Boston Seaport (Helioscribe/Shutterstock)
Amazon announced this week that it was opening new offices and expanding its footprints in the North American tech hubs of Boston and Vancouver. While neither of these announcements represents the highly anticipated selection of a site for the e-commerce giant’s second headquarters (Boston is on the list of 20 finalists; Vancouver is not), both plans envision creating several thousand jobs and stand to have an appreciable impact on the local talent and housing markets in these cities.
The Boston Globe‘s Tim Logan reported on Tuesday’s announcement of a new facility in Seaport Square, a major new development in the South Boston Waterfront neighborhood, which will be primarily dedicated to developing its voice-activated Alexa technology, along with cloud computing and robotics—already focal points of Amazon’s existing offices in the highly-educated city:
The company has long based much of its Alexa and Audible teams at a growing office in Kendall Square, and has beefed up its Amazon Web Services and robotics development teams here in recent years. Its new building, set to begin construction later this year and open in 2021, would mark the company’s biggest presence to date, and comes as Amazon opens a new office in nearby Fort Point.
Along with an office in the Back Bay, a robotics facility in North Reading and a massive distribution center in Fall River, the company has added 3,500 jobs in Massachusetts since 2011, with these 2,000 more to come. They have an option for a second building — with room for 2,000 more jobs — at Seaport Square should they want to expand further.
Amazon is also opening a new office in Vancouver, one of Canada’s primary tech hubs and a short hop from the company’s Seattle headquarters. Taylor Soper covered the news for GeekWire:
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Toronto is the crown jewel of Canada’s growing tech sector and a centerpiece of Prime Minister Justin Trudeau’s ambitions to make the country a leader in emerging technologies like artificial intelligence. The city boasts a high-quality research university and a highly educated talent pool. Unfortunately, it’s also starting to experience the same problem faced by other major cities in North America: a shortage of housing, leading to high living costs for young professionals.
The Toronto Region Board of Trade has warned that rising housing costs and a short supply of decent apartments in the greater Toronto area risks harming the city’s ability to attract and retain talent, according to the Star’s real estate reporter Tess Kalinowski:
A survey by the business group last year shows 42 per cent of young professionals would consider leaving the region because of the high cost of housing. That has prompted the board to publish a Housing Policy Playbook in advance of the June provincial election with five recommendations for how the next government should tackle the housing crunch. The proposals range from building condos over transit stations to expediting construction permits. …
Facing a shortage of talent and a surplus of unfilled jobs, the state of Wisconsin is pulling out all the stops to attract millennials from other parts of the midwestern US to the state to work, Shayndi Rice reports at the Wall Street Journal. In January, the Wisconsin Economic Development Corporation launched a $1 million ad campaign in Chicago, while the state legislature is soon expected to pass a proposal from Governor Scott Walker to spend another $6.8 million to advertise the state throughout the midwest.
Too many jobs and not enough workers may sound like a luxury problem compared to what some parts of the US have reckoned with in the past decade, but Wisconsin policy makers fear that the slow growth of the labor force (just 1.4 percent from 2010 to 2016) could hinder economic development in the state. That low growth—a product of demographic aging, low birth rates, and negative net migration—has left Wisconsin with an unemployment rate of 3 percent and a projected 45,000 unfilled jobs by 2024, Rice reports.
Along with the abundance of job opportunities, the ad campaigns tout the low cost of living in Wisconsin cities (compared to Chicago), easier commutes and higher quality of life. Cities like Milwaukee and Madison are also running social media campaigns to advertise themselves as fun, vibrant places for young professionals to live. Critics of the campaigns, however, contend that these funds would be better spent on public services.
In the wake of the Great Recession, young professionals migrated to Washington, DC and its surrounding suburbs in large numbers, attracted by a growing tech scene and the relative stability of a local economy anchored by the federal government. But now that job growth has picked up again in the rest of the country, many of the millennials who led DC’s transformation over the past decade are moving away, eschewing the capital’s high living costs for opportunities in more affordable cities, Aaron Gregg reported at the Washington Post on Saturday:
A new analysis by George Mason University researchers finds that, among those already in the United States, more people are leaving the region than arriving for the first time since the Great Recession. Millennial deserters — ages 20 to 29 — are one factor. But another big one is baby boomers leaving to begin retirement life elsewhere. Families and the unemployed are also going. …
The current exodus could complicate efforts to diversify the region’s mix of business and wean it off its dependence on the federal government. In recent years, Washington has persuaded large corporations like Nestle and Yelp to set up offices here, and local leaders are now mobilizing to lure Amazon.com’s second headquarters here.
