> “What’s clear is that Google doesn’t have to do this,” Rosenfeld told Reuters. “Google has paid these workers at 100 percent of their prior wage, by definition. So it’s not like they can’t afford to pay their workers who choose to work remotely the same that they are used to receiving.”
This right here is the money quote. Google is rolling in cash while paying its employees $X, no matter where they are. Now, they want to say "Oh, because you live in $PLACE, we're going to pay you less."
Did the value to Google of the work these people are doing suddenly go down? No, and not even if they were previously working from San Francisco and now working from South Lake Tahoe, or even Bumfuck Nowhere.
Google knows this. That means this can only be either an attempt to force people back into offices (which are located in more expensive areas), or an admission that they're not willing to pay people for the value of their work -- literally, not paying people what they're worth. Either one of these is a really bad look, IMO, and not really a smart move for Google.
In the next few years, I’d love to see statistics on corporations that owned office property vs leased office property and their attitudes on remote work post pandemic.
I’d say it’s a safe bet that corporations that had an easy out of their office footprints would likely have less of this type of return to office “encouragement”. Consequently companies like Google and especially Apple that have created these corporate owned campus monstrosities (err I mean “flagships”) would not want to have a billion dollar real estate asset on their books that sat around 75% empty.
This is understood. However, Google from the very beginning aimed at attracting the best people, not just with salary, but with time for side projects and so on, it was a part of their culture that made it attractive. It's a 180-degree turn now, they openly became employee-hostile. This kind of pettiness may seem insignificant but it leaves a bad taste and make the best talent think twice about their options.
Well I doubt you could call it really “employee hostile”, it’s more a shift to a more normalized benefit expectation for the industry and relying on the Google name prestige to separate it from the other companies in the tech sector.
It may not be what it once was…but employee hostile? Hardly.
This has always been true though. The employee in the London or Tel Aviv or Bengalore or Toronto offices of Google (or any other company for that matter) are not paid the same $ amount for the same role/contribution.
Companies have always paid people "market value", never what they can afford to pay (which for some companies is less and other companies a lot more).
When an employee's "market value" goes down, it does not warrant a pay cut though: the existing employment contract continues, and the value that the employee provides to the employer does not depend on the employment market.
In the US, employment is generally at-will, which means either side can unilaterally terminate the agreement but either way, these are the people whose employment conditions presently include having to physically show up to work. So, there's no "existing employment contract" here either legally or morally - if want to change one side of the contract (from working in the office to working from home), then it's reasonable for the other side of the contract (compensation) to have to be renegotiated.
Pay cuts are a pretty accepted alternative to layoffs during recessions... I think it certainly depends. It's more of an ethical question - as legally, I'm pretty sure the company can implement a salary cut whenever it wants.
If a recession caused Google to run out of money, the pay cuts could be justified much better, but that's not the situation at hand.
I think the ethics (and legality?) of arbitrary pay cuts go hand in hand with arbitrary firings: cutting a salary to $1 is essentially the same as a firing. Legality then would logically depend on whether the employment contract is under a state jurisdiction with at-will employment or if there is a requirement of a just cause.
When I worked in home-office based companies previously (job with lots of travel to customer sites), they paid a flat rate no matter where you lived.
I quite like the philosophy of "this is our remote pay, if you want to move to Bentonville, AR and live like a king have at it, but if you want to live in Manhattan that's on you."
But that has as much to do with the relative skill level in those particular markets and constrained to living in those markets in a pre-remote centric world as it does higher cost of living in those areas.
> Did the value to Google of the work these people are doing suddenly go down? No, and not even if they were previously working from San Francisco and now working from South Lake Tahoe, or even Bumfuck Nowhere.
I'm a senior developer who has chosen to live both in expensive cities like New York, as well as rural areas.
I knew moving to the rural areas I'd make less in pay with the companies there, I accepted this because it also came with a lower cost of living. My skills grew but my pay was reduced. So was my rent.
