Amazon HQ2 Was Supposed To Add Jobs Last Year. It Shed Them Instead.

Amazon has fallen so far behind schedule in creating new jobs at its Northern Virginia headquarters that its workforce at those offices shrank last year, the company confirmed, underscoring how a project that it had initially pitched as an economic jolt is instead hitting a slowdown.

Following a much-hyped sweepstakes across North America several years ago, the tech giant made a deal with state and local officials to locate half of its “HQ2” in Arlington, just outside D.C.: In exchange for as much as $750 million in taxpayer subsidies from Virginia, it agreed to build a massive new campus near the Pentagon and fill it with tens of thousands of new employees.

The company was supposed to gradually add 25,000 new jobs at HQ2 by the end of the decade, according to its agreement with the commonwealth, including more than 2,500 new jobs last year. Instead, it lost more than 200 existing positions in Arlington in 2023 - a drop-off that will likely affect how much money it receives from the state. (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 company’s vice president of worldwide economic development, said in a statement Monday evening.

Related:Tech's Job Cuts Give Little Hope for Return to Rapid Growth

Sullivan said the company has not abandoned its target of 25,000 jobs. She called the project “a long-term investment” and noted that there are 1,000 open positions at HQ2, where two soaring office towers - part of a total $2 billion investment - opened last year.

But amid a shift in work habits prompted by the coronavirus pandemic and a squeeze in the tech industry, the downturn in hiring marks another setback in the boost Amazon had initially promised to the area. Even as its contractor began installing utilities last month on an empty plot of land at HQ2, construction on another three office buildings and futuristic “Helix” supposed to go there has been on pause for more than a year.

To receive subsidies from the state, Amazon must submit a document to the commonwealth every spring detailing its total hiring progress at HQ2 since 2019.

Its application last April said the company had hired 6,939 employees for qualifying jobs, out of 8,000 total positions in Arlington. Amazon’s report this year said it had filled 6,644 qualifying jobs and had 7,791 total employees assigned to HQ2.

Virginia’s incentives for the company are supposed to reward its progress toward a goal of bringing 25,000 new jobs to Arlington by 2030. They are also structured to ensure that the company maintains those new jobs for at least five years.

Related:Big Tech Usually Dismisses Fears That AI Kills Jobs. Now It’s Studying Them.

State officials will pay the company $22,000 for each full-time job with an average salary of $150,000, according to the contract. (That salary is supposed to climb slightly each year; it was $159,205 last year.)

Amazon’s application last year asked the state for nearly $153 million in taxpayer subsidies to be paid by late 2026. The hiring slump reflected in the most recent report probably means Virginia’s payout could drop by several million dollars if hiring stays flat in the next year and a half.

Because the company submitted a “progress report” this year instead of a formal application, Virginia will probably not pay Amazon any incentives in 2027. The company had also declined to apply for incentives from the commonwealth until 2021, citing pandemic-related challenges, even though it had consistently been ahead of schedule on hiring at HQ2.

This year’s report marks the first time that Amazon has fallen behind on its hiring goals in Arlington.