Google could soon be creating two different payment regimes across its company if one of its recent experiment becomes a reality. Workers who choose to work from home permanently can see a pay cut, especially if they used to have a long commute to work.
The advertising giant is not the only company trialing this compensation method, as other Silicon Valley firms are doing the same. Facebook (now known as Meta) and Twitter will also adjust the salaries of its staff that relocate to less expensive cities.
However, other companies are doing the opposite, letting employees keep the surplus when they live in less expensive areas. These companies, including Reddit and Zillow, are trying to attract talents to join their workforces or retain them.
Google has released a compensation calculator that employees could use to see the impact of a potential move on their pay packages. While the language of the scheme is centered around employees moving to new locations, employees that work remotely without moving will also be affected. The farther they live away from their office, the less pay they get.
A company spokesperson defended Google’s new salary scheme, saying it is based on location. “Our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from.”
As reported by Google staff anonymously to avoid retaliation, some employees will experience up to 25 percent less pay by working from home full-time, based on results from Google’s Work Location Tool. A particular employee commutes to Google’s Seattle office from a county close by. Despite a two-hour trip to work, the employee won’t take the remote work option as it will cancel out the financial reward of their last promotion, which is about ten percent of their pay.
Speaking to Reuters on Google’s new compensation plan, Jake Rosenfield, who works as a professor of sociology at Washington University, said “What’s clear is that Google doesn’t have to do this. Google has paid these workers at 100% 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.”
Rosenfield also pointed out that the families of the employees will feel the pay cuts too.
Google says it calculates worker compensations using metropolitan data from the US Census Bureau. A spokesperson also said Google won’t cut an employee’s pay if they choose the remote work option while living in the same city as their office. This means staff members attached to the New York City office that work from home will be paid the same rate as their colleagues that report to the office.
In related news, Google has informed its staff it will not be raising salaries to match inflation. This was revealed by Frank Wagner, VP of compensation while responding to a question by an employee during a staff meeting. The staff member compared how other companies adjusted their workers’ pay. He said; “As I mentioned previously in other meetings when we see price inflation increasing, we also see increases in the cost of labor or market pay rate…those have been higher than in recent past, and our compensation budgets have reflected that.”
Wagner also tied pay raises to increased performance, a claim that needs more clarification as the company has been reporting record profits for five consecutive quarters.
Many companies do not wait to experience consecutive record-breaking quarters to adjust their employees’ compensations, a process that is known as cost of living adjustment
This news means Google workers will be earning less in reality. When combined with the pay cuts for those choosing remote work, the financial loss can be significant for some Google workers.