Under your logic the local companies should compete with San Francisco salaries, because I "could" be making that much there. When I moved out of NYC I wasn't expecting other companies to compete with my former NYC salary, that would be absurd. The pay is high there because the cost of living is high, not because that is specifically what my talents are "worth".
Yes, the fact everyone is remote now is making everyone second-guess this assumption about pay and location. However, prior to remote work you got paid relative to the cost of living in your area. Programmers in Fargo, North Dakota made far less than programmers in Los Angeles, even with the same or greater skills.
Yes, actually, you've got it exactly right. They should compete with SF companies for the type of workers SF companies want to hire and who have the capability to work remotely. In fact, they do, implicitly, because, by and large, people who can make SF salaries don't generally apply to companies that exist in rural areas in the first place.
I keep hearing the trope of "people are paid the value of their work" come up, and it's completely false and absurd. People are paid the market clearing price (a.k.a. better or equal to the alternatives, given some reasonable amount of searching effort).
Yes, this means there are many engineers in SF that are actually/currently paid MORE than they would be in an efficient market (and there are many software developers in developing countries that are paid LESS than they would be in an efficient market). Right now there's enough money going around that nobody cares about market efficiency, but if we have an actual, deep recession in the sector, I expect all the music to stop (and the efficiency of the developer market to go up on the whole).
In software we can pretend to ignore these discrepancies, but it becomes patently obvious if you've ever dealt with international companies who discriminate based on nationality for people doing the exact same job (and not in software, where you can argue talent - literally the exact same job - two performers doing the same act in the same show. I've seen pay discrepancies of up to 2.5X or more for an American Expat in Hong Kong and a worker from the Philippines, for example). It's all about what your individual alternatives are.
You don't get it. This is actually the free market in action. People love to talk about the virtues of the free market, until they actually get one.
In a normal labor market, companies can pay based on geographic concerns because employees aren't mobile. In the case of engineers, designers, etc., these people can work from anywhere, including San Francisco. So, they always have the opportunity to make SF wages by working in SF.
But, the thing is, none of this changes when these same people move to Bumfuck Nowhere. The same companies are still competing for the same employees, who are capable of earning the same wages they were before. And, like it or not, SF is the place where a software engineer can maximize their net income after expenses. So, guess what? Companies in Bumfuck are now competing with companies in SF.
Remote work doesn't enable a truly free labor market, but it does significantly free things up.
Regarding people not being paid what they are worth, I know that. It's also bullshit, but that's another comment. And, as I said in another comment, you know that, I know that, and Google knows that, but there are lots of people out there who either don't know that, or just refuse to acknowledge it to themselves. And, if you're Google, you really don't want to open those peoples' eyes, because it reduces the information asymmetry about the process that you exploit in order to get people to work for less than they're worth.
> In the case of engineers, designers, etc., these people can work from anywhere, including San Francisco.
They can also work in Bangladesh. And unless you are thinking of standardizing pay for software engineers globally in any reasonable timeframe, this argument does not hold up.
What is an engineer worth? I have offshored to skilled developers at rates 1/5th the US rate, and they can do the same work.
The actual answer according to the free market would be to take every engineer of equivalent skill, globally, and find the average. That is what a software engineer is worth according to the market all of us are in.
Uh, I'm not an economist, but what you said doesn't make much sense to me -- isn't "the market clearing price" effectively the same as "people are paid the value of their work"? If the value that a software engineer can potentially produce is lower, then wouldn't the corresponding market clearing price would simply be lower for that person?
Maybe in a world where every software engineer is genetically engineered to have the same output then what you said about market efficiency would make sense, but this isn't that world.
The thing you said about price discrimination is not even related to what the OP said, and you simplified the problem a lot by reducing the problem simple monetary terms. The example you gave about expats is particularly flawed, because it's not unusual that expats are paid more for other values that they bring outside of the work they perform (for instance, academic institutions think of that as prestige in some Asian countries). We were all born unequal, if the market were so efficient there wouldn't be so many unjust things happening around the world.
No, since there is no good way to measure how much a person's individual work is worth (in software engineering). There are ways to do that in finance and sales - that's why the pay bands for those fields are so much wider.
