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.

Comments

If I believe what I read in the Atlantic, our college students are coddled and protected from all conflict, requiring trigger warnings before all possibly upsetting subjects. If I believe what I read in the NYTimes, these coddled students then face a Darwinian work environment at Amazon.

Different students. It's all self-selection.

I think that's precisely the point. Depending on what you hear, either millennials are the laziest generation ever, or they are the hardest workers. Too much generalization!

Both ends of the bell curve are getting stretched further and further.

I am not sure you should believe what you read in The Atlantic about "coddled college students"

http://www.newrepublic.com/article/122543/trigger-warning-myth

And in any case, its pretty silly to think that demanding good working conditions and a minimization of stress should amount to "being coddled", or that Darwinian work environments are good for people or society. Social and economic progress largely depends on people demanding better conditions, better workplaces, better lifestyles, etc.

The folks who are actually coddled is management, and sociopathic bosses like Jeff Bozo. They are lucky that American workers have thus far not followed the examples of their fellows in the developing world, where such exploitative bosses are regularly kidnapped, beaten, and even killed, and their factories set ablaze.

You are delusional. The vast majority of upper management at top tech companies work long hours, they are not coddled. They are handsomely compensated, no doubt, but they work hard.

"The vast majority of upper management at top tech companies work long hours, they are not coddled."

The article talks about midnight e-mails and nagging follow up texts. Somebody higher up is sending those.

That ain't workin'... (I have no opinion on your hypothesis, only on your evidence.)

"They are lucky that American workers have thus far not followed the examples of their fellows in the developing world, where such exploitative bosses are regularly kidnapped, beaten, and even killed, and their factories set ablaze."

Arjun you a typical Socialist who thinks there's nothing wrong with the threat of violence towards those you dislike.

Hey hey, relax folks, I never condoned or condemned anything. I was just pointing out that the "Darwinian workplace" of other regions result in vastly different pressures and outcomes for managers, bosses, and capitalists, and that American higher-ups are lucky that they don't have to deal with reactions against their power and policies the way other bosses do. I made no claims on the morality of workers using violence.

But you have in the past, and your claim was that it is moral for workers to use violence. So why are you trying to look like you are backing away from that now (albeit without actually doing so)?

By the way such violence hardly has improved the lives of the workers there

Nonsense! I wouldn't advocate harming a fly, let alone the helpless capitalists.

"They are lucky that American workers have thus far not followed the examples of their fellows in the developing world, where such exploitative bosses are regularly kidnapped, beaten, and even killed, and their factories set ablaze."

A Communist wet dream no doubt.

I come from an ex-communist country and I can tell you that here bosses are like satraps or medieval landlords. There is no modern employee-employer relationship. This is the result of the communist beaurocratic syndrom

This is not an exclusive of ex-communist countries...

"The folks who are actually coddled is management, and sociopathic bosses like Jeff Bozo. They are lucky that American workers have thus far not followed the examples of their fellows in the developing world, where such exploitative bosses are regularly kidnapped, beaten, and even killed, and their factories set ablaze."

You need to learn about the developing world. The Jeff Bozos of the world purchase all the security they need, and the "fellows" feed on themselves.

If your version of morality includes advocating for the murder of people you dislike how could you criticise somehow who merely requires their employees to work long hours for high pay in sometimes stressful circumstances ?
If your version of communism allows for the murder of opponents on the way to a better future then you can hardly claim to have a nuanced position.

Yes, we are very fortunate that American workers aren't morons who destroy their places of employment.

And yet employees are considered disposable....

It's clear that the managerial staff at Amazon doesn't "fear" their employees. Which indicates that the employees don't know any better, are holding out for future promises of reward, have some ideological attachment to the company that transcends the way they are treated, or that they aren't worth that much on the rest of the tech market and are easily replaceable.

Why would anyone want to work in a fucking shithole like Amazon?

http://withoutbullshit.com/blog/jeff-bezos-non-denial-denial-of-the-new-york-times-amazon-takedown/

Also, great framing on the 'upper middle class lifestyle'. Not everyone can be a tenured professor at a second rate Eastern university. Pull up the drawbridge!

They would be so much better off if Amazon was forced to close!

And yet obviously people do. That link is pretty poor in my opinion anyway.

derek, presumably the employees could work at other jobs, assuming Amazon's claims that their staff are the best and the brightest is correct. At a certain point, management needs to feel that they need an incentive to keep their employees happy rather than risk the consequences of alienating them. The tech industry predates Amazon by decades, after all. Clearly management doesn't have that kind of fear instilled in them, which is the problem.

@Tyro, whats amazing is that you know what is best for all these tech people better than they do.

It's okay for you to post your homicidal ideations under your own name, Prof. Rosser.

#2 applies to libertarian professors at quasi-private institutions, as well, no? And especially in light of #3, this suggests that perhaps libertarian professors (who, unlike a large number of people have easy access to an upper middle class lifestyle, and unlike almost anyone have a right to one via tenure) are deserving of being lowered in status.

I would think this would apply to pretty much all tenured professors, not just the libertarian ones.

Re: #3, I don't think there's anyone to pity besides people who can't get jobs at Amazon. Definitely not those who fail to realize how easy it is to trade 10% of your salary for 40% of your hours after 2-3 years at a place like this.

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

Just about everyone born to upper-middle class parents can enjoy an upper middle class lifestyle with minimal effort, although they might decide the owe it to membership of a 'cognitive elite' rather than random good fortune.

Perhaps that's exactly who the comment is targeted at.

Judging by many of the newly fledged children of various upper-middle class friend & neighbors of ours, it's not exactly an easy waltz into a life equal to that of their parents. Reversion to the mean is actually a thing.

It's not a reversion to the mean. It is a completely different era. My doctor father (he's 65 and at the end of his career) had like 3 women in his med school class and probably 0 non-whites. Something like 65% of his age cohort was unable to compete against him for a spot in the class various reasons. That's just for starters. Becoming an upper middle class professional is much harder now than it was 40 years ago.

Yes, this is an understated point. There is more competition today for professional positions.

So harder for a white man but easier for everyone else? That doesn't seem like something to complain about.

