In an aggressive hiring market for engineers, this is a decision Google is making which will increase potential churn risk for some engineers. As a Xoogler myself, I know how much they invest into thinking about talent acquisition and retention and would venture to say they are aware of this. I suspect none of this is as "hot take" to them.
At the same time, Google's stock is up massively over the last two years. Google has been relatively aggressive with RSU allocations. That appreciation in RSU value will act as an offset for a subset of those who would churn. This must also factor into their current policy decisions. The team's at Google try very hard to optimize for retaining their best people, but they are dealing with very large numbers of individuals during an unusual time. Further, they have traditionally been leading the charge for geographic proximity and density for product teams. Lots of change for them to manage through right now.
That said, as a CTO at a startup (which counts Google Ventures as an investor) I have hired many engineers from Google over the past 18mo. Approximately half our engineers are ex Google, Amazon, Microsoft. Beyond our product and ENG culture, our policy is fully distributed work (within the US - compliance reasons) and that is the one benefit ex FAANG engineers seem to value the most, currently (small N, selection biases acknowledged). Over all roles, I would estimate more than half the company consists of ex FAANG employees. Many were tired of being locked into a geography which did not make them happy.
So I view this as a change in the market dynamics which is allowing startups like mine to help make these engineers happier. We have engineers that have joined, and immediately moved to Hawaii, or purchased a rural farm in the Midwest - and we are 100% supportive of them having a work/life that makes them happiest. Also, we've removed policies of paying differently based on the traditional tier 1, 2, and 3 geographies.
This is a market advantage that favors engineers, and as such - I'm very supportive :)
> Many were tired of being locked into a geography which did not make them happy.
Do you compete with Bay area FAANG salaries? It seems that part of the reason companies pay so much in Silicon Valley is because the cost of local labor is so high.
A lot of the discussions here never mentioned one issue that might arise if the companies didn't adjust for CoLiving:
What would happened to the existing employees of the same company that already accepted lower salary for being in LCOL?
Google Mountain View pays differently than other Google branches (heck for a while, the pay in Google Seattle was slightly lower compare to HQ).
Now you have Google Señor Developer in LCOL accepted the fact that they get paid less than their compadre in Mtn View, but your Mtn View compadre decided to be your neighbour while refusing your level of pay. Wouldn't that create tension?
Such issues already exist. When the company adjusts pay scales they don’t go proactively bring everyone up to their “true” deserved pay. They might make some minor adjustment but are otherwise happy to let compensation linger above some defensible minimum and pocket the difference.
Exactly, not sure why the article doesn't address this.
From the employer perspective, the strategy toward compensation has NEVER been "equal pay for equal work". I understand why that is intuitively fair to people, but it's not rooted in reality.
The strategy is "I want to pay as much as other employers in the area". That is, if you get a job in the same area and your pay drops 40-50%, then that's a BUG from Google's perspective. They were paying you too much.
They want to pay you an amount so your pay will drop 0% or 10% when you get another job. Or conversely, if someone local is going to Google, they should get 0-10% more, not a 40-50% increase.
-----
As you mention, a corollary of this is that if most programmers start working remotely AND most companies offer remote jobs, then Google will be forced to adapt. Basically if all companies start doing what Reddit does, then Google will have to do that too to stay competitive.
It's a market-based system. There are many instances where markets determining prices produces outcomes we view as unfair.
Though I guess you can argue that it shouldn't be purely market-based and it should take into account "company loyalty". As the article mentions, employees can also "quit in place", which changes the calculus a bit.
Most people who cry about CoL adjustments don't realize that the developers working in India are doing the same job for 1/5th the salary. In a remote-first world, there is going to be some averaging of pay as the pool of the talent accessible to companies increases.
I would guess in most cases whatever value the employees provided Google has not changed. Not only that, Google's costs are lower not having to provide a space for their workers.
Trillion dollar companies with their record quarterly profits cutting their employees pay is nonsense.
Funny to see this mentioned. A friend of mine started remote in the city where we lived, then moved to the sticks.
They tried to pull his chain on this, then realized he essentially was the market there.
Awkward exchange overall; felt very much like 'we want to dial the pressure of the thumb'.
Eventually they did a 180 on it and no adjustment happened. If it were me, it'd erode my trust. I'm thankful my employer only cares to know my location for tax/withholding purposes.
It's like you said... is there really a local market (with everyone remote?). Even then, this person was there just long enough to qualify for raises and already had several.
A bit like a slap in the face to have these rewards (presumably for your efforts) to be clawed back... because the employer essentially realized you didn't need as much anymore.
Get real. Arguments about CoL or geography or stock are all smokescreen. They pay for Engineers is whatever the market will bear. It's quite curious that Engineers accustomed to calculating efficiency and tradeoffs will get mired in imaginary discussions about 'correct' hiring.
