6 ms·

Why Google's Plan to Cut Remote Worker Pay Is a Bad Idea

17 points by johncena33 5y ago

prepend 5y ago
> But cutting pay for existing employees who opt to work from home is a terrible idea and it shows a complete lack of emotional intelligence. What in the world does this mean? Cutting pay for temporary telework is stupid, but cutting it for long term agreements that are willfully made by the employee makes total sense. It seems ludicrous to me to pay Silicon Valley rates to someone living in Montana. The pay is based on cost of living and labor supply constraints. And both of those are eased by people working remotely in low cost of living areas. If they don’t do this then they’ll end up paying the high water mark everywhere in the world for fairness purposes and that will make it harder to compete. Imagine living in Lagos or somewhere and because you’re locally employed and always lived in Lagos you get Lagos wages. But someone who was hired in San Francisco and moved to Lagos gets San Francisco wages. How emotionally intelligent is that?
- zibzab 5y ago
  It means people can feel unappreciated and offended and that could cost Google much more than 10% in the long run. Basically, you sometimes need to stop counting beans and start considering people's emotions. It's not always logical but you must still consider it. I know a top engineer & manager who left a major company because someone decided his nice parking space that he had for 10 years should be given to someone more important.
  - prepend 5y ago
    True, but I assume they are counting the beans and thinks the costs are greater than the benefits. Lots of anecdotes about people who quit over reasons. But there’s many more examples of people who didn’t quit despite all sorts of weird stuff.
- jolen33 5y ago
  At the risk of this discussion devolving into a flamewar, I would just encourage you to do your own research about this situation. Regardless of all other arguments about location-based pay, Google et al have been paying their temporarily-remote employees 100% of their salary up until now. These companies would need to spend lots of resources to legally navigate pay cuts to already-agreed-upon contracts. And they would also have to weigh the risk of those employees leaving for better pay elsewhere.
  - erhk 5y ago
    Advising someone do their own research is a cheap way to circumvent providing any sources.
    - prepend 5y ago
      It’s also confusing. Does that mean they think I didn’t do research? My basic operating model is that we’re all doing our own research all the time and using it to form opinions. I wasn’t sure if GP was saying they disagree with me, think I didn’t research, think I was relying on someone else’s research, didn’t feel like doing their research, or something else.
  - prepend 5y ago
    I’m not sure your intent, but yes, I’ve done my own research on this. And I did it before my comment and I think my comment stands given my research. Im not sure what contracts Google has. My contacts there don’t have any contracts guaranteeing pay or term, just stock awards. So it’s not a contract issue to raise (or lower) pay. I think it’s more an issue of whether employees will quit and whether they can continue attracting new employees.
  - UncleMeat 5y ago
    > These companies would need to spend lots of resources to legally navigate pay cuts to already-agreed-upon contracts. My pay went down by like 40,000 when I moved to fully remote. Whatever cost was involved in setting up a new contract for me is surely quite a bit lower than that. > And they would also have to weigh the risk of those employees leaving for better pay elsewhere. The industry hasn't settled on a standard, but the number of companies that offer permanent remote work at SF pay scales and also pay the same as Google is pretty low. Attrition for pay is real, but it isn't like Facebook doesn't do the same cuts.
- d82nsjk9 5y ago
  > The pay is based on cost of living and labor supply constraints. why?
  - prepend 5y ago
    I think because labor is a market and markets are driven by supply. If there’s millions of programmers, wages will be lower. Just basic, hundreds of years old thinking from Smith’s Law of Supply and Demand [0]. There’s likely lots of specific reasons but they all boil down to some form of supply and demand. [0] https://www.investopedia.com/terms/l/law-of-supply-demand.asp https://www.investopedia.com/terms/l/law-of-supply-demand.as...
namelessoracle 5y ago
Are the cuts proposed base salary or also equity grants? (I would imagine these might be pegged to your salary level so one impacts the others, the bonuses im sure work that way)
snicker7 5y ago
If the COLA adjustments are granular enough (e.g. zip code), I could see this as a civil rights violation. They'd be punishing employees who live in black and latin communities.
- thehappypm 5y ago
  I assure you Google has thought of this and is making absolutely sure not to do any sort of thing in the minority communities
chickenpotpie 5y ago
> A Google employee interviewed by Reuters commutes two hours each way to the company's Seattle office. That employee was considering switching to remote work permanently when the company reopens its offices in October. But then the employee looked at the location-based pay calculator and realized the switch to full-time remote work would mean a 10 percent pay cut--in effect, rescinding the raise that came with this person's most recent promotion. "I didn't do all that hard work to get promoted to then take a pay cut," the employee told Reuters. This is absolutely insane. A 10% pay cut is absolutely worth 4 hours of your day back everyday and this person is completely irrational.
- 650REDHAIR 5y ago
