in software development and related fields—to continue hiring and innovating on behalf of our customers,” the company wrote in November.

Economists expect Arlington County to add 29,855 jobs over the next 12 years based on pre-Amazon projections, which is an annual growth rate of 1.2%. When taking Amazon into account, growth rate jumps to 2.2% for a total of 54,855 new jobs.

For each Amazon job, one to two local employment opportunities could result, based on a projected “job multiplier effect.” The first multiplier is the anticipated number  of start-up companies who may follow Amazon’s lead and locate in Arlington. The second multiplier is the increased need for services such as restaurants, copy centers, gyms, and more. The estimated full capacity for HQ2 in 2030 is almost 60,000 new jobs for Arlington County.  The downside to this growth is that . it already has the lowest unemployment rate in the D.C. area at 1.8%.

Labor markets including Arlington County have tightened across many occupations nationwide. More than half of the districts within the Federal Reserve Bank’s Beige Book report that companies are being held back by an inability to attract and retain qualified workers.

In such a tight labor market, filling 25,000 positions may be the biggest challenge for Amazon. Critics say that there are not enough qualified people in the area for the high-tech jobs they will need to fill. The concern is that candidates will be relocated from out of the region. Even if Amazon hires local residents, many may already have jobs. If an already employed candidate’s company can’t find someone to replace him or her—which is likely in this job market—then Amazon didn’t create a new job. Only by hiring unemployed local residents will Amazon affect unemployment in the D.C. area. And what about Amazon’s tax breaks based on bringing jobs to the area?

report by the Brookings Institution for the National Center for the Middle Market explores the impact that large corporations have on the operations of smaller businesses.

Small-to-midsize businesses are trying to fill more positions than ever, but they continually face challenges in finding appropriate candidates for these roles. Forty-five percent of small-business owners and 44 percent of middle market firms blame the skills gap for this disparity. Difficulty finding people with the right technical and soft skills is a major issue for all employers. In addition, some firms said that the lack of qualified talent was becoming a constraint on their business.

Twenty-eight percent of small-business owners blame competition from large corporations offering more money, better benefits, and additional perks that small businesses can’t offer. Besides money and benefits, larger companies recruit people by promising advancement opportunities. The problem isn’t isolated to small businesses when middle market companies hire the right talent, they are also at risk of losing key people to larger firms.

More and more employers are partnering with staffing agencies and outsourcing firms—like Employment Enterprises, Inc.—to reduce the time and effort required for human resources operations. A good partner can be an especially effective for a small company that may not have the time to handle tasks such as processing payroll, managing taxes, or handling worker classification issues.

Finding talent continues to be a major challenge for many small-to-midsize companies. Recruitment process outsourcing saves companies time by having a partner firm review applications, interview candidates, and negotiate salaries. Or, by utilizing contingent staffing resources, companies can rely on someone else to provide their own workers for open roles.

It is difficult to predict exactly what Amazon’s arrival will mean to businesses in the Washington, D.C. area. However, companies can prime themselves for an even tougher job market by implementing the right support system now.

Written by: Sarah Perlman

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