Easier for non-white non-male non-middle class people compared to 1969, but on average it is more difficult for everyone.

You think your father's med school class had zero non-whites in fucking 1975? Jebus, people are terrible at history.

My wife went to Princeton, and my boss went to MIT (and hires many MIT grads). Thus, I know lots of MIT and Princeton grads with college-aged kids, and I would say that the vast majority of them (maybe 70% of the kids) went to colleges lower down the food-chain than their parents. Some significantly lower.

You mean like GMU?

Buuuuuuuurrrrn!

Well, only in the sense of self-parody, to keep pace with this web site. After all, I did graduate from GMU. After having worked there, before ever becoming a student, then while studying at Mason, and afterwards, both for the Commonwealth and for one of those ever so carefully constructed centers, with the GMU Foundation taking the place of bagman. Or cut-out, depending on whether the center is getting millions in funding from the GMU Foundation, or providing funds when the center's activity is one that generates revenue for the foundation. (Yep, not every center is the sort of money drain that the Mercatus Center is - see the filings at https://www.citizenaudit.org/541436224/ )

My younger son is a plumber and is doing fine on his own without my help.

I have been rich and I have been what many in the USA call poor and it is better to be rich but not that much better.

Compared to most other professions, it is laughably easy to find work as a software developer or one of several other technology-related positions. One imagines that the people at Amazon who don't like the hours can easily find other work. Perhaps however they are kept from doing so by one of the following factors: (1) Amazon is "at the top", and they have nowhere else to go that wouldn't lower their prestige, (2) the nature of the work is that these kinds of working conditions are necessary, even if the employees have high bargaining power.

I have no insight into the tech world to figure out which of the two it is.

I think you left out a more important point that was mentioned in the original NYT's article. (3) If they are successful at Amazon they stand to make millions in additional compensation for a decade or so of work.

Would I put up with really crappy decade of work, if I got an additional $1 million at the end of it (on top of the $80K+ salary)? I'd certainly consider it. Let's face it, that's the equivalent for winning the lottery for 50% of the American work force.

You can call all "economic rationales" you want. There is something more important called "minimal human decency", which seems to be absent at Amazon (the question is whether this is really on regular bases, or it is an exceptional story)?...

"There is something more important called “minimal human decency”,"

Yep, working at Amazon is just like working in the Coal Mines of West Virginia. ;)

No, the diamond mines of Sierra Leone, you know since such 'minimums of human decency' are universal and afforded by Nature.

If you think ppl crying in their desk every day is normal welll... the question is as I said, is it an exception or is it the rule? I would like to see some data on that...

Minimum human decency probably is about the level of the military- something people pretty routinely sign up for.Amazon's not that close.

Do keep in mind that minimal human honesty is manifestly not a requirement for journalism.

People "cry at their desk", or in a toilet, or a nearby café in every workplace where people work together. And in school, and in sports teams.

Crying at desks is evidence of the existence of humans. For evidence about the workplace (or school or sports team or charity or whatever) in question, it matters how the crying is caused and how it is reacted to. On these fronts, Amazon does not appear to be a particularly "caring" place. And for sure, the people I know in tech in Seattle are not keen to work at Amazon, but they do know people who do, and some hate it, and some love it.

What is not given enough attention in all this is that Amazon's actual tech is still absolute top-end world class cutting edge. Their site STILL works better than nearly any other site on the planet, under enormous traffic.

In my experience, a genuinely crappy workplace cannot sustain a genuinely top-notch product for long. And Amazon has.

So I think their workplace simply caters to a very narrow segment of humans who happen to include a large proportion of very good programmers.

There is a persistent myth in software development that everyone works crazy hours, but it's just not true. Some companies demand it, others don't. You lose a bit of flexibility if you're not willing to work crazy hours, of course -- you cut off your opportunity for some jobs -- but in my experience not a ton of it.

Two job hunts ago, I was just past the phone screen for a job (that went well), and the guy I was talking to -- CTO, I think -- said, "Oh, by the way, we work from 10am to 8pm or so, and I assign about 10 hours of work every weekend." I said, "Thanks, I don't think I'm interested in this job."

The demand for software developers is red hot right now. There is nothing in "wanting to work 40-50 hours a week" that should prevent a competent developer from making a generous six figures.

Source: 15 years as a software developer in silicon valley/San Francisco.

I wish more people were aware of this. Especially new grads. I've seen comparisons with wall street and medicine. But the important difference is that as a software engineer you can make a similar amount of money in a different company (goog, fb, twtr, many others) without those management shenanigans.

Somebody in another comment mentioned making a million in a decade as if it were impressive. It's not. In the current market, good (not great) software engineers make that much in 2-3 of years, after a couple years tenure. And no, you don't need to get in before an ipo.

The demand for software developers is red hot right now.

Then why all this hyperventilation about H-1Bs? The news reports seem to keep saying that there are legions of unemployed American software engineers out there who have lots their jobs to cheap Indian tech workers.

2 reasons. 1, the H1B visa system is horribly unfair. Its a system designed to import skilled people and pay them shit, plus keep them from shopping around for a better job. 2 the news lies.

A big part of the problem with H1-B (to me) is that it's being abused. With a few reforms to the system, the US market could easily absorb 100k new engineers, no problem. The thing is, the system is being abused by Wipro and Tata. Global outsourcing companies account for over half of H1B's. They bring people over for 6mo-1yr to meet the client and learn the project, then manage a team of 30 developers either from the US or back in India, and they sell substandard work to MBA's who are overenamored of the man-months they are getting for cheap.

I remember another story in the NYT, from maybe two or three weeks ago, about how people with no technical background were going to three-month to six-month "coding boot camps" and emerging with six-figure jobs. All for a total tuition cost typically less that $20K. If that doesn't float your boat, there is at least one quant finance boot camp, which also costs about $20K, with similar salary outcomes.

So yes, it is pretty easy to gain access to an upper-middle-class lifestyle. It just requires a little bit of application.

I have a couple of friends who have gone to such bootcamps (the coding ones, not the quant ones). That is a thing, but there are a few caveats:

1. These aren't "start from nothing" bootcamps. You have to have a certain -- fairly large for a non-professional -- amount of coding skill coming into them. And speaking as someone who did some computer science TA stuff back in college, some people Just Don't Get coding and will never pass the interviews to get into the bootcamps.