I think the reality is the best engineers are probably worth on the order of multiple millions per year or more (assuming they are working at a place with leverage), and the average engineer is probably worth much less than they are making now. That's the power law we see with YouTube creators, for example. If people had reliable ways of identifying who is actually a really high performer, the pay bands might look more like that. The pay smoothing (since it's hard to make an accurate measurement of efficiency) actually benefits the average engineer over the super high performers.
Also, because the employee is at home now they can allocate that office space and resources to someone else. They are saving on individuals working from home! They should be compensating for office equipment at home.
> Did the value to Google of the work these people are doing suddenly go down?
No, but pay has never been about just the value provided. It's (value * leverage).
Janitors provide plenty of business value, because a clean workplace is important. They have low pay because they're relatively easy to replace, so they have no leverage.
If you move to an area with a weaker economy and fewer high paying job opportunities, you've reduced your leverage, so your pay going down isn't surprising.
Except that a Google employee moving to someplace with a weaker economy has not reduced their leverage. These are people who have the power to simply move back.
> Except that a Google employee moving to someplace with a weaker economy has not reduced their leverage. These are people who have the power to simply move back.
A Google employee that moves away both changes the pool of options that employee has (only companies that offer remote or local ones in his new place of living - versus companies in (SF, NY, whatever)), and the alternative options that the employer has (he is now being compared against a much larger pool of people who can work remotely). That is indeed decreasing leverage.
> Again, not true. That employee can simply... move. You've ignored that.
Well, yes, but we're arguing that they have the same leverage in their new place of residence as they did before the move. If they have to move back in order to exercise that leverage, their leverage is actually location-based, and they will have to choose between their old salary and old location and new salary and new location.
Yes, and they exercise their leverage by applying to those SF or NYC companies from wherever they are. If they can exercise that leverage from anywhere, then how is that not having leverage?
These companies are used to this sort of thing. Relocation costs are nothing compared to the cost of hiring. There is effectively no friction on the company's part. Yes, the employee needs to be willing to go through the process of moving, but, provided they're willing to pay those costs, their leverage in the situation is unchanged.
Those frictional costs (of moving) are the whole problem. SF salaries are where they are at because of those frictional costs (people choosing not to move to SF, whether by personal choice or by way of visa restrictions etc).
Yes, there is a subset of people that have disproportionate leverage no matter where they are at (by virtue of being really really good devs). But that represents only a minority of SF devs.
That's just the thing. Companies know that, at any given point in time, many people will be unwilling to pay those costs.
A family of four enjoying a large house in some suburb for a reasonable price may find the idea of living in a 2br apartment in SF, or paying a truly exorbitant price for a single family home in the bay area, unappealing.
They absolutely have. It's much easier to switch jobs without moving than to get a job that requires a move. Their leverage isn't totally gone -- especially since full remote jobs are becoming more common -- but it's definitely reduced.
When you move, it's not just the hassle and expense, but also the life changes. Especially if you have kids, those are big.
Experienced software engineers in general are capable of moving to practically any major metro if they really want to. By your reasoning, all of them should possess the same pay scale, the same cost of labor.
> Experienced software engineers in general are capable of moving to practically any major metro if they really want to. By your reasoning, all of them should possess the same pay scale, the same cost of labor.
Yes, and the cost of labor in that case is not everyone getting an SF salary, it's everyone getting a much lower (but equal) salary. Part of the reason that SF salaries still exist is that the US has a very tough immigration system and artificially restricts the number of people who can claim one of those SF salaries (H1B quotas etc). Same thing for doctors (foreign doctors mostly can't practice medicine in U.S.), lawyers, etc.
Believe me, there are Russian programmers earning 1/3 of a U.S. engineering salary that are much more technically competent - the only thing stopping them from capturing the true "value of their work" is that damn market (and U.S. immigration system...)
The SF salary is high because of high demand and low supply (of competent engineers). If you move remote, you increase the supply of competent engineers (there are likely people in middle-of-nowhere that are just as good as SF engineers but don't want to move because of other reasons - hence market inefficiency). Since you're increasing supply with the same demand, now the SF salary is going to drop (and establish a new market clearing price with the new supply & demand dynamics).