  You couldn’t entice me to commute 1 hour let alone 4 hours for a 50% pay increase.
  - pempem 5y ago
    So you're trading those four hours for potentially years of earlier retirement. Do we not think that matters, complainer or not?
    - 650REDHAIR 5y ago
      Because you are only this young once. You don't get this time back at the end of your career.
- secretsatan 5y ago
  I mean, it depends on your pay I guess. But 4 hours commute, just no, why do people do that? I most probably is worth 10% But I am of the opinion that if google thinks the job is worth what they are currently paying, then that's what it's worth, but the arguments used here are terrible? I don't think any company pays commute time, and not doing 4hours commute doesn't mean google should get an extra 4 hours work a day out of the employee
  - 5y ago
jolen33 5y ago
ITT: People using their subjective remote-work opinions in defending Google's desire to increase their profits by sacrificing their own employees' well-being.
- thehappypm 5y ago
  Eh I think the adjustment is fair. It’s kind of a pay loophole to negotiate a salary based on one market, then move to a different one. It’s reasonable that companies pay market salaries, rather than having this weird thing where the Googler who moves to Montana makes double what the new hire from Montana is offered.
  - bluefirebrand 5y ago
    Maybe it should instead be taken as an indication that location based pay in an industry where location doesn't matter is asinine.
    - renewiltord 5y ago
      It's not location-based pay, right? It's market-function based pay. A radiologist can usually give you a report based on your scans from anywhere. However, my cousin (a well-paid radiologist in the NHS) simply cannot give me a report that I can use here in the US. So I must pay above global market value since the market function constrains participants. So it isn't location-based. It's just market-based. It makes sense that big companies would do this, since labour is usually fungible there. They can then treat the labour market as a highly-liquid market of equivalent units. This standardization of things leading to liquid markets is quite common: options contracts, the TEU shipping container, the ERC-721 standard. I run engineering at a trading company and I don't do this, but that's because labour is not fungible at my scale. So I don't have a liquid market: each time I buy labour, it is not usually substitutable with another guy.
    - thehappypm 5y ago
      “Market rate” is just that: a market rate. In regards to pay, it’s all about finding the salary that’ll get someone to say “yes”, and trying not to go too much above that. Pre-pandemic, living in the Bay Area, you were commuting to the office, and you were exclusively competing with the people also living in the Bay Area, meaning your labor was scarce. Companies paid more not because of CoL but because the market mandated a certain salary, otherwise you’d just say “no” and work somewhere else. Remote was much rarer, and if you lived in (say) Montana, Google could offer you less money because you’re way more likely to accept a lower salary if you have fewer options and if that salary satisfies you. With this odd moment we have people who negotiated salaries in the Bay market now moving elsewhere to work remote.
sydthrowaway 5y ago
Google is a long-finished company. The IBM of the 21st century. Join a startup, change the world.
- chickenpotpie 5y ago
  You mean the company with the 1.7 trillion dollar market cap?
empalms 5y ago
Perhaps I'm in the minority here given the comments thus far, but I've always been of the opinion that equivalent work should be compensated equivalently and commensurate with the value of output generated for the company.
- erhk 5y ago
  Thats quite idealistic
  - empalms 5y ago
    I tend to agree, unfortunately.
- renewiltord 5y ago
  I am a little sceptical. So you pay the same at all equivalent restaurants, the same for all cars, etc.? So if you were going to buy a thing at price $x, and someone were to tell you "Hey, here's a discount available if you use this coupon!" then (since you were going to buy it at $x it provided commensurate value) so you don't use the discount to bring it down to $(x-d)? I don't think that sounds right. There is some value in the firm having a culture of unity, etc. but bigger companies are going to just negotiate with individuals as buyers in a labour market similar to you buying a car warranty contract.
  - empalms 5y ago
    Those examples seem somewhat contrived. The exchange is not that of physical depreciating assets or even consumable goods. A worker is not giving a coupon to a company for a one time purchase but forming an ongoing contract for knowledge services which can be performed from anywhere to (arguably) similar levels of proficiency. Whether you believe WFH is equal in value to on-site is another matter. Google apparently does not hold this view. Regardless, in those cases I’d still expect a competitive market to reach some price convergence, holding all other factors constant — especially when the seller knows that a buyers willingness to pay == $x and != $x-d for the same utility (say, from already getting paid $x repeatedly for the same work). If I am mistaken I’d definitely welcome the chance to adjust those expectations.
boring_twenties 5y ago
10 percent doesn't seem too bad. I'm currently working remotely for an NYC-based company and I think I'm making 20-30% less than than if I was living in NYC. However, it's still about triple anything I could make in the local market, on top of the facts that the work is actually fun (unlike anything in said local market) and there is no commute. Seems like a pretty good deal to me tbh.

