Google is trying out a peculiar salary model for its employees’ post-pandemic. As its staff in the New York City office decides whether to return to the office or work from home, Google might hand out a pay cut to employees based on their decision.
The pay cut will reportedly be decided by a salary calculator developed by Google. The calculator takes into account the area employees live in and their distance of commuting to the office. From what has been confirmed so far, those living in the same city as the Google offices will not experience any pay cut, even if they chose to work from home permanently.
Meanwhile, employees living in adjacent towns and areas and choosing to work from home will likely see a pay cut. These pay cuts have been reported to be as high as 25 per cent.
Google’s move has been highlighted in a new report by Reuters. The publication cites screenshots of Google’s internal salary calculator, revealing that a Google employee living in New York City (NYC) and working in Google’s NYC office will see no pay cut if they opt to work from home.
On the other hand, an employee living in Stamford, Connecticut – an hour-long train ride from New York City – “would be paid 15 per cent less if she worked from home.” Other screenshots showed “5 per cent and 10 per cent differences in the Seattle, Boston and San Francisco areas.”
A Google spokesperson confirmed the development, stating that the company’s compensation packages “have always been determined by location.” The spokesperson further added that the pay would differ “from city to city and state to state.”
The report mentions that a similar salary structure is being experimented with across Silicon Valley. Other tech majors, including Facebook and Twitter, have also introduced pay cuts for remote employees who now work from less expensive areas. Companies like Reddit and Zillow have shifted to location-based salary structures.
As the experiences of employees have revealed so far, the new payout models have both positives and negatives. Such models now allow companies to hire people from outside a limited region. They can do so at lower rates by cutting down on travel compensations and increase diversity.
However, the practical application of the model has revealed some flaws. For instance, not all city-adjoining areas are cheaper to live in than the main city. Some are equally expensive, and a pay cut can negatively affect an employee’s financial wellbeing. The travel distance, thus, should not be the primary factor in deciding pay cuts.