Economic Impact: How much will Amazon's new second headquarters benefit Virginia?

The entire state of Virginia will benefit from Amazon’s decision to locate part of its second headquarters in Northern Virginia.

Combining capital expenditures made by Amazon in 2030 when it reaches full capacity, along with the headquarters’ operations, the total economic impact is estimated to be $14.2 billion in Virginia, supporting 59,308 jobs, according to a new study by Chmura Economics & Analytics commissioned by the Virginia Chamber Foundation that looked into the economic impact of Amazon’s decision.

These figures include the ripple effect of Amazon that accounts for the jobs created when the company purchases supplies from businesses in the state and employees spend some of their income in the state.

From 2019 through 2030, the capital expenditures and operations of Amazon, with the ripple effect included, can potentially bring $1.83 billion to Virginia in tax revenues mainly through individual income and sales taxes, according to the study.

In 2030, the total state tax revenue is estimated to be $346.7 million — an amount that will continue to grow in the years going forward.

In addition to benefiting the state coffers, the increased tax revenue will directly benefit the funding across the state for local education systems, higher education institutions and transportation infrastructure.

This project also will cement Virginia’s position as a high-tech center on the East Coast, attracting high-paying jobs and highly skilled individuals to the state, benefiting Virginians for generations to come.

The report found that the Amazon project will quicken job and income growth in Northern Virginia.

Take Arlington County, for example. Arlington County was expected to add 29,855 jobs over the next 12 years (from 2018 through 2030) even before the Amazon announcement. That translates to an annual average growth rate of 1.2 percent, which is faster than the expected 0.7 percent growth rate in the nation over the same period.

When the Amazon expansion is added to the current forecast, Arlington’s growth rate over the next 12 years is expected to increase to an annual average 2.2 percent for a total of 54,855 jobs — a conservative growth rate because it only considers direct jobs created by Amazon.

The Amazon jobs also are expected to boost the average wages in the county.

Amazon is expected to pay an average $147,514 in 2018 dollars compared with an average wage of $88,449 in Arlington County as of the second quarter of 2018. The infusion of Amazon’s jobs into the region can boost the average wage of the county by 6.5 percent to $117,651 in nominal terms.

Although year-over-year employment growth in Virginia has generally matched the pace of the nation over the past year, Amazon’s expansion into the state will likely boost growth above the national average.