Pay Rankings at Amazon's Contenders
January 22, 2018
If it’s New York, you’re talking $235,000 a year for senior-level executives. By comparison, Nashville would be a steal, and Toronto would be the lowest—about $70,000 a year less.
One of the most anticipated corporate decisions of the year—Amazon’s second headquarters—moved into a new gear last week when the company announced the 20 finalist cities it is considering. Certainly, the stakes are significant, with Amazon expecting to add 50,000 jobs to the winning city and a $5 billion investment. So the question was obvious: where do the finalists stand on average pay?
According to a Korn Ferry analysis for three employee levels, the differences are big. New York, not surprisingly, would be the most expensive second home for Amazon from a talent perspective, with compensation averaging $68,700 for an entry-level employee, $128,400 for a mid-level employee, and $235,000 for a senior-level employee. At the other end of the spectrum are Nashville and Toronto, where average compensation is less than $55,000 for an entry-level employee and around $94,000 for a mid-level employee—and as much as $180,300 for Nashville and $166,000 in Toronto for senior-level. (See chart below).
To some degree, experts say, higher compensation costs for talent could actually work in Amazon’s favor. For example, if Amazon expects the average salary at its second headquarters to be about $100,000 and they selected a city where the average salary would actually be $125,000, then they can use the additional expense as leverage to extract concessions. Using Amazon’s projected 50,000 jobs, in this example it would have to pay an extra $1.25 billion annually in compensation.
“Those cities with higher costs are going to have to make a bigger business case,” says Craig Rowley, senior client partner for Korn Ferry’s consumer & retail practice.
According to Maryam Morse, senior client partner, leader of Korn Ferry’s Rewards practice in North America, where Amazon ultimately selects will hinge on what its ambitions are for its second headquarters. “If it’s a conventional headquarters, where you need lots of accountants, logistics, HR, and other similar jobs, then those lower-cost cities may look very attractive. There are lots of people with those skill sets already in those towns and their low cost-of-living/family atmosphere may attract people to those towns,” Morse says.
“However, if they’re looking for it to be a bigger tech hub, then Amazon may find it really tough to recruit 50,000 tech people to a place like Nashville.” When viewed through that lens, pay will be a factor in Amazon’s decision, but what type of people it wants to hire may matter more.