Category Archives: Education

Three Workforce-Based Reasons Why Amazon Should Locate Its Second Headquarters In the Washington, D.C. Metro Area

C2ER and the LMI Institute are pleased to welcome this guest post from Lokesh Dani, a current graduate student at George Mason University in Arlington, VA.

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Amazon is looking for a second headquarters—HQ2. Many major metropolitan areas are preparing proposals now to host HQ2. Amazon’s decision will be a pragmatic one of matching its needs and preferences with the metropolitan area’s labor force, its infrastructure, its culture, and the attractiveness of the incentives the city offers. Most cities will accordingly seek to highlight their highly educated STEM workforce, their university system, their subways, highways, and airports, as well as their quality-of-life, and their culture of entrepreneurialism. Yet, the question of how well matched these features of an economy are to Amazon’s business activity, rather than any average technology-oriented company requires a more nuanced discussion.

Here I present three data-driven reasons why the Washington, D.C. metropolitan region is uniquely well matched to the needs of an Amazon headquarters based on the metro’s unique and specific occupation and industry mix.

  1. Meeting Amazon’s Specific Jobs Demand

An analysis of 5,948 job postings at Amazon Seattle’s headquarters since 2010 reveals that 42 percent of their job-demand was concentrated in software development activities. This was followed by 20 percent concentrating in management-related activities mostly covering project, program, and product management categories, including managerial activities relating to logistics and operations. The third largest concentration of demand was for engineering and R&D related work at 12 percent, followed by business development at 10 percent. The remainder of their jobs demand sought to staff their human resource needs, push their design innovations, and support their everyday activities, including addressing the regulatory and legal environment.

fig 1 amazon

Source: Author’s analysis of Amazon job postings and Bureau of Labor Statistics data

If the functions of HQ2 will mirror those of the Seattle headquarters then, for HQ2, Amazon will seek metropolitan areas that have a similar occupational mix as their expected demand. However, a common issue in matching demand with the regional supply of workers is that job categories, like workers’ skills and abilities, are amorphous and ever-evolving. This is visible in the plethora of job titles associated with related and similar types of work activities, such as the job titles of Programmer, Java Developer, and Software Developer. To get around this problem, I matched Amazon’s Seattle job postings to related occupational clusters in the Washington metro region and assessed the relative concentration of workers employed in these similar clusters.

The results show that for similar jobs as employed at Amazon’s Seattle headquarters, the Washington metro region has 2.2 times the national concentration of workers in software development; 2.9 times the national concentration employed in similar managerial activities; 3.8 times the concentration of related engineering and R&D workers; and, 2.3 times the number of business development workers as compared to the national average. This analysis reveals not just that the Washington metro area has a high concentration of educated workers with STEM degrees, but that the region has competitive advantages in precisely the type of educated STEM workers that Amazon needs to staff its new headquarters.

2.  The Washington Metro Area’s Unique Industry Mix

To say that Amazon is a leader in cross-sector innovation would surprise no one. The technology giant may file under the NAICS code 454: “Nonstore retailers”, but the company’s business activities span well beyond the confines of any single NAICS sector, at any level of aggregation. To maintain its innovative lead and to satiate its demand for workers with breadth of knowledge and experience, Amazon hires from a diverse list of industries. It would then be useful to know what cluster of industries’ labor pool Amazon would most benefit from if it were to locate in the Washington metro area.

fig 2 amazon

Source: Author’s cluster analysis of QCEW data drawn as a network using Gephi 0.9.2

To investigate this regional characteristic, I have clustered all 3-digit NAICS industries in the Washington metro area based on the skill and task similarities of their most prominent occupations. This method reveals a ‘similarity’ of industries based on their potential for sharing occupational labor flows. What it shows is that nationally “Nonstore retailers” share an occupational similarity almost exclusively with other “Retail Trade activities”. In the Washington metro area this industry potentially shares labor flows with, “Professional, scientific, and technical services”; “Finance and Insurance”; and, the “Information services industries”. Compared with the composition of job postings of Amazon’s Seattle headquarters, the Washington metro area’s unique mix is well matched to keep the company at the frontier of innovation by attracting new workers with a wide set of diverse but related industry knowledge.

3. Regulating the Risks of Automation

Last year Mckinsey issued a report that assessed which jobs are most at risk of automation in the near future.[1] By evaluating work activities rather than job titles they reported that data collection, data processing and work requiring predictable physical tasks are the most susceptible to automation. Given Amazon’s primary industry activity in the retail sector, its data intensive technology, and its dominant market share, it is more-than-likely that the same technical advantage of automation that favored Amazon in disrupting an industry will ultimately present the company with substantial workforce challenges in the future. The only long-term option to automation is workforce retraining and upskilling in conjunction with an update of the regulatory infrastructure to support a digitized workforce. As the seat of the federal government and with one of the nation’s best education ecosystems, this is yet another competitive advantage of the Washington metro area that specifically benefits Amazon’s future growth and headquarters.

