Nov 13, 2018

Amazon's new quest: Find 50k workers in a historically tight market

Illustration:Rebecca Zisser/Axios

Amazon has pulled off one of the most successful public relations coups in memory, creating more than a year of wild public suspense and — among cities — deep longing to host its next headquarters.

But now comes the hard part: finding 50,000 engineers, computer scientists and other skilled workers to staff complexes in two of the largest cities in the U.S. amid the tightest job market in five decades.

  • There are already more than 1 million unfilled jobs in the U.S., according to figures for September, released by the Bureau of Labor Statistics. About 34,000 of them were in the Information industry, which includes tech jobs.
  • Earlier this month, the WSJ reported that China's Foxxcon, the supplier for Apple, is considering shipping in engineers from China because of the difficulty finding talent in the U.S.

The bottom line: In its announcement today, Amazon said that attracting tech talent was a primary reason for selecting Long Island City and northern Virginia. But very few tech grads or workers anywhere in the country appear to be begging for work. "If your background is data analysis, you are going to get a job right out of school, and you're probably going to do something better than Amazon," Joel Kotkin, a professor at Chapman University, tells Axios.

  • This lack of idle talent stretches across the industry, including into management. I asked Tim Derdenger, a professor at Carnegie-Mellon's Tepper School of Business, whether many of the school's graduates are hard-pressed to find work. "Probably not," he said.
  • Among last year's graduates, a third were hired by the tech industry — led by Amazon, according to Stephen Rakas, who runs it's career center.

The critical U.S. shortage of skilled workers appears to be the leading driver for Amazon's decision, said Michael Farren, a fellow at the Mercatus Center, a think tank at George Mason University. Ultimately, it spurned larger, more lavish subsidies lathered on by other cities.

  • Farren tells Axios that, for secondary U.S. cities to compete for jobs, they should invest in infrastructure with broad advantage, rather than aimed at a specific company — like strong education. (In a new report, Farren and co-author Anne Philpot argue that most such subsidies are money thrown away.)

In fact, a principal part of Virginia's bid was a promise to invest $1 billion in pumping out thousands of added engineering and tech graduates.

  • The money will go to build a new Innovation Campus at Virginia Tech. The campus will produce 750 engineering master's degree graduates a year, plus 125 Ph.Ds. Virginia Tech will also graduate an additional 2,000 engineering undergrads.

Yes, but: Even absent Amazon, there is sufficient jobs demand to absorb all the added Virginia Tech engineering grads, said Tim Sands, president of Virginia Tech.

  • Sands tells Axios that the school already had expansion plans, which were accelerated to win the competition for Amazon.

What's next: Amazon will scour the schools and attempt to poach from other companies. But, in addition, Kurt Heikkinen, CEO of Montage, a tech recruitment firm, said that the company will have to be flexible as to the credentials of candidates.

  • It will have to ignore whether a candidate has a specific college degree or a certain number of years of experience, and instead focus on aptitude — whether the person either can already do the job, or can be trained to do it.
  • "I also suspect that not 100% of the hires will be located" in the headquarters, he said. Amazon, he said, will probably permit some of the more specialized hires to work virtually from wherever they live.

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