2. The bootcamps do have a very impressive rate of placing people into pretty good junior dev jobs post-graduation. The catch is that reputedly they do this by aggressively failing people out of the bootcamp. So if they think you're not going to be able to get a pretty good job, they boot you from the program. My understanding is that they usually offer a certain amount of your fee back.

I think that the bootcamps can be a very good value proposition for a lot of people. They aren't all smoke and mirrors. But they also aren't a generalizable path to a six figure income.

Having a friend who went to amazon and was ground to the ground, I can tell you why he did it: It was his first job out of school, lacked the background to know that the behavior he was subjected to was NOT typical, and was properly indoctrinated into Amazon's mission. He left and is far happier, but the damage to his heath from being reminded that sick time means letting your team down will follow him for the rest of his life.

Getting kids right out of school is not unique: A certain very large hedge fund is run like a cult of personality that exhibits the same, if not worse, traits than Amazon, but they only hire ivy leaguers straight from school. They lose a lot of people quickly though, because many of those recent graduates are well connected people that realize how insane their experience is, as most employers don't have books giving you a set of rules to live by, that are quoted in meetings like one quotes the bible.

I had some somewhat similar experiences fresh out of school. Although perhaps not an institutional culture like at Amazon.

I would also point to SpaceX (owned by Elon Musk) as another work culture with insane hours and workloads that exploits fresh-outs. People in the space industry typically report employees at SpaceX working 80 hour weeks routinely and burning out after 2 years. They hire a lot of people fresh out of college who think SpaceX is cool, and thus are able to get away with treating them much worse than workers at other aerospace companies. It's their PR/hype/image that permits it.

I'm curious what some further investigation of Amazon will turn up. On the one hand, the NYT does some pretty good investigative work and there were a lot of comments backing up the gist of the article, on the other hand this particular article seemed to rely on a substantial amount of anonymous comments and surely high level Amazon employees are in a good position to take another job. Someone that has to stand behind their comments is going to be aware that there are others who will call out an obvious untruth.

The vaunted investigative reporting of the NYT aside, isn't there a whiff of partisanship about the article because Bezos owns the NYT's chief competition, the Washington Post?

Some time back there have been a number of articles about working conditions @ Amazon fulfillment centers in the UK and in Germany. Didn't look good. basically AMZN is using humans AS robots. Punch the button, little guy runs to grab the goods. Punch another one and keep tabs on the other guy prepping the boxes. Look down from the raised gangway and shout down the the lazy workers to stop talking and get moving. Technically speaking it's perfect for robots, hence "inhumane".
I have yet to read about the working conditions of AMZN coders, middle management, sales support, etc. Maybe their story is different.

Have you had a job in a factory, or a café, or anywhere similar???

Or the military?

I often hear or read that investors buy Amazon stock because it's "safe", an altogether different meaning of the term than the one I'm familiar with. But what do I know. Maybe earnings is an old-fashioned concept that has no place in today's economy. As for the 24/7 work environment at Amazon, I don't get that either. Why would anyone spend all her many waking hours working on shaving a few minutes of delivery time for products customers don't really need anyway. Or maybe I don't understand what they do at Amazon. Sit around thinking of ideas? I do understand why someone would want to work at Amazon if they are granted lots of stock options. I don't understand why the stock price keeps going up when earnings don't, but maybe Bezos and his 24/7 thinkers at Amazon have figured out how to defy gravity.

"I often hear or read that investors buy Amazon stock because it’s “safe”"

What? Safe. It's got a terrible P/E. It's a speculative stock, not a "safe" stock.

You have a pretty narrow view of what they do at Amazon. It's not just about minimizing delivery times, although optimizing global delivery networks seems like an interesting/challenging problem with obvious benefits.

Ever heard of AWS, Fire HD, Prime Instant Video, Recommender systems, (one could go on)?

Yep, cloud hosting is the biggest moneymaker for AMZN, by a long shot.

"products customers don’t really need anyway"

If Hillary! wins in 2016, can we exect the CFPB to issue a list of the products it has determined customers need?

RE #2, not sure I agree, the consensus I observed from software engineers and others on forums such as Hacker News and Reddit are that Amazon tends to pay less than Google, Facebook, Apple and Microsoft, AND has less perks.

Yes, this seems to be in direct conflict with the article itself, which says there is no free lunch buffet and so forth, and that employees are expected to pay their own business-related travel expenses.

"and that employees are expected to pay their own business-related travel expenses."

That's hardly rare in the sales field. A lot of sales positions at lower level firms are strictly commission. But that seems to be exceptional for the software industry. And considering the article (shoddy journalism?) fails to give any details, I'm doubtful if it's as dramatic as it first appears.

Yeah, that was one of my takeaways from that article too.

More anecdotes from former Amazon insiders are found sprinkled in here:
https://news.ycombinator.com/item?id=10065243

But unlike those companies, Amazon is a retail consumer products store as well. Software is important but not the only thing.

I would expect a software only company to pay more for software people than a mixed company.

I used to work for Microsoft in Redmond, and the grapevine said that Amazon paid a lot better than Microsoft (though with fewer benefits, the kinds that you make use of if you have a family or have retired or are often sick) but was a slave-driver.

I'm curious about the meta-story behind this. Matt Yglesias has been critical of Amazon for a long time. I wonder if behind the scenes he was advocating for this sort of an exposé with his contacts at the Times.

Overall I think there needs to be more understanding of how journalism operates, where information comes from, why certain stories are written and how they came to be written.. At lot of information we get if fed directly from advocates and

Wouldn't he have advocated an expose of the terrible condition for blue collar Amazon workers, if he could? That's the Amazon issue Vox has been all over, if I remember correctly.

Agree. But these journalists know their audience. Suddenly the intelligentsia are outraged at the human rights abuses at Amazon. Evil Bezos exploiting those people, forcing them to live in that infamous hellhole Seattle, all to accomplish meaningless things like deliver 4 boxes of diapers to my door in 2 days! Even TC feels compelled to comment. Strange.

"deliver 4 boxes of diapers to my door in 2 days!"

So last year. Amazon wants to deliver 4 boxes of diapers to you door the same day now!

My wife looked into that. Actually even ordered a shipment. Well technically you sign up for an ongoing delivery service. But it turned out to be simpler and just as cheap to pick up the diapers at Walmart when we needed them.

Simpler? We've been using it for years and find it a heck of a lot simpler for our diapers to show up at our door every month then to drive out to Walmart.

Walmart is a pretty regular shopping destination and my wife forgot to change the size of the diapers, so we ended up with two cases that were too small. It was a minor snafu and we order a lot of packages from Amazon, but the diaper delivery service wasn't as useful to us. If we could have ordered them when we needed them, just like everything else from Amazon, that would have been great. It was the "You've got to order a regularly scheduled delivery for months if you want a low rate" part that was the odd ball.

Gawker has covered the poor conditions both at the Amazon warehouses AND the white-collar offices for years. It's been a "known issue" in the industry for a while. The Times article simply brought the story to the masses.

In my social circles there were warning against working in Amazon for a while:

"You get worked like an I-Banker, but you get paid like an average cubicle drone"

Another point, Jeff Bezos owns a direct competitor to the New York Times: The Washington Post.

perhaps if we didn't emotionally over-invest in anecdotes about cancer patients and new mothers being shit-canned by Stasi-esque peer informants, we'd realize how benevolent Amazon's management system really is. right Tyler?

3. There is no right to an upper middle class lifestyle.

Presumably, there is also no right to a higher class lifestyle than one already has.

Pro-immigration policies are premised on people seeking higher class lifestyles migrating.

If there's no right to a higher class lifestyle, then there's no right to immigration.

opportunity and outcome are two distinct concepts

Is there a right to a lower-middle class lifestyle? An upper lower-class lifestyle?

If Tyler says there is no right to an upper middle-class lifestyle, the implication is, there's a right to some kind of lifestyle, right? So which one?

"the implication is, there’s a right to some kind of lifestyle, right?"

LOL, umm no. That's a logical fallacy.

Furthermore, The US government and society doesn't provide you a right to some kind of lifestyle. It's explicitly mentioned in the US Declaration of Independence:

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

As Tommy said, you have a right to the opportunity, not to the outcome.

To be fair, the USA needs to come up with some kind of competitive advantage when other countries offer a pretty good lifestyle. My grandparents didn't move to the USA because they had an opportunity that they might have a better lifestyle. They moved because the USA offered practically a guarantee of a better life.

When people compare Amazon to medical residency, I-Banking, or Big Law, the difference is that all of those experiences result in an upper middle class lifestyle at the end of the line. Even those who don't make partner or Managing Director end up finding a pretty comfortable off-ramp elsewhere.

If I were especially cynical, I would guess that Amazon made the insightful calculation that even well-educated talented professionals in their 20s don't generally make very well-thought out economic calculations in their career plans beyond the immediate 5-10 years and can be driven harder without commensurate rewards.

'Is there a right to a lower-middle class lifestyle?'

Depends what you mean by lower middle class. Prof. Cowen is on record in Average Is Over apparently advocating favelas with amenities for Americans -

'We also would build some makeshift structures there, similar to the better dwellings you might find in a Rio de Janeiro Favela. The quality of the water and electrical infrastructure might be low by American standards, though we could supplement the neighborhood with free municipal wireless. Hulu and other web-based TV services would replace more expensive cable connections for those residents. Then we would allow people to move there if they desired. In essence, we would be recreating a Mexico-like or Brazil-like environment in part of the United States, although with some technological add-ons and most likely greater safety.'

"workplace income is taxed but workplace perks are not." Try telling that to the IRS. Workplace perks are income unless specifically excepted. See IRC§61(a)(1): "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:(1) Compensation for services, including fees, commissions, fringe benefits, and similar items." De minimis fringes are excepted, but de minimis fringes only achieve de minimis wedges.

You are right in theory, but in practice, the IRS looks the other way.

What are we talking about that the IRS looks away from? (I'm not disputing you, I just want to know which perks are both big enough to be worth mentioning in point 2 and small enough that the IRS ignores them. In general, IRS agents tend to go after perks that they don't get. For example they used to go after personal use of business cell phones until they started getting employer-provided cell phones.)

If the IRS looked the other way before, they aren't doing that now:
http://sanfrancisco.cbslocal.com/2015/08/18/free-gourmet-meals-at-tech-companies-may-become-a-thing-of-the-past/

I think Bjartur is spot on with his comment "IRS agents tend to go after perks that they don’t get.".

I read the article. Not a good place for me but does not seem too bad overall.

They work insane hours but so do Big Law associates, residents and people at Google [and most of Silicon Valley].

Not "Darwinian" [whatever that means], and certainly not "sociopathic".

Anyone with enough job market competence to get a job at Amazon knows how to use sites like glassdoor and university alumni networks to determine in advance if an environment is competitive and decide whether that's right for them. I thought the article was severely lacking in that it failed to point out a crucial reason many choose Amazon.

Branding.

There was this weird quote line, "Recruiters, though, also say that other businesses are sometimes cautious about bringing in Amazon workers, because they have been trained to be so combative. The derisive local nickname for Amazon employees is “Amholes” — pugnacious and work-obsessed."

The name Amazon on a resume almost guarantees an interview at any tech firm, globally. The article gives only this misleading portrayal of the prospects of ex-Amazon employees. Sure, a lot of these people would have opportunities with or without Amazon, but it's undeniable that, in 2015, working at Amazon improves almost anyone's future job prospects.

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

How many Amazon employees are making an upper middle class income, when measured against the local cost of living? I'd expect that in places where employers like Amazon can be found, you'd need an income way into the six figures to afford anything that can be reasonably considered an upper middle class lifestyle. Even if Amazon is much more generous with compensation than companies I'm more familiar with, I don't believe anyone below at least middle-management level is making that much.

"How many Amazon employees are making an upper middle class income, when measured against the local cost of living?"

By any informed definition of "middle class," all of them.

This response at SLATE was interesting:

http://www.slate.com/articles/technology/bitwise/2015/08/amazon_abuse_of_white_collar_workers_i_worked_at_microsoft_and_google_and.html

My son has been at Amazon for a couple of years. He works crazy hours at times but I have also seen him have tremendous flexibility . He felt the article was slanted.

All of which looks like summer camp compared to what the typical 22 year old investment banking analyst deals with. For good measure throw in medical residents and first year big-law associates. There's a major cultural shift, where its become expected for upper-echelon twenty-somethings to work 60+ hour weeks for access to the best career paths.

I think it's been that way for awhile. Hopefully things will shift towards normal human hours, especially in the medical field where having doctors work extended hours is simply dangerous.

60 hours is not extreme. In my trade it is usual to work 3000 hours a year. Pretty good money at the end.

Any job that pays more than $50k a year outside of government owned you. If you don't want it some Chinese or Korean or Indian guy will.

No, that's not extreme for, say, the 19th century, and if you wan't to put in that much work, have at it. Lots of people have families and other passions they'd prefer to pursue. The problem as I see it isn't that people (voluntarily) work long hours; it's that others who are just as (or more) productive per hour don't have the option to not work such long hours and still be remunerated as much per hour as the person who works long hours.

Of course, maybe that's just empirically false. Maybe when you count all their hours, workaholic software engineers end up only making $30 an hour.

I think having doctors work to the point of exhaustion is a bad idea, but having them work a lot of hours isnt such a bad idea. Yea working 80+ hours a week sucks, but you get really good really quickly if you survive.

But these jobs tend to be occupied by people under 30 and they are understood to be temporary "hazing" phases that one has to get through. Doctors, lawyers and finance professionals can look forward to better working conditions and better pay within a few years of starting.

At Amazon, it seems the conditions don't improve and many of the people who work there are old enough to be thinking about getting married and starting families.

Back in the 90s, the company Trilogy was known for recruiting lots of 20-somethings and working them hard. It was a real work hard/play hard environment. Ten years later, those 20-somethings were 30-somethings and less inclined to work long hours on problems that were only moderately interesting for salaries that could be matched elsewhere where the working environment was less like a cult. I think what really did them in was the dot.com crash: once the promise of stock options making everyone rich was no longer on the table, the motivation dried up. Pretty soon the employees had moved on, and the company outsourced all their development to India. I could see a similar phenomenon happening at Amazon: if the stock grants don't really pay off anymore, the employees will pass Amazon over for more technology-focused companies, and Amazon's focus on development will be more about saving on costs than throwing wave after wave of developers at a problem.

I have been in tech almost 2 decades and the article pretty much describes all the top paying tech companies.

They grind you down to nothing, but in general you are paid enough to tolerate it.. Until you can't take it and you quit. This is what we call "normal" in my career.

Also, I think a lot of spoiled folks just woke up to the fact that a lot of people work their god damn ass off with that article.

Amazon does not pay especially well compared to its peer high prestige coastal competitors. And the work environment is measurably worse.

At least when I graduated in 2008, of the major tech firms, Amazon paid 5-10% more for first year students out of top CS programs.

Hypocrisy alert:
http://againstjebelallawz.wordpress.com/2015/08/18/hypocrisy-we-hardly-knew-ye/

I enjoyed reading this story, but it did not surprise me, largely because I read this blog on a regular basis. I haven't read Average is Over - frankly, the topic disturbs me - but Tyler has presented summary versions of his argument often enough, and the key take-away is that being a non-elite worker in the future is probably going to stink.

The thing is, though, that Amazon would not claim that their employees are "average"-- they would argue that they select for "the best of the best."

But I think even Amazon knows that is not true. At Zappos the hiring method is explicit: hire the "B" students and give them reasons to stay over the long term. They are much more easily retained. Amazon (Zappos' parent) seems to use a similar strategy in that the mass of their employees are more or less average and easily replaced and have the knowledge that Amazon is probably as good as they can get, as well as believing that they are doing something "important." A higher caliber of employee or one with a stronger ego would demand to be catered to.

I think there are some possible analyses you are leaving out: namely that Amazon claims that their employees are among the best and the brightest professionals. And yet, given their pay and work environment compared to their competitors, their workplace is out of line with other high prestige technology employers (though possibly in line with retailers, but Amazon doesn't try to compare themselves with Wal Mart).

So, either Amazon is under compensating their workforce, both in money or workplace environment (and prestige is now gone, too), or their workforce is actually lower quality than you would find at Google, Microsoft, or Yahoo. The lower-quality hypothesis is actually highly probable, since they seem to recruit mass numbers of people straight out of college or from abroad to replace all those who leave.

And in any case, you are dealing with "professionals" who expect to be regarded as professionals. Otherwise, Amazon may as well just train high school grads to code and give them jobs paying 30k-40k/yr.

As someone who had to compete against these companies for hires, Amazon is slightly above Microsoft and way above Yahoo, but substantially below Google and Facebook when it comes to the quality of hires they're getting, at least in software. Note that a lot of the complaints came from people in the retail side of the business, who probably are more fairly compared to Walmart employees. They don't have nearly the market leverage that the software people do, and are being asked to work in a company with a software startup culture for much less money.

I somewhat agree with your assessment. Although there are a great number of really solid engineers at Amazon.

I think it is more fair to say that the TCC at Amazon is above Microsoft and laughably Yahoo, and considerably below that of Google and Facebook. Amazon is especially hampered by how they dole out stock compensation. Further the work environment at Google/Facebook is considerably more pleasant. The work environment at Microsoft is about a push with Amazon.

One thing about Amazon is that if you are working on AWS, then you will be working in a red hot space and a few years in that environment can be very beneficial for one's career.

The ordering is something like FB | Google > Amazon > Microsoft >> Yahoo even if you factor in the hours.

One thing to note is that when there is a competitive environment there will be losers, and some of those loser may want to lash out. That is exactly what is happening in this case.

One thing about Amazon is that if you are working on AWS, then you will be working in a red hot space and a few years in that environment can be very beneficial for one’s career

This a thousand times over. My friend went from working at AWS (his quote "its like working at a startup, except you will never get rich") for a few years to working at Google getting seriously paid. A few years at Amazon shows your next employer that you can work, and work hard if need be. It answers the 'how full of shit am I?" question.

