Google’s internal calculator determines pay cuts for remote workers

in August 18th, 2021

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Is it fair if your colleagues get paid the same but live somewhere way cheaper? Tech companies can’t seem to agree. While Reddit and Zillow have promised no change in worker salaries, Facebook, Twitter, and LinkedIn are considering otherwise. In fact, Google recently introduced an internal pay calculator that determines how much employees will be paid depending on where they choose to work. While those living in major metropolitan areas are likely to see no change, that’s not the case for those in suburbs working from home:

  • 15% cuts to salaries are expected for employees forgoing the hour commute from Stamford, Connecticut to Google’s Manhattan offices.
  • A massive 25% cut is likely for Googlers who left San Francisco for Lake Tahoe, despite it being another expensive area of California.

Non-tech workers in American suburbs are hoping other companies follow Google’s lead. Data pulled from LinkedIn earlier this year showed how the pandemic upended the need for tech workers to be clustered around San Francisco. Those tech workers instead flocked to cities like Austin, Nashville, and Charlotte, driving up housing demand and pricing out the locals. In fact, out-of-towners paid an average of 7.8% above asking price for homes — one seller in a suburban area of Washington, D.C. said she got a record of 88 offers for a single house, with more than 80% in all cash.

Others question why Google would cut salaries given remote employees save the company money on office space, food, and more. Google argues their compensation packages have always been determined by location, but one sociology professor says if they could historically afford to pay those salaries, they should be able to continue to do so. Google's pay calculator also relies on census data, which some worry is not an accurate representation of U.S. cities.

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