EAST PALO ALTO, Calif.—This Silicon Valley city of 30,000 has largely been bypassed by the technology industry boom that surrounds it. East Palo Alto is now trying to catch up, but a rift over a city hiring ordinance is among the hurdles it faces as it tries to woo more jobs.

Amazon.com Inc. is planning to open a new 1,300-person corporate office here this fall, marking the first major tech implantation in the city. The new development, which will increase the number of jobs in the city by at least a third, could help revive...