Amazon employment and the tax wedge

A few points on the Amazon story everyone is talking about:

1. First, if the story is somewhat true but exaggerated (a plausible scenario for something anecdotally based), the story may help Amazon with its current (but not prospective) employees.   A lot of people suddenly are feeling better treated than the perceived average, and that may boost their morale and productivity.  Yet they still feel the surrounding pressures to succeed.  As a countervailing force, Amazon is now less of a high status place to work and that may lower productivity and also it may hurt recruiting.

2. Given the existence of a tax wedge, Amazon employees are perhaps treated better than they would be in an optimum.  There is in general an inefficient substitution into non-pecuniary means of reimbursing workers because workplace income is taxed but workplace perks are not.  So arguably Amazon is treating its workers too well.  Think of this as another form of corporate tax arbitrage.

3. There is no right to an upper middle class lifestyle.  And for a large number of people, getting one is not easy.


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