Amazon HQ2 impact would be ‘huge’ from jobs to economic impact

| October 13, 2017

by Rick Smith, WRAL TechWire, October 12, 2017.

Imagine doubling the number of 50,000 workers at Research Triangle Park’s more than 250 companies with the addition of one company: The new Amazon headquarters project. What would be the economic impact on the Triangle? Two economists share their view: “Huge” and “Huge is an understatement.”

  • The unemployment rate will drop.
  • The hunt for already scarce employees in some specialties will worsen.
  • Prices of houses will go up.
  • The economic impact would be billions of dollars a year.
  • And there might be problems- like runoff from more homes.

WRAL TechWire talked with NCSU’s Michael Walden and East Carolina’s James Kleckley to get their assessment of an Amazon HQ2 project as state and regional economic developers, government leaders and private sector partners team up to prepare a bid for the project. The RFP is due Oct. 19.

  • So what would be the impact on the unemployment rate for the region where the jobless rate in Wake and Durham counties is already under 4 percent?

Walden: It would reduce jobless rate by a full percentage point

Keckley: It’s hard to say. Remember we are at or near full employment in many areas.  Plus, this would attract people to the area that do not have jobs….and maybe not the skills.

  • What about the impact on wages?

Walden: There is definitely not enough slack now – the jobs would likely occur over several years – long enough for movement of new workers to the region. If the jobs are added over time – giving the labor market enough time to react, the impact in raising wages would be smaller, but there likely would be upward pressure on wages.

Keckley: It would occur over a number of years. It would have to. Higher paying jobs might suggest higher salaries elsewhere, but it also suggests higher prices for many things.

  • What do you see as the overall economic impact on the region?

Walden: The annual impact would be between 50 percent and 75 percent higher than those direct numbers, so $7.5 to $8.7 billion for the $5 billion spending, and $45 to $52 billion for the annual $30 billion impact. These are HUGE numbers!

Keckley: Hugh is an understatement.

  • How does Amazon fill the 50,000 jobs?

Walden: The biggest problem for increasing participation in the labor market is lack of appropriate skills. I see the labor needs mainly handled by new graduates and in-migrants from other regions.

Keckley: I would think a lot of new people.

  • What’s the impact likely to be on housing prices?

Walden: Impact on housing prices would definitely be higher unless supply could be expanded in concert with the increase in jobs. Even then, homes in more accessible regions would see price rises. In Seattle, Amazon is involved in building housing near their HQ. [I]would expect that to happen here

Keckley: You would think [impact would drive up prices], but what about things like the runoff to the rivers created by more and more housing.

Category: NC SPIN Perspectives - Opinions from NC Leaders & Organizations

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