5 ms·

Amazon's RTO is likely worth $100M / year based on the tax subsidies they haven't gotten from Seattle for 2022, 2023, and 2024. https://goodjobsfirst.org/amazo

by shagie 2y ago

Amazon's RTO is likely worth $100M / year based on the tax subsidies they haven't gotten from Seattle for 2022, 2023, and 2024. https://goodjobsfirst.org/amazon-tracker/?state=Washington https://goodjobsfirst.org/amazon-tracker/?state=Washington 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-transit-use-lags-pre-pandemic-levels-by-a-lot 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-office-downtown-seattle-revival 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.

Mengkudulangsat 2y ago
Wow. Talk about perverse incentives!
- bongodongobob 2y ago
  What is perverse?
  - fuzzfactor 2y ago
    What is incentive? Asking for a friend, an Amazon employee . . .
  - Terr_ 2y ago
    The wasteful inefficiencies of unnecessary commuting?
    - bongodongobob 2y ago
      Who said anything about commuting?
      - Terr_ 2y ago
        > What is perverse? > Who said anything about commuting? 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.
        bongodongobob 2y ago
        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.
  - ehnto 2y ago
    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.
    - bongodongobob 2y ago
      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.
      - JohnFen 2y ago
        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.
        marssaxman 2y ago
        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.
        ehnto 2y ago
        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.
reaperman 2y ago
$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.
- fuzzfactor 2y ago
  That is interesting. 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.
- onlyrealcuzzo 2y ago
  $100M isn't even a rounding error to Amazon.
- ninth_ant 2y ago
  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.
  - ok_dad 2y ago
    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.
hinkley 2y ago
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.
seatac76 2y ago
Given how aggressive Amazon has been to get tax breaks in the past, I wouldn’t be surprised this was actually a factor. Good find!

by shagie 2y ago

Mengkudulangsat 2y ago

Wow. Talk about perverse incentives!

bongodongobob 2y ago
What is perverse?
- fuzzfactor 2y ago
  What is incentive? Asking for a friend, an Amazon employee . . .
- Terr_ 2y ago
  The wasteful inefficiencies of unnecessary commuting?
  - bongodongobob 2y ago
    Who said anything about commuting?
    - Terr_ 2y ago
      > What is perverse? > Who said anything about commuting? 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.
      - bongodongobob 2y ago
        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.
- ehnto 2y ago
  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.
  - bongodongobob 2y ago
    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.
    - JohnFen 2y ago
      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.
      - marssaxman 2y ago
        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.
        ehnto 2y ago
        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.

reaperman 2y ago

$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.

fuzzfactor 2y ago
That is interesting. 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.
onlyrealcuzzo 2y ago
$100M isn't even a rounding error to Amazon.
ninth_ant 2y ago
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.
- ok_dad 2y ago
  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.

hinkley 2y ago

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.

seatac76 2y ago

Given how aggressive Amazon has been to get tax breaks in the past, I wouldn’t be surprised this was actually a factor. Good find!