When Cato Institute co-founder Ed Crane offered me a job in 2003, he acknowledged that the salary potion of the offer was arguably below market. At the same time, Crane’s boundless belief in the importance of Cato’s mission rendered him less likely to accept “no” from prospective employees.
In which case Crane reminded me of the certain “psychic income” that would come with employment at Cato. Fascinated by policy and the libertarian approach to policy as I was, lower pay would be mitigated by a brilliant atmosphere defined by really smart people. Even better, I would get to talk policy regularly with Cato’s wildly successful donors.
If you read the acknowledgements in my books today (including the most recent, The Money Confusion) you’ll see that Crane was both persuasive and right. I accepted the job at Cato, and to this day I have very close relations with countless Cato donors who’ve had a huge influence on me. The “psychic income” more than covered any salary shortfalls.
This came to mind last Friday while asking Amazon’s Alexa what the weather would be that day. On its own, the fact that Alexa exists to simplify and better my life is proof alone of the genius of corporate profits, and enormous wealth born of those profits that, as evidenced by Amazon’s market cap, are expected to soar over time. This is good news for Amazon users that the market expects its present and abundant range of services to expand in gargantuan ways in the future.
Plus there’s more to it. After Alexa reported to me the weather outlook for that day, she asked if I would like to thank the Amazon driver who had dropped off some presents at our house the night before. For background here in case readers aren’t already aware, with Christmas on the way Amazon’s delivery team is working even more around the clock than it normally does. Eager to gift customers with a seamless Christmas season, it has its drivers working seemingly non-stop.
Which means I naturally instructed Alexa to pass on thanks. And I’ll do so again and again. Christmas is the best time of year, and Amazon very much improves on what’s great.
From there, stop and think about what Alexa’s request says about Amazon’s treatment of its employees. Plainly wanting them to be jazzed about their work at a time when the hours are very long, Amazon seeks all manner of ways to show its workers appreciation. Some would refer to it as “psychic income.”
To which skeptics will say that Amazon is showering its employees with empty words instead of extra pay. The skeptics completely miss the point.
They do given the basic truth that low-paid and underpaid workers are incredibly expensive. In other words, even if Amazon wanted to rip off its workers it wouldn’t do so simply because an unhappy work force during the holiday season would likely lead to reduced customer satisfaction outcomes, worker absenteeism, or worst of all, employee departure. Imagine employees quitting on Amazon right now: skeptics will say that mass job exiting would lower Amazon’s costs, but only at the expense of unhappy customers at a time when Amazon’s failure to serve is most visible. Worse, a failure to meet the needs of customers in 2022 will result in reduced trust in the retailer in 2023 and beyond. Again, unhappy workers born of low pay are very expensive. Simple common sense.
All of which explains why Amazon doesn’t just look for opportunities to thank its workers in all manner of ways, but it also searches for ways to increase employee pay. Indeed, it’s investing enormous sums in automation not to put its employees out of work, but to greatly improve their productivity. Translated for those who need it, Amazon invests heavily in its employees because it desires to pay them much more. Happy Holidays.