In the past year, we’ve taken a few looks at “corporate inequality”: i.e., the theory that income inequality in the US is being driven in large part by the growing divide between the compensation of high-value employees at highly profitable firms and the rest of the workforce. Large, wealthy organizations, particularly in the tech sector, are able to attract top talent by paying much higher salaries than lower-margin industries, exacerbating inequality by cultivating an elite class of professionals with high pay and lavish perks whose experience is completely divorced from that of the typical employee anywhere outside Silicon Valley or Wall Street.
Not everyone who works for these highly profitable companies benefits equally from their success, however. As the Guardian’s Julia Carrie Wong writes in a snapshot of Facebook’s contingent workforce, these contractors and subcontractors don’t enjoy the all-inclusive benefits o the tech giant’s regular employees, and many are struggling to get by in the increasingly expensive San Francisco Bay Area:
The $500bn company has been conscientious about ensuring that its subcontracted workers are relatively well paid. In May 2015, amid a nationwide movement to raise the minimum wage, the company established a $15 an hour minimum for its contractors, as well as benefits like paid sick leave, vacation and a $4,000 new-child benefit.
But those wages only go so far in a region with out-of-control housing costs. San Francisco and San Jose ranked first and third in the nation a recent analysis of rents, with one-bedroom apartments in San Jose going for $2,378. The extreme cost of housing is why California has the highest poverty rate in the country, according to a US Census figure that takes into account a region’s cost of living.
In 2016, US labor mobility fell to an all-time low since the Census Bureau began collecting data after World War II. Increased economic uncertainty for lower- and middle-class workers paired with cultural and political polarization have made it tougher for those in distressed, typically rural, regions to accept higher-paying jobs in thriving urban centers, if they can even get them. This has hindered the ability of growing companies in America’s most productive cities to attract talent from outside these urban cores, while also contributing to reduced socioeconomic mobility.
Problems that were previously linked to struggling cities, such as high unemployment and reliance on social services and low-income housing, are now rampant in rural areas. For those who own homes there, local housing markets have failed to recover from the late-2000s crash due to a drop in demand caused by the significant reduction in farming, manufacturing, and other blue-collar jobs. Even if a better opportunity came along somewhere else, selling their property would be tough.
Small-town workers are also put off by the socially liberal attitudes and lack of community in larger cities, so even if they can manage the financial and logistical challenges, the metropolitan culture may be too distant from their own to bear. Eventually, they begin to believe they are stuck. Examining this dilemma at the Wall Street Journal last week, Janet Adamy and Paul Overberg noted that the rate of people in rural America moving across county lines has dropped from 7.7 percent in the 1970s to 4.1 percent in 2015, and this reduction in mobility is having a significant impact on the country as a whole:
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The US Department of Labor has begun the process of revising or reversing the controversial new overtime rule enacted by the Obama administration last year, which would have raised the salary threshold at which employees are exempt from overtime pay from $23,660 to $47,476, but was held up in court before coming into effect. The Trump administration indicated earlier this month that it was planning to rewrite the rule, and on Tuesday, the Labor Department issued a request for information, soliciting public comments on the rule as a first step toward amending it, Reuters reported.
Specifically, the department is asking for input on whether and how to update the current salary threshold, or whether to eliminate the threshold entirely and base overtime eligibility solely on the “duties test.” It also wants to know how last year’s rule change and the injunction blocking it affected employers, many of whom raised salaries in anticipation of the rule and in some cases intend to keep those raises in place regardless of what happens in Washington. At TLNT, Seyfarth Shaw attorney Alex Passantino, a former acting administrator of the DOL’s Wage and Hour Division, provides a detailed overview of the questions included in the RFI, such as:
- Should the 2004 salary test be updated based on inflation? If so, which measure of inflation?
- Would duties test changes be necessary if the increase was based on inflation?
- Should there be multiple salary levels in the regulations? Would differences in salary level based on employer size or locality be useful and/or viable?
- Should the Department return to its pre-2004 standard of having different salary levels based on whether the exemption asserted was the executive/administrative vs. the professional?
The question of whether to differentiate salary thresholds by local cost of living is potentially the key innovation in the Trump administration’s proposed overhaul of the rule. Talking to SHRM’s Allen Smith, Passantino and other employment attorneys discuss how this might work—or indeed, whether it would work at all: