They get these subsidies based on having people employed in the office and generating economic activity in the area where they work, and public transport utilization, and so on.
It dropped from 20m / year in 2019 to 10m / year in 2023.
Amazon claims that with RTO, 7.5m of those trips are from Amazon employees that Amazon pays for ( https://www.aboutamazon.com/news/community/amazon-return-to-... ) - that's either the difference in public transportation or 75% of the current ridership depending on when this was measured.
That's likely a key part of why there's an RTO mandate - Seattle wants the economic activity back and isn't giving Amazon any more tax credits to the tune of $100M until they get their employees back in the buildings.
$100M just isn't that much money though. That's maybe the compensation for 200-300 truly good-to-excellent engineers? RTO mandate seems likely to lose that many good to great engineers. $100M is 0.017% of amazon's revenue. At my income level that's equivalent to me telling the woman who cleans my house that she's done here because I found someone else who charges $1/month less.
I could see that potentially being one part of the overall calculus, but certainly have difficulty seeing it be a rational "driving reason" of all this RTO.
Agreed. Plenty of similar companies are making the same type of mandate despite having no tax incentives.
Quite clearly, execs at these companies believe they get stronger productivity from people working at the office, and this would outweigh any attrition from people leaving from RTO mandates. I don't care how many people scream about how that's false -- what matters is that the people making these decisions _do_ believe it.
Maybe the tax incentives are a nice bonus, but there's no way it's the entire picture.
The CEOs also have investments and buddies with investments in CRE, not to mention the companies themselves with the actual offices. Probably it’s more about the real estate than anything else.
I just don't buy this. It might be why the media is pushing an "end work from home" narrative but I don't believe the majority of execs are making the decision due to this reason. I think WFH just exposes that without the ability to physically harass and micro-manage people they don't provide much day to day value.
It’s probably a bit of everything we said here, plus cargo culting. WFH is probably more effective for some individuals and orgs and offices for others. I personally need it, because where I live has no real software dev jobs.
That won’t explain the prevalence of RTO. Most CEOs are not involved in CRE and being involved with renting out your office space to your own company is a conflict of interest.
The simplest and most likely explanation is that they think it’s better.
If I had my way each engineering-level employee would be the ongoing key to about $1M/year of income.
So regardless of any tax incentives, if I lost 100 top producers I fail to break even because there is no upside to paying the tax compared to paying employees.
Unless of course the executives are not very good at making money from employees having mad technical skills, compared to how easy it is for gov't money to roll in.
Yeah, I’ve never got the “it’s stealth layoffs” or “because we need to use the offices we pay for” or “for the tax breaks” arguments. The math just doesn’t work out.
Staff are such a huge part of costs, and the difference between your good staff and bad staff can break a company. Adopting any policy that would encourage the staff who can go elsewhere (the best ones) to leave and be left with the ones who can’t (the less good ones) is such a huge risk, you wouldn’t take that position for a few million dollars, but only if you believed it’s the best strategy long term.
It is interesting to me though that with so many companies taking this stance lately, many of them heavily data driven (like Amazon), that I’ve not yet seen any actual data or research that says “Here are some quantitive numbers on what we think having folks back in the office is worth”. Anyone got any data on this?
I doubt they would share their data, but do consider that the average tenure at Amazon is around 2 years and that they disproportionately hire a lot of recent graduates. We do know that junior staff are mostly negatively impacted by wfh, so it’s a small step to seeing they need to bring the seniors back to mentor the juniors.
> There's also the question of even if remote work was more productive on the whole (and I believe this to be true) and that these productivity gains come from the more senior workers who are able to identify tasks that they need to complete and effectively shut the door on the office and focus ... while also being able to handle other things at home (being more productive because you can put a load of laundry in at noon or being able to get something to eat without having to go all the way to the break room)...
> So, grant that on the whole productivity is higher with WFH for mid level and senior level individual contributors ... junior ICs may be suffering quietly without more direct mentorship, the listening in on ad-hoc hallway meetings, managers being able to pick up on work stress more easily.