My understanding of Amazon from a second-hand software engineering standpoint is their code base is basically a mess. Everything is modularized to micro-services in the extreme. This helps them get by with low-quality, high-volume code. When you try to coalesce too much bad software into a single library or project, it tends to collapse under the weight of its hapless complexity. Micro-service zealotry acts as a quarantine, so that when any one sub-component gets too corrupted it can simply be scrapped or re-written without any need to focus on large-scale software architecture issues. This model is basically only competitive because Jeff Bezos is an insane genius with an inscrutably detailed understanding of all the moving pieces. The sheer weight of it all would be too sprawling for nearly anyone else to stay on top of.

The opposite end of this spectrum is probably Google, which is known to have the most disciplined software engineering approach of any firm anywhere. Their competitive advantage isn't management, but their own pristine, beautifully architected codebase. Larry Page could drop off the face of the Earth and Google would keep humming along just fine. The downside to this though is that you need to keep a lot of very famous hackers, like Guido van Rossum, around. You have to pay them *a lot* of money and give them *a lot* of freedom to do whatever interests them, and mostly hope that they devote some of their time to extending that beautiful architecture on business critical needs. Amazon can treat developers much more like commodities, and throw intelligent, but basically indistinguishable, bodies (e.g. new CS grads), at a problem until its solved.

That makes a lot of sense and explains their recruiting process. I actually think the micro-services idea was brilliant because it allows Amazon to quickly productize any services that prove useful. But at the same time, the overall impact is means that Amazon is basically no different than any number of software bodyshops like Infosys rather than a high-prestige technology employer.

The downside to this though is that you need to keep a lot of very famous hackers, like Guido van Rossum, around. You have to pay them *a lot* of money and give them *a lot* of freedom to do whatever interests them, and mostly hope that they devote some of their time to extending that beautiful architecture on business critical needs.f

A downside for whom is the question. Once an organization starts looking at the idea of employing famous professionals and giving them freedom a "downside", I think you're going down a bad path, at least if you're trying to market yourself as a marquee technology company.

> Once an organization starts looking at the idea of employing famous professionals and giving them freedom a “downside”, I think you’re going down a bad path, at least if you’re trying to market yourself as a marquee technology company.

I don't necessarily disagree with you. But you have to remember Amazon's margins are razor thin, and Google has just tons of idle cash to throw around. Paying a name-brand computer scientist a seven figure salary to work on moonshots is going to be a lot harder to justify in Amazon's situation. Also Amazon is definitely the least software focused of the major tech companies. Even AWS is at its core about physically hosting infrastructure. A software company's culture is much closer to a university. A corporate culture focused on operational and logistic efficiencies is naturally going to look a lot more like a 19th century industrial conglomerate.

But I do think you're probably right. Amazon will continue to do well in markets with high overlap between bits and atoms. But they're never going to become first-tier competitors in pure tech space, as a lot of investors seem to think they might.

A corporate culture focused on operational and logistic efficiencies is naturally going to look a lot more like a 19th century industrial conglomerate.

I recently read a developer describe his time at Amazon as, "All my previous experiences were in engineer-driven companies. Amazon was my first experience with an MBA-driven company."

I think that GvR, aka Python's Benevolent Dictator For Life (BFDL), has been at Dropbox for a couple of years, although he did work at Google for a few years before that.

Yes, you're absolutely correct. Just used Guido, because I figured he was the closest thing to a household name among Google's "resident hackers".

It is going to be fun watching The New York Times and The Washington Post tear each other apart over the same shrinking readership.

If politicians in any country strived for the type of culture that Jeff Bezos has developed at Amazon, they would be called Communists. Bezos sounds a lot like Mao.

Terrible comparison. If you don't like Bezos, feel free to work elsewhere. If you didn't like Mao, they killed you.

So Mao was only bad because he didn't give people the option to leave?

Also, the murder part.

Yeah, but if this becomes more or less the norm, most people will have no choice but to live half of their waking hours abiding by the same code of conduct -that was typical of communist china, east germany and other authoritarian states. Not a pretty prospect.

"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."

This is the sort of claim I think Tyler should defend from a broader philosophical perspective rather than a narrow Econ 101 perspective. Many if not most people think there is a minimal level of dignity and respect that people deserve, including at the workplace. The stories coming out of Amazon as well as from Elon Musk's companies are of employees being berated because, for instance, they took time off from work to attend to sick parents or to be with their spouses during a childbirth.

A supervisor granting leave so that an employee can attend to important family matters strikes me as a minimum standard of civilized conduct, not a "benefit" that employers should feel justified in revoking in exchange for higher compensation (with a few exceptions, such as for employees in life-saving or emergency response professions). If George Mason punished Tyler for cancelling a class or arranging a substitute lecturer for a similar situation, I imagine he would be justifiably angry at them, no matter how much he is being paid. But tenured professors have some of the easiest and most flexible working conditions imaginable, so this hypothetical is much more distant for Tyler than it is for most other full-time employees.

Agree. No wonder people think economists are idiots, who have little grasp of reality beyond their models... I certainly think so, after reading this Tyler post. On the other hand I actually believe he might be trolling us...

Economists are not idiots so much as people whose job it is to provide a mor justification for sociopathic behavior. Lots of employees and supervisors consider it a burdensome cost to treat their employees well. The economist provides a justification for explaining why, in the name of efficiency, treating employees well is a moral wrong.

The stories coming out of Amazon as well as from Elon Musk’s companies are of employees being berated because, for instance, they took time off from work to attend to sick parents or to be with their spouses during a childbirth.

A data driven approach to how to deal with this issue would be to ask how shareholders are benefiting from NOT berating their employees and wondering what the benefit to shareholders is for an employee to take time off to deal with an ill relative, and asking whether such an employee could be better replaced by one without sick relatives or, at least, an employee without such sentimental attachments.

By contrast, managers may receive some psychic benefit to berating the employees which, since it does not represent a cost to the shareholders (and in fact is done in service of providing less employee "theft" of shareholder value) represents a net benefit to the company.

Amazon simply has quantified and culturally absorbed the lesson that any benefit to the employee comes at the expense of the shareholder and the customer.

