Amazon announced that it will open a new satellite office with 3,000 new technology jobs in Vancouver. Prime Minister Justin Trudeau and Mayor Gregor Robertson heralded the announcement, with the mayor saying it was a “big win for Vancouver’s economy.” But it isn’t. Not only will Amazon’s influx of jobs add more strain to the housing affordability situation, it will also strain our technology labour market, potentially negatively impacting the very sector that it is supposed to help.

In 2017, the Vancouver Economic Commission produced a technology sector labour market report for the government of B.C. as part of the Labour Market Partnership Program. Some 500 sector stakeholders who participated in the study identified top three recruitment issues: Lack of mid- to senior-level talent availability, salary competitiveness with other jurisdictions or with local companies, and cost of living. Inevitability, Amazon’s increased presence will exacerbate all three recruitment issues for local firms in the sector.

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First, as a top-tier company with best-in-class technology, Amazon demands mid- to senior-level talent to fill its ranks from an already limited local talent pool with a shortage of high-skilled workers. Second, because of Amazon’s global scale and access to capital, they have the ability to pay a premium for talent compared to local firms. The higher-paid Amazon employees will be more able to afford the high costs of living in Vancouver, while putting additional pressure on already scarce housing resources and impacting affordability for everyone else — the “Amazon effect.”

Vancouver’s homegrown technology firms, which are mostly startups to mid-sized firms, will not be able to compete with Amazon in the talent arena. The industry already relies on poaching due to a constricted talent pool. Unlike peers in the U.S., most Vancouver-based companies do not have access to the necessary financial capital to pay a premium for talent due to our small venture capital ecosystem. Amazon’s increased presence can potentially stunt the development and growth of existing local companies that do not have competitive access to skilled talent.

Some critics may argue that Amazon will bring in more international talent or train local talent that may eventually spin off to create new innovative startups, a phenomenon that is observed in North American technology hubs. But unlike other hubs, Vancouver has limited startup financing resources. This, coupled with a high cost of living, can easily discourage would-be entrepreneurs from taking the financial risks to start quality startups, since it is more financially secure and lucrative to work for a global corporation like Amazon.

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Even when a promising startup is spun off, the Vancouver technology sector has a culture of opting for quick exits like being acquired by a large U.S. firm rather than to take the longer and harder route of developing an anchor company, partly due to the lack of access to large and later-stage capital to scale. A recent example is Buddybuild, started by a team of ex-Amazon employees, which sold to Apple shortly after its launch. Another is Paypal’s latest acquisition of Vancouver-grown TIO Networks that led to ceasing of operations and closure of the office totalling hundreds of local jobs. In many cases, foreign acquisitions and satellite offices makes Vancouver’s technology sector vulnerable to job, financial, IP and brain drains. On the other hand, local anchor companies and committed small to medium-sized firms would retain those assets locally, attract talent and capital that reinvests, and organically grow the sector for the city to become a viable technology ecosystem.

Politicians might be celebrating Amazon’s job announcement as a “win” for economic development in Vancouver and Canada. However, we should be wary of their sales pitch. To create a successful local technology sector, Vancouver needs resources, talent, and cultural change to encourage homegrown companies to develop into anchor companies. Otherwise, we risk becoming a back-office city reliant on foreign technology behemoths, while hindering our homegrown companies from reaching their full potentials.

Melody Ma is a technology product manager and web developer who participated in a subcommittee for the government of B.C.’s and Vancouver Economic Commission’s Labour Market Partnership Program for the B.C. technology sector.