17 points by johncena33 5y ago

> But cutting pay for existing employees who opt to work from home is a terrible idea and it shows a complete lack of emotional intelligence. What in the world does this mean? Cutting pay for temporary telework is stupid, but cutting it for long term agreements that are willfully made by the employee makes total sense. It seems ludicrous to me to pay Silicon Valley rates to someone living in Montana. The pay is based on cost of living and labor supply constraints. And both of those are eased by people working remotely in low cost of living areas. If they don’t do this then they’ll end up paying the high water mark everywhere in the world for fairness purposes and that will make it harder to compete. Imagine living in Lagos or somewhere and because you’re locally employed and always lived in Lagos you get Lagos wages. But someone who was hired in San Francisco and moved to Lagos gets San Francisco wages. How emotionally intelligent is that?

zibzab 5y ago
It means people can feel unappreciated and offended and that could cost Google much more than 10% in the long run. Basically, you sometimes need to stop counting beans and start considering people's emotions. It's not always logical but you must still consider it. I know a top engineer & manager who left a major company because someone decided his nice parking space that he had for 10 years should be given to someone more important.
- prepend 5y ago
  True, but I assume they are counting the beans and thinks the costs are greater than the benefits. Lots of anecdotes about people who quit over reasons. But there’s many more examples of people who didn’t quit despite all sorts of weird stuff.
jolen33 5y ago
At the risk of this discussion devolving into a flamewar, I would just encourage you to do your own research about this situation. Regardless of all other arguments about location-based pay, Google et al have been paying their temporarily-remote employees 100% of their salary up until now. These companies would need to spend lots of resources to legally navigate pay cuts to already-agreed-upon contracts. And they would also have to weigh the risk of those employees leaving for better pay elsewhere.
- erhk 5y ago
  Advising someone do their own research is a cheap way to circumvent providing any sources.
  - prepend 5y ago
    It’s also confusing. Does that mean they think I didn’t do research? My basic operating model is that we’re all doing our own research all the time and using it to form opinions. I wasn’t sure if GP was saying they disagree with me, think I didn’t research, think I was relying on someone else’s research, didn’t feel like doing their research, or something else.
- prepend 5y ago
  I’m not sure your intent, but yes, I’ve done my own research on this. And I did it before my comment and I think my comment stands given my research. Im not sure what contracts Google has. My contacts there don’t have any contracts guaranteeing pay or term, just stock awards. So it’s not a contract issue to raise (or lower) pay. I think it’s more an issue of whether employees will quit and whether they can continue attracting new employees.
- UncleMeat 5y ago
  > These companies would need to spend lots of resources to legally navigate pay cuts to already-agreed-upon contracts. My pay went down by like 40,000 when I moved to fully remote. Whatever cost was involved in setting up a new contract for me is surely quite a bit lower than that. > And they would also have to weigh the risk of those employees leaving for better pay elsewhere. The industry hasn't settled on a standard, but the number of companies that offer permanent remote work at SF pay scales and also pay the same as Google is pretty low. Attrition for pay is real, but it isn't like Facebook doesn't do the same cuts.
d82nsjk9 5y ago
> The pay is based on cost of living and labor supply constraints. why?
- prepend 5y ago
  I think because labor is a market and markets are driven by supply. If there’s millions of programmers, wages will be lower. Just basic, hundreds of years old thinking from Smith’s Law of Supply and Demand [0]. There’s likely lots of specific reasons but they all boil down to some form of supply and demand. [0] https://www.investopedia.com/terms/l/law-of-supply-demand.asp https://www.investopedia.com/terms/l/law-of-supply-demand.as...

namelessoracle 5y ago

Are the cuts proposed base salary or also equity grants? (I would imagine these might be pegged to your salary level so one impacts the others, the bonuses im sure work that way)

snicker7 5y ago

If the COLA adjustments are granular enough (e.g. zip code), I could see this as a civil rights violation. They'd be punishing employees who live in black and latin communities.

thehappypm 5y ago
I assure you Google has thought of this and is making absolutely sure not to do any sort of thing in the minority communities

chickenpotpie 5y ago

> A Google employee interviewed by Reuters commutes two hours each way to the company's Seattle office. That employee was considering switching to remote work permanently when the company reopens its offices in October. But then the employee looked at the location-based pay calculator and realized the switch to full-time remote work would mean a 10 percent pay cut--in effect, rescinding the raise that came with this person's most recent promotion. "I didn't do all that hard work to get promoted to then take a pay cut," the employee told Reuters. This is absolutely insane. A 10% pay cut is absolutely worth 4 hours of your day back everyday and this person is completely irrational.

