The firm was anticipated to regularly add 25,000 new jobs at HQ2 by the top of the last decade, in accordance with its settlement with Virginia, and obtain cash from the commonwealth because it hit annual hiring targets — similar to 2,665 new jobs final yr.
Instead, Amazon misplaced a whole bunch of present positions in Arlington in 2023 — a pointy turnaround that executives attributed to layoffs and a hiring hunch throughout the corporate. (Amazon founder Jeff Bezos owns The Washington Post.)
“Last year we made the tough decision to eliminate a small percentage of corporate roles and to slow hiring around the globe, which impacted our forecast growth in HQ2,” Holly Sullivan, the corporate’s vice chairman of worldwide financial growth, mentioned in a press release.
Sullivan mentioned Amazon has not deserted its goal of 25,000 jobs, although an organization spokesperson later clarified that it might look to satisfy that aim by 2038. She referred to as HQ2 “a long-term investment” and famous that there are 1,000 open positions for the campus, the place two hovering workplace towers opened final yr, a part of a $2 billion complete funding in Virginia.
But amid a shift in work habits prompted by the coronavirus pandemic and a squeeze within the tech business, the hiring downturn marks one other setback within the enhance Amazon had initially promised to Arlington. The rise of distant and hybrid work has challenged tech business job facilities, together with the rising “innovation district” officers have tried to construct round HQ2.
“The tech industry is no longer booming nonstop, and the idea you’re going to have people in the office to help a location looks less appealing than it did before,” mentioned Nathan Jensen, a professor on the University of Texas at Austin who research financial growth. “In the end, it may be a project that’s nowhere close to what it was hoped be.”
Amazon staff are actually required to commute to the workplace at the least three days per week, however the HQ2 buildings that the corporate opened final yr within the Crystal City neighborhood have room for 14,000 staff — about twice as many as at the moment work there. The firm has for greater than a yr paused building on three different workplace towers and the futuristic “Helix” which can be alleged to be constructed up the road, at the same time as its contractor started putting in utilities final month.
Jensen mentioned that in some sense, it was emblematic of broader shifts in company tech. While the Amazon that pitted cities in opposition to one another for a flashy financial growth prize was identified for innovation and opening new traces of enterprise, the one that really constructed HQ2 simply shuttered an Amazon Fresh grocery retailer a number of blocks away.
“If they had proposed this in the first place, would they have gotten any special attention?” Jensen requested. “There was just a little bit of hubris there.”
Amazon continues to grapple with financial headwinds following the pandemic, regardless of record-high inventory efficiency. The firm laid off greater than 27,000 staff between 2022 and 2024, although layoffs didn’t have an effect on sufficient HQ2 staff without delay to set off notices below the Worker Adjustment and Retraining Notification Act in Virginia. Chief government Andy Jassy mentioned in a letter to shareholders final week that he expects the corporate to chop extra prices because it seems to be to change into extra environment friendly.
The drop-off in hiring in Arlington will most likely have an effect on how a lot cash Amazon will obtain from Virginia. To qualify for these subsidies, Amazon should submit a doc to the commonwealth each spring detailing its complete hiring progress at HQ2 since 2019.
A comparability of stories from final yr and this yr present that Amazon misplaced a whole bunch of jobs in 2023: The firm’s utility final April mentioned it employed 6,939 individuals in qualifying roles at HQ2, in contrast with 6,644 positions this yr.
Not all jobs in Arlington essentially qualify for state subsidies, that are topic to particular standards, however the drop is true even for all positions at HQ2. Amazon mentioned in final yr’s utility that it employed 8,430 individuals in complete in Arlington, a determine that fell to 7,791 staff on this yr’s report.
State officers in 2018 had agreed to pay the corporate $22,000 for every qualifying full-time job at HQ2 with a mean wage of $150,000. (That wage is meant to climb barely every year.) But Virginia’s incentives for Amazon are additionally structured to make sure that the corporate maintains new jobs for at the least 5 years.
Amazon’s utility final yr requested the state for practically $153 million in taxpayer subsidies to be paid by late 2026. The hiring hunch mirrored on this yr’s report most likely means Virginia’s payout might drop by a number of million {dollars} if job numbers don’t choose again up past 2022 ranges.
Christian Martinez, a spokesman for Gov. Glenn Youngkin (R), deferred remark to the Virginia Economic Development Partnership, which critiques the corporate’s purposes for incentives. A spokeswoman for that company didn’t reply to a request for remark.
Timothy J. Bartik, a senior economist on the W.E. Upjohn Institute for Employment Research in Michigan, mentioned the shifting payout factors to the success of the “unusual approach” that Virginia took in structuring its incentives for Amazon HQ2. The internet advantages of the undertaking could also be smaller, however the prices for state authorities can be, too, he wrote in an e mail.
Because the corporate submitted a “progress report” as an alternative of a proper utility this yr, Virginia can even not pay Amazon any incentives in 2027. The firm had additionally declined to use for incentives from the commonwealth till 2021, citing pandemic-related challenges, despite the fact that it had persistently been forward of schedule on hiring at HQ2 earlier than final yr.
This yr’s report marks the primary time that Amazon has fallen behind on its hiring targets in Arlington.
In addition to the cash from Virginia, the incentives bundle designed to woo Amazon there additionally included as much as $23 million in taxpayer subsidies from Arlington County. None of these incentives have been paid out but.
Amazon’s take care of Arlington was negotiated with the expectation that having such a big firm on the town would assist refill lodge rooms: The county promised to provide the tech large a 15 p.c reduce of any enhance in its native lodge tax. That income stream, nevertheless, had not but totally recovered from the pandemic as of final fall.
But Arlington County Board Chair Libby Garvey (D) mentioned the hiring slowdown was not trigger for concern — it was to be anticipated.
“Arlington’s businesses — like most of the nation’s — have seen the lasting impact of the pandemic on workplace trends,” she mentioned in an interview. “Amazon is no different. We’re actually thrilled with the company’s progress.”
Dozens of recent street-level retailers have opened on the HQ2 workplace towers that opened final yr. Garvey mentioned the realm “is so vibrant, so alive, and that’s because of Amazon’s presence.”
Caroline O’Donovan in San Francisco contributed to this report.