I think in the long run the SF salary (for the average developer) will be a historical anomaly in a place and time - kind of like the California Gold Rush in the 19th century.
(If your argument boils down to SF having more strictly more competent engineers than other places and that being the cause of the pay discrepancy, I strongly disagree)
Google has problems money can't solve as a company. I personally won't, and I coach juniors to stay away from many of the big names purely because of their toxic influence in the tech sector. They are of course free to do as they like, but I have an alright success rate with getting people to pass on those jobs to do something somewhat more constructive elsewhere.
It's like Fintech; a black hole of talent away from actually important work that needs to be done. You get that much capital condensed under one company, and it starts to channel itself against overall societal interests as it seeks to ensure it's own survival distributed across jurisdictions, fueled more by ignoramt adherence to past performance predicts future results amongst the capital management class implicitly picking winners through retarded capital overvaluations through overly aggressive M&A's and purging of the competitive landscape.
A lot of people simply overestimate how irreplaceable they really are.
If the 1/100 Google employees that are actually hard to replace (and Google knows it) threatens to leave unless they keep their Bay Area salary, they won't get their pay adjusted.
The only thing they've ever really cried about is the salaries they have to pay to get the workers they want.
With remote work becoming more of an option, the candidate pool is larger, and so the salaries they have to pay to get the workers they want are going to go down.
They are doing it because in lower COL area people with Google salaries can become financially independent much sooner compared to if they had to live in Bay Area. Financially independent people are much less likely to tolerate shitty bosses and dull projects.
Paying people simply what they are used to being paid is even less fair than what they are doing. Given that they already have location adjustments, if they simply let people keep their comp regardless of their move, employees that moved to Boston from SV and now work remotely from Boston would be paid more than employees who were always in Boston and still work in their Boston office. Remediating this would require increasing everyone's pay outside of their top market (Is it just SV and NY? Not sure) and that would cost significantly more.
Maybe for now. Do you really think they're going to be able to attract top talent in 5 years if this policy continues? I also expect that if this holds, there will be a fairly large exodus from Google to companies that don't have such a policy.
your living expenses get factored into your pay, it's why you (at least used to) hear of secretaries in nyc making over 150k. most of it goes to rent and other living expenses.
It is? So, there's an adjustment for people with families, then? And that adjustment gets larger for people with bigger families?
Although I truly don't know the details here, what you are saying is not logically consistent with how these types of things are typically implemented. It's just "you live $HERE, so you make $THIS_MUCH," with no actual regard for expenses.
The relationship isn't direct, but it ends up roughly working out this way, because whenever a company has a choice between two or more candidate employees, they bid the salary down to the point where one of them walks away. The point at which walking away happens is going to be related somehow to the cost of living in that location.
There are a lot of idealizations in that explanation, as I said it roughly works out this way.
the market does the factoring for them. to acquire the talent they want in a place like nyc they have to at least pay them enough to live close by. its a lot more expensive there than most other places. this until recently was a factor that affected everyone in the office, because they all have a certain amount taken out of their checks from society just to be in the proximity of their employer.
Google is sitting on $158 billion in cash and one of their founders is a resident of New Zealand. Seems a strange time to be that tight fisted with all your developers. Or as an outsider am I not seeing it correctly?
Worker compensation in Corporate America has a cost of living adjustment (COLA) multiplier. It’s calculated as part of the salary base and takes into consideration the location of the worker, among other things, in adjusting up or down offered compensation.
Google is simply making this transparent to workers. Just because someone was hired in a high COLA multiple location doesn’t mean they’ll keep that multiple when they voluntarily relocate to a low COLA area.
This is standard HR practice across all of Fortune 500.
Called this last year. This will become more prevalent in the industry as time goes on. Tell your boss you’re moving to San Francisco and if your employer bases your salary on your zip code then your pay should be going UP
It’s just like how businesses love to incorporate in Delaware or tax havens. All Employees can be based out of sf regardless of where they actually do their business. Just make an app to let people rent out their mailbox and forward it. When 500 people use the same address it will be just like the companies do!