> It would be very easy to imagine a conversation at some director level (where I'm making up the numbers)... "From 2020 to 2024, we've seen the number of junior ICs advance to mid level drop from 20% to 16% compared to 2016 to 2020. This is a declining trend and when looked at year over year 2020 to 2021 had 8% advancement while 2023 to 2024 only showed 4% advancement. Furthermore, the senior ICs are comfortable in their role and the number of them moving up to management has dropped from 5% to 3% in the 2020 to 2024 time frame. If this continues, we may be looking at a lot of unsatisfied junior developers who are not progressing and a lot of satisfied senior developers and leads who would traditionally shift to the management track... well, not take that step in their career progression."
> Yes, that's a just-so story. I find it to be a believable one.
> So even if everything is great with remote work currently for productivity, some trends may be showing a problem years down the road where people are not improving and the company as a whole is stagnating (even more).
Right: so many of the decisions to treat employees poorly, going way back before the pandemic and the rise of remote work, are not about money (though they are usually justified by talking about money in a superficial way); they're about power, and classism.
If our Just And True Overlords (ie, the bosses) can't walk around and see the people they command doing everything they tell them with their own two eyes, then what's even the point of being one of the Just And True Overlords?
It's controversial because not all workers want to return to office.
If the only reason they are returning to office is for tax cuts to Amazon corp, that's perverse. Not unprecedented, probably the norm prior 2019. But perverse anyway.
In a scenario not perverted by tax incentives, you would do what's best for individual worker's happiness and productivity. Some would stay WFH, some would return to office, probably a lot of hybrid situations. But very unlikely would it be mass return to office.
The city wants people to live there and put money into the economy. I don't see what's wrong with that. Cities need people to live in them and spend money there.
Coercing people to live and work there is, at the very least, extremely objectionable. If a city can't get people who actually want to be there, perhaps there is a deeper issue that should be addressed.
Seattle has no problem at all attracting people who actually want to be here! Quite the opposite: building enough new housing space for all the people trying to move here has been one of our more significant problems for many years now.
I don't think it's about housing in the metro and inner metro, I think it's about commercial real estate and businesses in the CBD areas and business parks.
People definitely want to live in the city areas still for the lifestyle, but not everyone can live there so most still commute. Commuting sucks, people don't want a commute.
But without commuting, the amount of business (and thus rent, thus tax income) that a CBD can support is much smaller.
Better public transport would help reducing the pain and cost of commuting, maybe that helps the CBD areas bring more people in.
I think that’s a red herring. People would rather be told the reasoning directly for something that affects their lives instead of a bunch of executives spinning a tale that makes them look benevolent.
Commuting is implicit in any RTO discussion and it's also been explicitly mentioned in parent comments, so both of these "questions" of yours are starting to look like bad-faith trolling.
I guess I'm not assuming that all of these people live far away. If it's RTO, my assumption is they used to live close. If they moved, I guess that's a different story.
Boeing used to get a tax credit for trying to keep its employees from engaging in cross town traffic. Seems like maybe Amazon should have gone for a different deal.
The thing about this kind of story is they could have found two employees "rage applying" for new jobs and then they can say "employees," as if it's thousands. Not sticking up for the company, but this kind of reporting trick is pretty douchey.
Just as Andy hoped. He'll cut headcount without layoffs and the ones left will be the ones who couldn't get jobs elsewhere. Those who couldn't find work elsewhere will be easier to abuse because they will believe they don't have other options.
Amazon is facing a looming crisis: It could run out of people to hire in its US warehouses by 2024, according to leaked Amazon internal research from mid-2021 that Recode reviewed. [...] “If we continue business as usual, Amazon will deplete the available labor supply in the US network by 2024,” the research, which hasn’t previously been reported, says.