If arguments about CoL or geography or nationalism quite being persuasive to potential hires, the hiring organization will simply switch to some other arguments. It's just business.
In my career, cutting salary without just cause was viewed as a request to change employment. Or, a signal that the company was in dire straits and extreme cash management was required. I think we can assume google does not fall into the latter category. And cutting salary when it will improve retention and hiring “reach” and enable the company to better manage real estate costs strongly suggests it’s a stealth layoff, aiming to remove any peg developing a bit of square-ness. Round pegs fit the holes best, eh?
And remember, having the worker exit on their choice costs the company nothing.
80% of my Bay Area salary is significantly higher than the local payment for my area. I’m just hoping these inflated salaries last. I’m nervous to buy a home because even if I make $$$ now, if I ever get fired and need to find a local job I won’t be able to meet my previous salary.
Why does google (or any company for that matter) think this is a good idea? Especially with jobs in the tech industry being so abundant and people chomping at the bit to hire SWEs/SREs.
By adjusting pay to local cost of living Google is effectively saying that they will provide their employees with the same standard of living regardless of their location. In lower cost of living areas this means an accordingly lower salary, because a Bay Area salary would otherwise afford an employee a better standard of living.
As for losing talent, Google is sufficiently established that the majority of freshly minted computer science and software engineering graduates are still desperate to work for Google if they can get in. And Google doesn't need to hire all the top talent to grow or run with the same profit margins.
I suspect software engineering salaries for new hires will start declining in nominal terms within the next decade or so, as (1) automation lowers demand for engineers on the business side (2) the labor supply keeps growing (3) non engineers in tech companies demand adjustments to their own pay to match engineers or start leaving for other companies that do, leaving less money to pay engineers (4) MBAs keep moving into management and start cutting labor costs for their most expensive individual contributors to increase profits and satisfy shareholders.
When new graduates make as much as doctors, with only a fraction of the education, while every other profession, with the exception of junior investment bankers, including technical ones and non-software engineering professions, are lucky to crack $75k, I don't see how the current job market is sustainable.
Google made $19B profit on $65B revenue last year. Whatever this is, it is NOT about being able to continue paying their workers what they already make.
"What is it about my work that is somehow less valuable in a different location?"
That person is either incredibly naive or dishonest. If she's naive, she should start by asking herself why is she paid multiple times what someone doing the same job in Hyderabad is.
All this outsourcing talk is so 2005. If it worked so easily, FAANG would've outsourced everything to India 10 years ago and tripled their profit.
In reality a common cultural background (i.e. how to approach some kind of work) is a lot more important than a lot of managers want you to believe. Outsourcing also requires extensive planning and management, which increases the number of managers required and thus increases the costs of outsourcing.
E.g. VW tried outsourcing over the last 10 years and is now recruiting developers en masse in Germany because it failed to make it work.
As someone who had run 200 person offshore development teams, the biggest issues are time differences visas & norming\forming teams.
Time difference: this can be mitigated for North America by using teams in South America, but scale is typically limited, The time difference in India is brutal for everyone, you end up having small windows of time to communicate synchronously either early or late, people are typically tired when this communication happens, either just waking up and trying to get their kids to school/ family going or trying to go to sleep so they can wake up early for another call… which leads to sleep deprivation!
One way around this is key individuals who have strong people + technical skills spend significant amounts to of time at the start of projects in North America(assuming it is a NA centric project) this allows them to fully immerse and absorb the nuances of the people, product, requirements and politics of the program, this is expensive and can be challenging from a visa perspective, any project I’ve worked on that has succeeded started with this.
While I sympathize with the principle that two people providing the same value should be paid the same, in these discussions it seems to me almost everybody is forgetting we live in a capitalist world and the offer and demand law applies.
If a company can get the same or better quality of engineers in a lower cost of living area at a cost discount (example: Canada where salaries were about half than in SV and about 50% less than say Midwest US), why are they going to not take the discount? And this "arbitrage" is what it seems to be happening, with US companies hiring fully remote Canadians at 25% discount for them and still the Canadians making 25% more than they used to. (Obv this doesn't address existing employees who moved to LCOL)
Would you feel as strongly about this if it was a corporation, instead of a single individual?
If I as corporation buy from a third party OEM and they decide to move production from Texas to Malaysia or Vietnam, would you also feel strongly that I as customer am entitled to a discount?
Or would you consider that we have agreed to a contract where the supplier is delivering the same OEM product but now from a different location?
Just wait till Google realizes they can hire equally competent people overseas for a fraction of the wages and those people won't have any of the cancel culture tantrums American workers do.