As the sibling commenter suggested, it's not as simple as renting a mailbox -- HR departments and tax collection agencies are not that dumb.
However, I suspect that one reason the housing market has gotten so crazy (California perspective here) is that many Silicon Valley tech folks bought houses in Sacramento/Tahoe/$CHEAP_PLACE while also keeping their houses in SV but renting them out. As long as the rent payment covers most of the mortgage, they build equity and eventually own the house, while also having a nice big house to work remote from. And perhaps they quietly keep using the SV house as their official residence for HR/tax purposes.
There are some tax and work permit/visa consequences so it's not as simple. E.g. someone who can not legally work in the US may have a problem presenting a US bank account and an SF mailbox. The requirements may vary in different countries/states.
But I agree we may be headed towards a future where pay is no longer a function of location. If you can't tell where an employee is physically it's a lot more difficult to have location based payments. A remote employee can be anywhere. When I worked remotely (way before the pandemic) I spent some time working from Hawaii and my employer did not even know.
possibly, but it's against the rules, they'd be living a constant lie and there would probably be repercussions if they were found out and didn't have political cover. Might not stop some employees from trying.
Facebook will also scale salary by location; I have never and almost certainly will never work there but they said they will check VPN logs, and in the past have used IP and geo data from their app to determine locations of employees and users who were potential security risks. Regarding VPN and remote work:
<quote>
Facebook said it would enforce the new work-at-home policy mostly by the honor code, but that it plans random checks of employee VPN addresses—the tool used to securely access the company’s network remotely—to confirm their locations. Any employee that is caught lying will face “severe ramifications” as it could affect some of the company’s tax filings, Zuckerberg said, adding, “You may be breaking the law.”
</quote>
I don't want to second guess them but random spot checks seem like more work than an automated job that looks at all vpn connections and matches to primary employee location.
My all remote company specifically states that if you move to a higher cost of living area they will not adjust your salary but if you started out in that higher cost of living and moved to a lower cost of living area they will not cut your pay.
>Screenshots obtained by Reuters show that Google employees who previously commuted an hour to Google’s Manhattan offices from nearby Stamford, Conn., for example, would see their salaries slashed by 15 percent if they choose to continue working from home. By contrast, “Googlers” who live within NYC’s five boroughs and choose to work from home permanently would not see their pay slashed at all.
This seems silly to me. That CT employee likely commuted to the NY office pre-Covid (a huge percentage of people who work in NYC have always lived in NJ or CT for COL issues). If they choose to work from home, how are they any different from an employee living in NYC who chooses to work from home? This is not at all the same thing as someone moving from SV or NYC to rural Wyoming to arbitrage COL differences as a remote worker. The CT worker is capable of actually being in the office within an hour if something came up requiring them to be, the guy who moves to WY is not.
Lots of people here calling this gross, but at the end of the day I’m willing to bet there a lot of qualified engineers living outside of a Google city who would be stoked to work for 50% of a Google salary, let alone 85. Are they gross for accepting that offer?
You’re in the business of selling labor and Google is in the business of buying labor.
This is just a cynical attempt to push down wages.
They should pay workers (and workers should demand) based on how much they are worth to the company. Remote workers should even get a 'rebate' since they no longer need the company to pay for expensive office space for them.
if they lower pay and still have the workforce they need, then that is their value, right?
it goes without saying that a company will cut wages as much as they can. if google paid its workers the value they created, then google would have no money.
Of course, there is an argument that the workers should indeed get all of the profits, after costs, including founder's IP, reasonable return to investors, etc, etc, since they are the ones creating those profits.
I don't get the angst around this. The happy feeling of getting exactly the same salary as earlier while spending much less wasn't exactly going to last. Companies have to pay lip-service to handling employees well and they managed to keep the salaries flat (at least most of them did). But the expectation that there is no going back to "normal" office life while continuing to get the full salary seems ridiculous and unsustainable. I am sure there are a few people who can demand and get whatever salary they ask for, but that's clearly not going to be true to the vast majority.