Conclusion

Having an Amazon headquarters locate in your city is a profitable opportunity. As Amazon notes in their RFP, “every dollar invested by Amazon in Seattle generates an additional $1.40 for the city’s economy overall.” The RFP further mentions that Amazon’s presence in Seattle has brought large positive innovation spillovers boosting the metro’s engineering and R&D capabilities. For a metro such as Washington, D.C. that has for some time sought to diversify its private sector away from federal dependence and re-brand itself an innovation hub, landing Amazon’s second headquarters would be a big win. Yet, the decision needs to also favor Amazon in a fashion that meets its current needs but also maintains its position at the frontier of innovation. The assessment summarized here provides support for such an argument by showing that the Washington metro area’s occupation mix and its industry mix provide unique opportunities well suited for the needs of an Amazon headquarters.

[1] https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet

Video: Applied Data Visualization and Moving from Theory into Practice

One of the best ways to better interpret data, make decisions, and get your message across is to use a visualization that quickly draws attention to sometimes surprising patterns and observations that are not always apparent.

Data visualization, a wide term that applies to visual representations that attempt to help viewers better understand data, can be used to help broader audiences understand and digest complicated data.

This year’s Council for Community and Economic Research Conference (C2ER) and LMI Institute Forum is focused on the global impact of regional partnerships, and managers from around the U.S. will gather to discuss topics facing industries, the economy, and the talent pool. We will take time during trainings to show trends in data-visualization software and discuss best practices. We invite you to visit our event site and view the preliminary agenda to learn more.

Managers to Merge in Minneapolis: Who You’ll See at the 2016 C2ER Conference

This year’s Council for Community and Economic Research Conference (C2ER) and LMI Institute Forum is focused on the global impact of regional partnerships, and managers from around the U.S. will gather to discuss topics facing industries, the economy, and the talent pool.

The conference takes place June 6-10 in Minneapolis. Classes, presentations, and breakout sessions are designed to guide state, national, and regional-level managers that want to be better enabled to make positive impacts both at home and abroad. Frequently, the people we work with and speak come from organizations that either provide strategic international partnerships or are growing their own understanding about globalization’s regional affects on their daily business.

The fundamental reality is that promoting an active global perspective among labor-supply specialists, economic developers, and researchers is essential to developing sustainable regional partnerships. Globally focused relationships and mindsets give leaders the foundations needed for international collaboration that addresses the greatest challenges in producing jobs and improving workforce quality.

C2ER and the LMI Institute, Leaders in the Field:

For 56 years, C2ER and the LMI Institute have brought together chamber leaders, administrators at government agencies and universities, data and labor-market experts, administrators at economic-development and utility firms, and consulting directors. Economic researchers and labor market specialists have added value to their state and municipal agencies after attending the event. We invite you to visit our event site and view the preliminary agenda to learn more.

Addressing the Skills Gap Starts in Your Own Office

NP Employees

A survey from the Chronicle of Higher Education shows that government and nonprofit employers have a more-difficult time with recent-graduate hires. Most of the issues cited involve “soft skills.”

Of the 700 employers in the survey who offered feedback on specific troubles they experienced with recent grads, most mentioned communication and critical thinking. Specifically, the employers stated that they often find candidates who cannot put ideas forward, support those concepts, and build upon them. “Soft skills” don’t just stop with communication and critical thinking. They include collaboration and respect for diversity. All too often, these people skills are becoming the value-add for new hires.

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US Cluster Mapping screenshot 4

C2ER, Harvard present cluster mapping training

Coming up in a few weeks, C2ER will be a presenting a new training course, Cluster Mapping for Economic Development. This is a one-day training course delivered by the U.S. Cluster Mapping Project at Harvard Business School. This in-person training session will introduce attendees to important cluster concepts, and how the U.S. Cluster Mapping Project’s newly revamped webtool can help to inform economic development strategies and activities.

To learn more about the class, you can watch this short video with Sarah Jane Maxted from the U.S. Cluster Mapping Project. Sarah Jane talks about the tool itself and what skills attendees can expect to take away from the training.

The first class takes place in Boston on June 25, then is presented a second time in Sacramento on July 29, paired with a second day of learning on July 30, The Basics of Economic Impact Analysis.

Check the C2ER training page for details, agenda, and registration.

Ellen Harpel on Evaluating Incentives Programs

CREC Research Fellow Ellen Harpel (of Smart Incentives and Business Development Advisors LLC) recently gave an informative webinar on evaluating incentives programs where she gave an overview of types of incentives programs, frameworks for evaluation, and trends in incentives transparency and accountability. Continue reading

Drew Conrad discusses business attraction, supply chain analysis

Last week, Drew Conrad, CEcD, from the Institute for Decision Making at the University of Northern Iowa discussed business development activities resulting from supply chain analysis, as part of C2ER’s Certified Community Researcher webinar series. CCR candidates are asked to give a presentation to achieve their certification.

During the Q&A portion of the webinar, an attendee asked a question about manufacturers and their own supply search process. Listen to Drew’s answer, relative to his experiences in northern Iowa.

CCR webinar recordings and powerpoints are availabel to the public on the webinars page.