Why Amazon Should Stay Away From California When Considering a Location for Its Second Headquarters

By Michael Saltsman

Amazon recently received proposals from cities hoping to host its second headquarters. A number of California localities—including Los Angeles, Sacramento, Pomona and Chula Vista—were in the mix. But the tech titan should tread carefully in the Golden State, where policy makers are studying punitive measures against companies that use workplace robots.

The latest example is a statewide campaign launched this fall by
Jane Kim of the San Francisco Board of Supervisors. Ms. Kim intends to raise money to support a statewide ballot measure that would penalize private enterprise for embracing automation in the workplace, as Amazon has done in its warehouses.

“The idea is simple: if an employer replaces a human worker with a robot or algorithm, he or she would pay a tax,” according to the “Jobs of the Future Fund” website. It continues, “If we can expect millions of Californians may lose their job, it is our responsibility to prepare now through a modest tax on the robots and algorithms taking their place.”

While Ms. Kim would like to tax the robots, some of her colleagues would prefer to eliminate them. Earlier this year San Francisco Supervisor Norman Yee proposed a ban on delivery robots. “Our streets are made for people,” he proclaimed. In an interview, Mr. Yee said he was concerned that “many delivery jobs would disappear” if such a ban were not enacted. He later amended the proposed ordinance to create a robot permitting process with geographic restrictions.

The workplace trend toward self-service and automation has indeed made some occupations obsolete. Customers have been accustomed to bagging their own groceries for at least a decade. Restaurant chains such as McDonald’s and Panera Bread are now rolling out kiosks that allow customers to place their own orders. And the automated delivery devices targeted by Mr. Yee will render some delivery jobs obsolete.

Employees displaced by technology might appreciate that these San Francisco politicians are concerned, but an apology might be more appropriate. Over the past few years, San Francisco in particular, and California in general, has increased the cost to hire and train employees at risk of being automated. The minimum wage will rise to $15 an hour in San Francisco in 2018. The rest of California will get there four years later. On top of San Francisco’s hourly wage mandate are requirements for health care, paid leave and employee scheduling.

These added costs give employers with already slim profit margins a strong incentive to automate or embrace self-service. In an interview with Forbes, the founder of a delivery robot company linked his product’s value proposition to a rising minimum wage: “At something like $10 per delivery, the majority of citizens will not use [human delivery]. It’s too expensive.”

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