I can't tell if this is intended as satire or not, but I think that Tyro makes a great point. There's definitely a softening of the American workforce that I see from articles like the one that the Times ran. And while in some circumstances, sure, I can see how being soft on employees ultimately helps shareholders because, especially at places like Google, the top talent won't take being treated like crap. But especially when you're looking at a margin business like Amazon, everyone needs to get on board and appreciate that the legal and moral duties of the company and its agents are to operate solely for the benefit of the shareholders. See, e.g., http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2576389. And absolutely no one is forcing these supposedly abused employees from working there. On the contrary, the worst thing that Amazon appears to threaten them with is not letting them work there anymore.

The framing of this as class warfare always confused me as well, since "shareholders" aren't some secret cabal of plutocrats, but include pensions fund, indexed 401(k) investments, and the like. For once I'd like to see the media run a story with the spin of "soft employers steal from retirees" or something to that effect.

I did mean it mostly as an exaggerated satire in employee hostility to employees, but the fact that it is taken as reasonable shows the problem with our barely concealed contempt towards workers. Ie, the idea that anything above the bare minimum and barely concealed contempt is either a gift workers should be grateful for or in some way a clever theft that more properly belongs to the employer and shareholder. This is what people usually call a "race to the bottom."

However, that attitude is extremely common in small customer facing businesses: for a sole proprietor, every dollar spent on his employees is coming out of his own pocket, and the value those employees provide is so small as to be only marginally measures me: they're considered an operating expense rather than a source of value. Amazon has managed to scale up this retail culture into a technology company, along with the realization that they could regard developers and white collar staff as retail expenses, since regarded them as professionals was leaving money and productivity on the table for shareholder capture.

Though maybe the lesson here is that calls for greater efficiency is just concealing a contempt for the staff.

(Same Mike as above I noticed that another Mike was commenting on the post, so I added the initial.)

The hostility point as a psychic benefit to managers is a really interesting one that is rarely discussed. I've worked at places where it's acceptable and even encouraged berate subordinates, criticize them, keep them around late and demand immediate availability on a whim, force them to cancel plans, etc.

Aside from overall morale issues, it does have plenty of benefits, both in an ability for the manager to get work done more efficiently (no worrying that the subordinate won't be willing to turn around something when you need it at 3am), plus it is sort of fun to boss someone around and haze them. And I think a lot of the subordinates enjoy it too, both out of a general quasi-Catholic sense of sadomasochism and because they want to some day abuse subordinates themselves.

Obviously, some people won't like this sort of culture, and they're free to work elsewhere. But similar to how I don't judge, say, Scots who may like to eat haggis or midwesterns who like to shoot lions, even if neither is my cup of tea, I think that it's unreasonable for outsiders to come along and criticize Amazonia workplace culture just because they may find it sadistic and dehumanizing.

Well, Mike S., from the perspectives of social norms, the public, and specifically tech workers, has an interest in creating a social "cost" to workplaces that are run like that to ensure that they do not spread, in the same way that people look down upon the parents who beat their children of people who have abusive relationships with their spouse, even if each member of the marriage might get off on conflict: most people don't want to see such behavior normalized or considered socially acceptable.

America has always been of two minds with its idea of a "classless society." On one hand, they don't like the idea of a nobility who thinks they can tell others what to do. On the other hand, in the absence of this kind of nobility, people feel the urge to take any opportunity they can to badger anyway within reach with orders (as any member of the waitstaff can tell you)-- without the knowledge of their place in the hierarchy, people are so insecure that they need to constantly prove what position they belong in. In this sense, we have a vested interest in not creating these sorts of divisions, and technology professionals have an interest in not being treated as part of the servant class.

There is another aspect of technology journalism in that journalists have always placed tech professionals on a pedestal, since they don't really understand what they do and even though their salaries aren't so high, they are substantially higher than journalists'. Thus, reporters become mystified when someone who works for a tech company ends up being treated like a Anna Wintour's personal assistant.

One has to factor in the cost of hiring and training replacements. I would say the prevalence of Amazon's business practices suggest there is not such a great shortage of tech workers as is sometimes claimed. (of course, other factors like stupidity and naivety of younger workers may play a part).

The stories coming out of Amazon as well as from Elon Musk’s companies

Yes, within the aerospace industry, SpaceX is known to be kind of a sweatshop environment.

How much of this is just agile development being compared with waterfall? SpaceX is also known for coming as close to agile as you can whilst building a giant rocket.

"There is no right to an upper middle class lifestyle." Well, no, but we live in a world in which a few people --- Gates, Zuckerberg, etc. --- through a combination of skill, hard work and massive amounts of good luck have amassed far more wealth then they could ever conceivably spend in several lifetimes. I'm sorry, but this offends a deep-seated sense of fairness, that most people possess and I don't see why we shouldn't want more people to have a middle class, or even upper middle class lifestyle.

How about aspiring to a system of capitalism that distributes the rewards a little more fairly. Mark Zuckerberg (to pick one name) could still indulge his every whim with 1/00 or even 1/1000 of his current wealth but his monetary loss --- with little or no loss to his personal utility --- could be a gain for many people, thus (on a utilitarian basis) increasing the total sum of human happiness.

Before anyone says, allowing governments to take money from Peter to pay Paul is not the answer, but that does not mean we shouldn't recognize the failings of the current system.

One of the salient insights of the 70s and 80s was that the existence of a middle class represented a theft from shareholders and owners, and thus the best solution was to reclaim the wealth that was being distributed to employees in the form of pensions, health insurance, and job security so that shareholders and executives could reap more of the gains.

As many economists can tell you, not squeezing every last ounce of productivity out of an employee and casting them out the instant they run the risk of becoming a drag is massively inefficient. Any psychic or financial benefits employees accrue in the form of personal enjoyment of time off ultimately comes at the expense of the balance sheet and is being stolen from shareholders. This, it turns out that the middle class itself was an unacceptable expense.

"we live in a world in which a few people — Gates, Zuckerberg, etc. — through a combination of skill, hard work and massive amounts of good luck have amassed far more wealth then they could ever conceivably spend in several lifetimes. I’m sorry, but this offends a deep-seated sense of fairness, that most people possess"

I think you might be wrong about how most people view Gates, Zukerberg et al. Although i have met some people who mirror what you are saying, ive met far far more that marvel at what those people have accomplished with hardly a thought about the inequality of it all.