Why do people keep touting warehouse numbers when the RTO conversation comes up? It's not like the warehouse employees are the ones working from home. It seems like such a bizarre thing to bring to the conversation. I get that warehouse employees have a rough go, but it's a totally different conversation.
Warehouse wages will rise until it’s more economical to automate the remaining jobs that have not yet been automated. Then there will be no warehouse employees.
Amazon has had to raise warehouse pay [1 [2], definitely screams labor shortage to me. This makes sense considering structural demographics and a shrinking participation rate in the US labor force [3]. I would not have expected Amazon to just ¯\_(ツ)_/¯ and say "we are all out of workers"; they have to compete like everyone else for a shrinking pool of folks.
They have run out of folks to abuse at the previous price point. The wage floor will continue to rise. Even Bank of America is raising wages for tellers [4]. Demographics are destiny, all that jazz.
[3] https://www.ebri.org/retirement/content/new-research-of-u.s.... ("A new research report published today by the Employee Benefit Research Institute (EBRI) taking a historical look at labor force participation and employment data in the United States found the prime working age population (25–64 years old) has significantly fallen and is being filled by older workers. At the same time, the labor force participation rate of those ages 65 or older has not reached its pre-pandemic level, while that of the prime working age population has reached that level")
[4] https://news.ycombinator.com/item?id=41500201 ("Bank of America is pledging to pay its bank tellers and other hourly workers at least $24 per hour starting in October. The company says that this pay raise, from $23 per hour currently, will affect “thousands” of its 212,000 employees. The wage increase will particularly affect tellers and other customer-facing employees, such as call-center workers.")
(~10K Boomers retire per day, 3.6M per year; ~1.8M people 55+ die every year in the US, ~5k per day; roughly half of which are in the labor force, so ~2.5k workers actively in a job die each day; ~20% of the population is retired today, in 10 years that'll go to ~30%)
Along with the existing productivity dip due to lowering of the hiring bar to meet DEI KPIs, and with this brain drain of their top talent, it is going to be a rough ride for Amazon.
Desperate people work harder and longer for less pay. That's pretty much peak number go up. It's a horrible long term strategy, but companies are not minmaxing for long-term retention, nor even quality at this moment.
Sometimes companies forget that their entire existence relies on a middle class that has money to spend.
Way back in the 60s in my country the government in consultation with the business world came up with a genius idea: give everyone a bonus pay check to spend on holidays. It created entire leisure industries nobody could imagine.
Right. We're only really dealing with the population of employees who strongly prefer working from home.
That's likely disproportionately employees who have families (hence a commute), so skew older and more senior. These employees will take the secret sauce they learned over many years at Amazon and spread it to startups and other orgs.
Anecdata, the younger people in my team are reacting worse than the more senior ones. Senior / more tenured their response has been: "well, this is how it was for the past 20 years before COVID". While the juniors are the ones who dislike the idea of long commutes, less WLB (no more quick errands during work) etc.
I struggled with the wording there and got it wrong.
I didn't intend to imply incompetence or anything negative.
Some folks have made choices to commit to things and take up responsibilities requiring stable, location-based employment.
"Couldn't get jobs" should be taken to encompass anyone that is subject to labor market friction of any sort.
Local government has likely realized that tax revenues have increased with Amazon's three-day RTO over the past year and naturally wants more of it now.
The last layoff was bottom-heavy, primarily targeting L4s and L5s. This has left Amazon top-heavy. One of the reasons why no raise this year L6 and above. Reckless promotions over the past three years have driven salary expenses higher. I see PEs in my organization who don’t deserve their titles.
Replacing tenured employees with fresh graduates could lower the company's salary expenses. Additionally, I believe that L5s and below tend to spend more on food, transportation, and other expenses compared to seasoned employees who have families and more significant expenditures. This could lead to increased revenue for the local government—a win-win for both parties.
Amazon does not want to spend money on severance, as being frugal is one of its leadership principles. The company is likely trying different tactics to encourage people to leave, using severance as a last resort. I personally feel that Amazon overhired by around 50,000 during the pandemic, and the layoff of 27,000 was suboptimal.