If the company was willing to pay me $X for the work I'm doing, then they should continue to pay me at least $X if I change locations. The work has already been valued.
Does the company exist to support the HR department, or does the HR department exist to support the company and employees? At google, we know the answer.
[+] [-] demeyer1|4 years ago|reply
At the same time, Google's stock is up massively over the last two years. Google has been relatively aggressive with RSU allocations. That appreciation in RSU value will act as an offset for a subset of those who would churn. This must also factor into their current policy decisions. The team's at Google try very hard to optimize for retaining their best people, but they are dealing with very large numbers of individuals during an unusual time. Further, they have traditionally been leading the charge for geographic proximity and density for product teams. Lots of change for them to manage through right now.
That said, as a CTO at a startup (which counts Google Ventures as an investor) I have hired many engineers from Google over the past 18mo. Approximately half our engineers are ex Google, Amazon, Microsoft. Beyond our product and ENG culture, our policy is fully distributed work (within the US - compliance reasons) and that is the one benefit ex FAANG engineers seem to value the most, currently (small N, selection biases acknowledged). Over all roles, I would estimate more than half the company consists of ex FAANG employees. Many were tired of being locked into a geography which did not make them happy.
So I view this as a change in the market dynamics which is allowing startups like mine to help make these engineers happier. We have engineers that have joined, and immediately moved to Hawaii, or purchased a rural farm in the Midwest - and we are 100% supportive of them having a work/life that makes them happiest. Also, we've removed policies of paying differently based on the traditional tier 1, 2, and 3 geographies.
This is a market advantage that favors engineers, and as such - I'm very supportive :)
[+] [-] chris11|4 years ago|reply
Do you compete with Bay area FAANG salaries? It seems that part of the reason companies pay so much in Silicon Valley is because the cost of local labor is so high.
[+] [-] madarco|4 years ago|reply
[+] [-] Proven|4 years ago|reply
[deleted]
[+] [-] hello_moto|4 years ago|reply
What would happened to the existing employees of the same company that already accepted lower salary for being in LCOL?
Google Mountain View pays differently than other Google branches (heck for a while, the pay in Google Seattle was slightly lower compare to HQ).
Now you have Google Señor Developer in LCOL accepted the fact that they get paid less than their compadre in Mtn View, but your Mtn View compadre decided to be your neighbour while refusing your level of pay. Wouldn't that create tension?
[+] [-] plafl|4 years ago|reply
[+] [-] throwawaysea|4 years ago|reply
[+] [-] allcentury|4 years ago|reply
Companies want to be competitive in your local market so they can retain you and so they can "hire the best".
Where this gets murky is now everyone is remote so is there really a local market?
[+] [-] chubot|4 years ago|reply
From the employer perspective, the strategy toward compensation has NEVER been "equal pay for equal work". I understand why that is intuitively fair to people, but it's not rooted in reality.
The strategy is "I want to pay as much as other employers in the area". That is, if you get a job in the same area and your pay drops 40-50%, then that's a BUG from Google's perspective. They were paying you too much.
They want to pay you an amount so your pay will drop 0% or 10% when you get another job. Or conversely, if someone local is going to Google, they should get 0-10% more, not a 40-50% increase.
-----
As you mention, a corollary of this is that if most programmers start working remotely AND most companies offer remote jobs, then Google will be forced to adapt. Basically if all companies start doing what Reddit does, then Google will have to do that too to stay competitive.
It's a market-based system. There are many instances where markets determining prices produces outcomes we view as unfair.
Though I guess you can argue that it shouldn't be purely market-based and it should take into account "company loyalty". As the article mentions, employees can also "quit in place", which changes the calculus a bit.
[+] [-] durovo|4 years ago|reply
[+] [-] lancesells|4 years ago|reply
Trillion dollar companies with their record quarterly profits cutting their employees pay is nonsense.
[+] [-] bravetraveler|4 years ago|reply
They tried to pull his chain on this, then realized he essentially was the market there.
Awkward exchange overall; felt very much like 'we want to dial the pressure of the thumb'.
Eventually they did a 180 on it and no adjustment happened. If it were me, it'd erode my trust. I'm thankful my employer only cares to know my location for tax/withholding purposes.
It's like you said... is there really a local market (with everyone remote?). Even then, this person was there just long enough to qualify for raises and already had several.
A bit like a slap in the face to have these rewards (presumably for your efforts) to be clawed back... because the employer essentially realized you didn't need as much anymore.
edit: To be clear, not Google - elsewhere.
[+] [-] JoeAltmaier|4 years ago|reply
If arguments about CoL or geography or nationalism quite being persuasive to potential hires, the hiring organization will simply switch to some other arguments. It's just business.