Im not saying your wrong, but its possible that one of us is having a "no one i know voted for Nixon' moment. That our worldview is simply a reflection of our peer groups, not of the rest of the world.

The problem with this approach is that, as has been shown, the wealth of billionaires is a drop in the bucket. So redistribution looks less like taking money away from someone who won'tnotice, and more like taking 60% of an MD's salary instead of 40%. Some people think that the path to greater wealth is capitalism itself, since incentives matter. It's hard to imagine a household that has earned 127 million dollars in the last 5-10 years and done less for society than the Clintons - redistribution (what people buy from the Clintons) is zero sum. Those millionaires working in the professions and industry have, for the most part, created reciprocol value for their millions or billions.

If they do not consume it then what is the problem?

Gates and Buffett will give most of their wealth to charity. Maybe Zuckerberg will too. He is still young, and he has already donated large sums, for example to Newark public schools. There will be more wealth creation if the very wealthy are allowed to control when and how their wealth is used for social good.

yeah, right, because they only work for public good right? loool

You might have a point, but its worth noting that any one of those guys has done much more for charity then you ever will. You can be a bit snarkier after you donate first million.

They've spent a lot of money on trying to educate low IQ hopeless cases and making more Africans. Hardly a net good for the world. I would rather one of their employees had time off to care for family members.

The Clintons have earned 127 million dollars over the last decade by trading, quid pro quo, billions of dollars of government influence, favors, and expenditures. I'll take the tech billionaires and their imperfect charity.

for #2 you are make a bad assumption that money and stress are fungible.

Tyler: "3. There is no right to an upper middle class lifestyle."

Define "upper middle class lifestyle". Something tells me your bar for what qualifies as "upper middle class"--not to mention the likely bar of your libertarian commenter groupies--is significantly lower than that of the median American. The term itself is a Rorschach blot.

Your point does, however, touch on what I think is a key difference between the libertarian worldview and that of a large chunk of the public: the libertarian view of "economic justice" is transactional and iterative while the colloquial public view is more karmic and cumulative. In the former, one delivers a product/service to a customer and is compensated for doing so. Sustaining the lifestyle enabled by that compensation depends on continuing to deliver to customers. There is no accumulated "credit" to justify maintaining the lifestyle independently of the work. In contrast, under the latter world view, one accumulates a certain degree of entitlement to the lifestyle one has earned i.e. "they've worked hard all their lives for what they have and thus deserve to keep it."

TL;DR: unless it's due to gross misconduct of some kind, downward economic mobility is considered immoral and unjust by a large segment of the population. In a democracy, that means some degree of socialism is inevitable.

"And for a large number of people, getting one is not easy."

No shit. Keeping one ain't no picnic anymore, either.

a. “they’ve worked hard all their lives for what they have and thus deserve to keep it.”

b. "unless it’s due to gross misconduct of some kind, downward economic mobility is considered immoral and unjust by a large segment of the population. In a democracy, that means some degree of socialism is inevitable."

This is largely contradictory.

1. keeping what you the exactly the result of the iterative process you outlined. The cumulative process you discussed involves taking what one person has earned through the iterative process, and giving it to someone else.

2. Downward economic mobility for half the population is exactly what is required by socialism.

Ya think? I didn't say it was coherent.

A simultaneously Calvinist and yet Marxist assumption baked into the worldview is that only workers truly "earn". Those at the top of the economic pyramid--those who own rather than work--are assumed to have not earned their wealth, either because they inherited it or gambled to get it i.e. investing/speculating is tacitly not considered "work". TL;DR: a double standard kicks in for those who independently possess sufficient wealth so as to not have to work.

In this matter, the transactional libertarian worldview is the accurate one.

On point 1, I think the story is currently true and not exaggerated - though I think the most important part about AMZN is having a good manager. You could probably say that about a lot of places, but the culture of AMZN magnifies it a lot.

I think this other piece I read puts it perfectly (looking at Bezos' email to all hands at AMZN):

http://www.bloombergview.com/articles/2015-08-17/a-job-at-amazon-isn-t-for-everybody

"When this is the message from the top, of course you are going to get ambitious mid-level managers who give employees low performance ratings for getting thyroid cancer, or who think it’s OK to build a distribution center in Pennsylvania with no air conditioning, then station paramedics outside during heat waves to treat stricken workers. That doesn’t mean Bezos wants his people doing those specific things, just that they are in keeping with the overall corporate ethos of putting customers first and being frugal."

Also, I find it interesting how much of the response to this article is "Feel bad for the warehouse workers, but not the white-collar employees. White collar employees can always walk away." Apparently most people don't know Washington is a state that enforces noncompetes and that AMZN has a pretty strong one. Or they skipped the part of the original NYT article talking about AMZN having clawbacks on relo costs and bonuses (relo and signing bonus during year 1, cash bonus in year 2) - and they recruit a lot out of state (given their local reputation, it's a necessity). Or how employer-sponsored visas work - they also recruit a lot internationally, for the same reasons. It actually says a lot that their average employee tenure is only 18 months in spite of those things. I know we like to assume a world without transaction costs, but those are considerable obstacles.

Also, I think people who say that's just what big tech companies are like are wrong. Just compare the average employee ratings for comparable tech companies on GlassDoor with those of Amazon. Amazon is significantly below all of them. While their may be data flaws in that sample, I would assume they'd be equally affecting all the peer companies. I think it's like big consulting firms or banks. The culture matters - you put in long hours and work hard irrespective, but at least at the good ones the atmosphere is more collegial, while the bad ones can be brutally Hobbesian. This sounds like a bad one.

OK so this one actually *was* funded by the Koch brothers.

You can live in the USA on $10,000/year (http://earlyretirementextreme.com/). One could argue that people in developed countries are crazy to work so hard, and yet they do, so maybe they like it.

Even the hippies at http://www.permies.com/ end up working hard.

For some work is a hobby. It is competition. Some people spend a huge amount of time playing sports for the same reason.

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