At least part of the takeaway here has to be that employees themselves bit as hard on the "Covid=new paradigm" idea as the employers themselves, and that now they are getting burned for it, just like the employers themselves.
What else is there to takeaway? They knew they weren’t working for a remote-first company. They knew what their contract said. They played a dangerous game and now they’re finally burned. You cannot collect an Amazon salary living out in Idaho or Nebraska.
While you cannot collect an Amazon salary out there - because Amazon won't pay you if you live there, you can collect a similar salary out there from other companies that just need good people and pay them well. Of course you will need to wade through the companies that figure since cost of living is less out there they should pay you less. However wages are competitive for full remote companies, so companies that allow full remote tend to not care where you live, they just pay enough to get the people they need.
Note, such companies do count what country you live in. You will make different amounts in US, India, Germany, and Mexico. For legal reasons people who live in a different country are not equivalent to each others.
"similar salary"? Be realistic – a random startup is not going to give total comp similar to Amazon... you need to find another remote-friendly FAANG to get that, and I don't know if any of them are even hiring right now, let alone hiring full-remote
It's a version of the prisoner's dilemma. They could do that, and they arguably should do that. But it won't scale to everyone doing that, and so it breaks down to a remote person with lower cost of living volunteering work for a bit less, in order to secure a desired position for themselves.
So you are indirectly saying that they will form a union. Human greed will say that the developer in Seattle(or others) will not agree to it and look for a better deal for himself/herself.
what if you had wheels instead of feet? there is zero mechanism for this and tech workers have shown again and again that there is not interest in a professional union.
Unions in the US have policies that tech people do not want. Often they are backed up by law, so you cannot legally form a union that gives you the good without the bad.
I suppose an overly optimistic employee could have thought that remote work is supported by the data, therefore it would be likely for Amazon to adopt it.