[+] [-] jleyank|4 years ago|reply
And remember, having the worker exit on their choice costs the company nothing.
[+] [-] meowtimemania|4 years ago|reply
[+] [-] likpok|4 years ago|reply
It doesn’t impact tech people because the tech offices were always the bay, Seattle and nyc which often ended up in the same band.
[+] [-] tmysl|4 years ago|reply
[+] [-] HenryKissinger|4 years ago|reply
As for losing talent, Google is sufficiently established that the majority of freshly minted computer science and software engineering graduates are still desperate to work for Google if they can get in. And Google doesn't need to hire all the top talent to grow or run with the same profit margins.
I suspect software engineering salaries for new hires will start declining in nominal terms within the next decade or so, as (1) automation lowers demand for engineers on the business side (2) the labor supply keeps growing (3) non engineers in tech companies demand adjustments to their own pay to match engineers or start leaving for other companies that do, leaving less money to pay engineers (4) MBAs keep moving into management and start cutting labor costs for their most expensive individual contributors to increase profits and satisfy shareholders.
When new graduates make as much as doctors, with only a fraction of the education, while every other profession, with the exception of junior investment bankers, including technical ones and non-software engineering professions, are lucky to crack $75k, I don't see how the current job market is sustainable.
[+] [-] convolvatron|4 years ago|reply
[+] [-] TheRealDunkirk|4 years ago|reply
[+] [-] LAC-Tech|4 years ago|reply
Where I live has a higher CoL than almost all of the US, and local salaries are a fraction.
It's about google paying competitively compared to local companies. Nothing to do with cost of living.
[+] [-] aYsY4dDQ2NrcNzA|4 years ago|reply
1. Employee switches to 100% at home situation, same team, same role. But they remain in the employer’s town, they don’t move away.
2. Same as scenario #1, but they move away to somewhere with a cheaper cost of living.
#1 suffers no pay reduction, but #2 does.
[+] [-] Jyaif|4 years ago|reply
That person is either incredibly naive or dishonest. If she's naive, she should start by asking herself why is she paid multiple times what someone doing the same job in Hyderabad is.
[+] [-] foepys|4 years ago|reply
In reality a common cultural background (i.e. how to approach some kind of work) is a lot more important than a lot of managers want you to believe. Outsourcing also requires extensive planning and management, which increases the number of managers required and thus increases the costs of outsourcing.
E.g. VW tried outsourcing over the last 10 years and is now recruiting developers en masse in Germany because it failed to make it work.
[+] [-] mrbadideas|4 years ago|reply
Time difference: this can be mitigated for North America by using teams in South America, but scale is typically limited, The time difference in India is brutal for everyone, you end up having small windows of time to communicate synchronously either early or late, people are typically tired when this communication happens, either just waking up and trying to get their kids to school/ family going or trying to go to sleep so they can wake up early for another call… which leads to sleep deprivation!
One way around this is key individuals who have strong people + technical skills spend significant amounts to of time at the start of projects in North America(assuming it is a NA centric project) this allows them to fully immerse and absorb the nuances of the people, product, requirements and politics of the program, this is expensive and can be challenging from a visa perspective, any project I’ve worked on that has succeeded started with this.
[+] [-] mensetmanusman|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] senectus1|4 years ago|reply
Seems mean and greedy to me.
I use MY resources, My power/internet/aircon/floor space to do a job for my employer. Why should I be paying for that?
[+] [-] theonlybutlet|4 years ago|reply
[+] [-] lazyant|4 years ago|reply
If a company can get the same or better quality of engineers in a lower cost of living area at a cost discount (example: Canada where salaries were about half than in SV and about 50% less than say Midwest US), why are they going to not take the discount? And this "arbitrage" is what it seems to be happening, with US companies hiring fully remote Canadians at 25% discount for them and still the Canadians making 25% more than they used to. (Obv this doesn't address existing employees who moved to LCOL)
[+] [-] nojito|4 years ago|reply
[+] [-] GhostVII|4 years ago|reply
[+] [-] DoingIsLearning|4 years ago|reply
If I as corporation buy from a third party OEM and they decide to move production from Texas to Malaysia or Vietnam, would you also feel strongly that I as customer am entitled to a discount?
Or would you consider that we have agreed to a contract where the supplier is delivering the same OEM product but now from a different location?
[+] [-] silexia|4 years ago|reply
[+] [-] madengr|4 years ago|reply
[deleted]
[+] [-] tomohawk|4 years ago|reply
Does the company exist to support the HR department, or does the HR department exist to support the company and employees? At google, we know the answer.
[+] [-] rightbyte|4 years ago|reply
You essentially get payed to afford housing in the area where you work, not by value.