Florida’s Business Climate Can Help Tampa Land Amazon’s HQ2

This opinion piece was originally published on the Forbes  website (October 11, 2017).

The Tampa-St. Petersburg metro area is putting together a proposal to be the site of Amazon’s second headquarters. And it’s not alone; over 50 other cities are reportedly crafting proposals in an attempt to land the retail/tech giant. The Tampa metro area meets Amazon’s basic requirements—an international airport and a population over 1 million—but its greatest advantage is being in Florida.

The CEO of Tampa’s local economic development corporation recently said that “On a scale of 1 to 10, this is a 13 for us. We have read Amazon’s RFP (request for proposal) and it sounds like it was written for us.”

But was it? Tampa does meet the airport and population requirements, but Amazon also wants a developed labor pool where it can find talented workers. Along this dimension, Tampa trails many of its competitors.

The table below shows the percentage of private non-farm employment in the information industry and professional, scientific, and technical services industry for several metro areas vying for Amazon. It also includes the U.S. metro area average and Seattle—home of Amazon’s current headquarters—as references. These data give us some idea about how deep the local labor pool is for the high-skill workers Amazon wants. Tampa trails notable tech hubs San Francisco and Boston, and it also lags New York and Atlanta.

MSA employment

That said, Tampa has a greater percentage than Dallas and Pittsburgh. Its labor force is also better suited to Amazon’s needs than that of the other three large metro areas in Florida, which all fall below the U.S. average. If Florida is going to land Amazon’s second headquarters, Tampa seems like the best fit according to this measure.

But Tampa’s real advantages are at the state level. Amazon has stated that it prefers a stable and business-friendly environment, and Florida performs well on measures of state economic freedom, state business tax climate, and state fiscal health. The table below shows each state’s rankings in these measures and an average across all three using the most recent rankings available.

Florida is in the top five in each and has an average ranking of second. Its closest competitor is Texas, which is only middling in terms of fiscal health, where Florida places first.

Florida is already the third-largest state in the country by population and it’s growing quickly. People are moving to states with responsible and financially healthy governments, which bodes well for Florida’s and Tampa’s long-term growth prospects. There is also evidence that lower, simpler taxes and more economic freedom generate positive outcomes such as faster economic growth and higher wages.

The workforces of the San Francisco, Boston, or New York City metro areas may have an edge on Tampa’s, but they are in three of the highest tax, least economically free, and least financially responsible states in the country.

Moreover, these states—and others like Illinois and Connecticut—have terrible public pension problems that will necessitate future tax hikes and public service cuts. As their financial conditions deteriorate, it’s hard to imagine these states providing the stability Amazon prefers.

The Tampa metro area may not be able to beat out San Francisco or Boston on its own, but in combination with Florida it’s a desirable location for businesses and one that Amazon should seriously consider.

 Adam Millsap is the Assistant Director of the L. Charles Hilton Jr. Center for the Study of Economic Prosperity and Individual Opportunity at Florida State University. He conducts research on urban development, population trends, labor markets, and federal and local urban public policy.

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