650REDHAIR 5y ago
You couldn’t entice me to commute 1 hour let alone 4 hours for a 50% pay increase.
- pempem 5y ago
  So you're trading those four hours for potentially years of earlier retirement. Do we not think that matters, complainer or not?
  - 650REDHAIR 5y ago
    Because you are only this young once. You don't get this time back at the end of your career.
secretsatan 5y ago
I mean, it depends on your pay I guess. But 4 hours commute, just no, why do people do that? I most probably is worth 10% But I am of the opinion that if google thinks the job is worth what they are currently paying, then that's what it's worth, but the arguments used here are terrible? I don't think any company pays commute time, and not doing 4hours commute doesn't mean google should get an extra 4 hours work a day out of the employee
- 5y ago

jolen33 5y ago

ITT: People using their subjective remote-work opinions in defending Google's desire to increase their profits by sacrificing their own employees' well-being.

thehappypm 5y ago
Eh I think the adjustment is fair. It’s kind of a pay loophole to negotiate a salary based on one market, then move to a different one. It’s reasonable that companies pay market salaries, rather than having this weird thing where the Googler who moves to Montana makes double what the new hire from Montana is offered.
- bluefirebrand 5y ago
  Maybe it should instead be taken as an indication that location based pay in an industry where location doesn't matter is asinine.
  - renewiltord 5y ago
    It's not location-based pay, right? It's market-function based pay. A radiologist can usually give you a report based on your scans from anywhere. However, my cousin (a well-paid radiologist in the NHS) simply cannot give me a report that I can use here in the US. So I must pay above global market value since the market function constrains participants. So it isn't location-based. It's just market-based. It makes sense that big companies would do this, since labour is usually fungible there. They can then treat the labour market as a highly-liquid market of equivalent units. This standardization of things leading to liquid markets is quite common: options contracts, the TEU shipping container, the ERC-721 standard. I run engineering at a trading company and I don't do this, but that's because labour is not fungible at my scale. So I don't have a liquid market: each time I buy labour, it is not usually substitutable with another guy.
  - thehappypm 5y ago
    “Market rate” is just that: a market rate. In regards to pay, it’s all about finding the salary that’ll get someone to say “yes”, and trying not to go too much above that. Pre-pandemic, living in the Bay Area, you were commuting to the office, and you were exclusively competing with the people also living in the Bay Area, meaning your labor was scarce. Companies paid more not because of CoL but because the market mandated a certain salary, otherwise you’d just say “no” and work somewhere else. Remote was much rarer, and if you lived in (say) Montana, Google could offer you less money because you’re way more likely to accept a lower salary if you have fewer options and if that salary satisfies you. With this odd moment we have people who negotiated salaries in the Bay market now moving elsewhere to work remote.

sydthrowaway 5y ago

Google is a long-finished company. The IBM of the 21st century. Join a startup, change the world.

chickenpotpie 5y ago
You mean the company with the 1.7 trillion dollar market cap?

empalms 5y ago

Perhaps I'm in the minority here given the comments thus far, but I've always been of the opinion that equivalent work should be compensated equivalently and commensurate with the value of output generated for the company.

erhk 5y ago
Thats quite idealistic
- empalms 5y ago
  I tend to agree, unfortunately.
renewiltord 5y ago
I am a little sceptical. So you pay the same at all equivalent restaurants, the same for all cars, etc.? So if you were going to buy a thing at price $x, and someone were to tell you "Hey, here's a discount available if you use this coupon!" then (since you were going to buy it at $x it provided commensurate value) so you don't use the discount to bring it down to $(x-d)? I don't think that sounds right. There is some value in the firm having a culture of unity, etc. but bigger companies are going to just negotiate with individuals as buyers in a labour market similar to you buying a car warranty contract.
- empalms 5y ago
  Those examples seem somewhat contrived. The exchange is not that of physical depreciating assets or even consumable goods. A worker is not giving a coupon to a company for a one time purchase but forming an ongoing contract for knowledge services which can be performed from anywhere to (arguably) similar levels of proficiency. Whether you believe WFH is equal in value to on-site is another matter. Google apparently does not hold this view. Regardless, in those cases I’d still expect a competitive market to reach some price convergence, holding all other factors constant — especially when the seller knows that a buyers willingness to pay == $x and != $x-d for the same utility (say, from already getting paid $x repeatedly for the same work). If I am mistaken I’d definitely welcome the chance to adjust those expectations.

boring_twenties 5y ago

10 percent doesn't seem too bad. I'm currently working remotely for an NYC-based company and I think I'm making 20-30% less than than if I was living in NYC. However, it's still about triple anything I could make in the local market, on top of the facts that the work is actually fun (unlike anything in said local market) and there is no commute. Seems like a pretty good deal to me tbh.