This is, frankly, disgusting. What a way to show how little they actually care about the very people bringing in the tech and fresh ideas that keep Google afloat...
Isn't remote work obviously good for the environment, especially in the big cities like SF and Seattle? Shouldn't Google, MSFT, Apple, et al be encouraging more remote work - given their size their local impact on rush hour traffic is likely noticeable.
Maybe this is another area where government needs to step in and mandate all employers over a certain size allow work-from-home with no pay consequences.
> Isn't remote work obviously good for the environment
Probably not, since it seems to encourage suburban and rural sprawl?
There's commutes to factor in too, true, but I don't know if that's enough.
> especially in the big cities like SF and Seattle?
Big cities are good for the environment precisely because they keep large numbers of humans within a small area. Imagine if NYC's population suddenly spread out to all live in detached single family homes on large lots. The environmental devastation would be enormous.
In any case, commutes don't have to be that bad for environment. Electrically-powered public transit, or biking, have a marginal per-person impact on the environment, relative to the US standard of a person driving themselves a long distance in their gas car, alone.
Although I wonder what will happen to US tech salaries as many companies become even more comfortable with remote work, I'm having trouble finding a way to get upset over this move.
At least at the pay grades that greatly exceed comfortable living needs, 5%-15% to WFH could be a great quality of life deal, even before taking possible lower housing&commuting costs into consideration.
At lower pay grades, where 5%-15% cut in isolation could be very painful or nonviable, if WFH means a parent doesn't have to pay child care (or pays less for care, like part-time older neighbor kid), is that a good financial deal for the parent?
Maybe one situation in which to be upset is if you're much more productive WFH; in which case, even though a pay cut for WFH is a good immediate deal for you, the company is getting much more out of the deal than you are?
Google & other tech companies that can shift their force to remote can be expected to offload real estate to an MLP and restructure remote workers to 1099 contract employees. This probably would also enable them to get around pesky H1B rules to further reduce costs. They can't do that for every project or function but, remote workers might want to reconsider their fight to stay home.
There is an overwhelming part of Google's employees in SV, but seeing this from the company's perspective: they're either going to have to take the battle with all other offices who now want the higher SV salary, or they have to take the battle with only the highest-paying office.
It'll be way cheaper--and hence the obvious corp strategy--to lower salaries in SV than increasing them everywhere else (because everyone is already "remote from SV").
What I'd like to know is whether they're docking the pay of that exec dude who's working from New Zealand. Although I'm pretty sure he's made enough to not care.
There is no good way to measure the value generated by an individual engineer in most cases (in large enough companies), only the total/average value produced by a group of engineers - and even then, it's a first order approximation. Hence, the market is not efficient.
Was that salary cuts on the signed contract in case of work-from-home situations? If not then I don't see a reason for Google to do salary cuts or explain them to their employees.
Has any company said that they think their workers are less productive when WFH? Or less productive when less able to meet in-person on occasion? And so rate less pay for that reason?
I thought Google was not allowing work-from-home except in exceptional cases. Does this tool mean that is not the case and they are providing the option more generally?
will there also be an adjustment of the fewer resources the employee is going to use while working remotely? Eg, office space, internal food and drink subsidies....
It's not just adjusting salaries based on location. It's slashing people's salaries by quarters and halves even if they have been working at the company for years just because they moved somewhere cheaper.
Your value hasn't decreased just because you live in Wisconsin instead of California. Your contributions are the same and you are just as productive of an employee. They have no right decreasing your salary just because they can get away with it.
Have you missed out on the last 50 years of history of American labor and union busting? Programmers are not special snowflakes in this regard, just currently in a very friendly market environment, but don't think for a moment that the people in charge wouldn't do the same thing if they had the option to (which remote work certainly helps with).
I'm painfully aware. Programmers aren't special snowflakes but they have traditionally been well off in this regard. My worry is that if they are being targetted by these kinds of decisions that it legitimises efforts to increase actions against who don't traditionally have as much social mobility.
https://news.ycombinator.com/item?id=28127240