Why now? Aside from local government pressure to drive state revenue, I believe leadership has recognized that Amazon's stock and revenue are likely to remain flat in the upcoming years, making significant growth unlikely as it was in the past. They would want to optimize profits, naturally leading to more junior hires if needed, forcing seniors out, and keeping local government satisfied. A win-win for all?
My advice to Jassy and the S-Team:
1. Ensure that your flattening of the curve exercise is fair at all levels, guaranteeing each level a degree of influence not just at the immediate level but throughout their organization. I have seen two L7s managing 40 people, with no reporting structure indicating a reasonable span of control. Establish rules such that L6s have 8 (min) to 10 (max) reports, L7s manage between 48 (6 teams of 8) to 70 (9 teams of 8), Directors handle 4 * 50 = 200 (175 min, 250 max), VPs oversee 800 to 1200, and SVPs manage 10,000 to 15,000. If the desired corporate org size is 250,000, ensure there are around 25 SVPs, 250 VPs, 1,250 Directors, 4,200 L7s, and 25,000 L6 managers.
2. Reassess the roles of PMTs and TPMs and the value they bring. Rarely do these individuals fulfill their intended roles. Their responsibilities need to be clearly defined, and OKRs must be set for what they are expected to accomplish. It’s not their fault; VPs, L8s, and L7s often offload their tasks onto them. Check when the last time these leaders authored say strategic documents themselves.
3. Many Kingpin goals are lacking. They rarely contain good metrics as success criteria or justifications for prioritization. Your L8s are unlikely to adopt metrics-driven goals, often opting for launch goals instead. I would bet that 70% of goals are launch oriented rather than metric driven. Establish a rule that at least 80% of goals at the Director level should be measured by metrics. Each Director should have one S-Team goal; otherwise, what is the purpose of a Director managing a 200-person organization? Startups build billion-dollar businesses with similar-sized teams. Shouldn't Directors be able to do the same? Encourage them to adopt S-Team metrics-driven goals. If they cannot, reconsider the necessity of the L8 position in that organization.
4. There is too much bias during talent reviews. Your HRBPs focus primarily on diversity bias (which is important) but rarely assess bias from other angles. I have seen top-performing individuals marked as LE for trivial reasons. Your HRBP organization needs to be revamped and trained to look beyond diversity bias. In talent reviews, they often aim to please the L8s they support, leading to agreement rather than objective assessments.
Many more suggestions, but I’m too tired to write them all out.
Imagine that, a multi-billion dollar company who treats valued employee like just-a-number/trash. I wonder if there's someway they could group together and somehow force the company to recognize their numbers and their value?
If you currently work at a publicly traded company, you're definitely just a number. If your company doesn't show continuous growth quarter after quarter and they announce layoffs, your stock will likely jump up that day.
Amazon has survived the dotcom bubble collapse, the Great Recession, and a global pandemic. Whatever happens here with talent loss will be meaningless.
Perhaps you are suggesting trying to Unionize? In most public sector unions, the politicians hold all the cards of a union (Example: http://tiny.cc/b7xnzz). I wonder any checks on Amazon type companies is possible in the US, even if employees were successful in forming a union.
They get these subsidies based on having people employed in the office and generating economic activity in the area where they work, and public transport utilization, and so on.
For example... public transport in Seattle: https://www.axios.com/local/seattle/2023/12/18/seattle-area-...
It dropped from 20m / year in 2019 to 10m / year in 2023.
Amazon claims that with RTO, 7.5m of those trips are from Amazon employees that Amazon pays for ( https://www.aboutamazon.com/news/community/amazon-return-to-... ) - that's either the difference in public transportation or 75% of the current ridership depending on when this was measured.
That's likely a key part of why there's an RTO mandate - Seattle wants the economic activity back and isn't giving Amazon any more tax credits to the tune of $100M until they get their employees back in the buildings.