As more and more people switch to working from home, some are left counting the cost.
Millions of people are seemingly ready and willing to take a pay cut to continue working remotely. Sixty-one percent of American workers; four in 10 Londoners; more than a quarter of office workers in the UK. Breathless media reports on the trend cite a lot of statistics, but few have found any people happily slashing their monthly household budgets. In fact, when you look at the major technology companies actually bringing in these remote pay cuts, many employees are choosing to cut and run.
“I’m job hunting,” says “Mike,” a senior software engineer for Google in the northeastern US, who moved to a new home during the pandemic. (Some names have been changed in this article.) He wants to continue working for the company remotely, but the pay cut he’d have to take to do so is equivalent to losing four years of pay increases. “Any pay cut is unacceptable, and it’s been presented as a ‘take it or leave it’ proposition,” he says. “Google is telling us to vote with our feet if we don’t like the situation. I love the work we do, but that’s a lousy bargain.”
Mike hasn’t decided what he’s going to do yet; the Delta variant has delayed Google’s return-to-office plans and given him extra time to consider his options. But his colleagues who have applied to stay fully remote are already having their pay reduced, he says, even though the whole company is still working remotely.
“I’m waiting to see if they back down,” Mike says, explaining that in the past Google has backtracked on pay-related decisions, specifically when it was announced that bonuses would be linked to the success of Google+. “That was deeply unpopular, and after an uproar among the employees they walked it back,” he says. In this situation, he concedes, it’s harder to predict what will happen.
Laura de Vesine, a former Google engineer, didn’t wait to find out. She left Google earlier this year when she was told her pay would be cut by 25 percent. “There was a discussion about moving our team to North Carolina, and that was originally floated as a 15 percent pay cut,” she says. At first, she thought that was reasonable, then they announced it would actually be 25. “The bait and switch was very upsetting,” she says. “And once I was angry about it, I started questioning why there was even a 15 percent cut. What is it about my work that is somehow less valuable in a different location?”
That’s the biggest complaint from employees facing pay cuts: How is this fair? Remote work can mean living in a lower-cost area, without a commute, but it can also mean higher household bills—especially if you need high-speed internet in a rural area. A Google spokesperson says the company has always paid employees based on their location, at rates that match the top of the local market. But precedent doesn’t do much to soothe the burn its employees feel as they watch their wages drop. “They’re basically saying we are going to get the same value from you, but we think we can talk you into taking less money,” de Vesine says. And this, many feel, is not fair.
That issue of fairness is what gets people so riled up. If employees think they’re getting a rough deal, they won’t react well. There’s an experiment, conducted by Emory University primatologists Sarah Brosnan and Frans de Waal. Two capuchin monkeys are completing the same task, for the same reward—a piece of cucumber. But after a while, one monkey is given a tastier grape instead. The other monkey notices and reaches out for hers, but when she is passed another piece of cucumber, she goes berserk, chucks the cucumber out of the cage, and refuses to continue doing her work.
The same kind of tantrum happens when a toddler is given half a cookie, after seeing their brother get a whole one. And it doesn’t matter how old we get, we can’t stop our brains from firing when we feel we’ve suffered an injustice. But instead of throwing a tantrum, we retaliate in other ways.
At work, that can mean quitting. De Vesine isn’t the only one to have done so. “Google continues to assert that it is normal attrition, and I think you can make the numbers tell both stories,” she says. “But it seemed to be higher than usual and much more senior-oriented than I had previously seen when I was leaving, and I’ve seen a continuation of that.”
Even if people don’t quit, they can revolt in different ways. “If you feel like you’re being treated poorly by your employer, it’s just human nature to not work as hard,” says Brian Kropp, chief of HR research at consultancy Gartner. There’s a mindset shift, he explains, if people feel they’re not being paid fairly for their contributions, then why should they contribute more, or even at all? “Perhaps even worse than leaving,” he says, “they quit in place.”
A study by researchers at Columbia University found that employees reduced their output at work by 52 percent when they discovered their coworkers were paid more. They were also 13.5 percentage points less likely to even show up (compared to a base of 94 percent attendance). So even if employees do begrudgingly take pay cuts, they’re likely to respond by working half as hard.
The worst part of the fallout is arguably what it says about the companies implementing these pay cuts. Kendra, an information architect at Google’s Seattle campus, has seen firsthand how employee attitudes toward the company have changed. “I’ve talked to a number of different people who have just straight up left the company because they don’t see the opportunity for growth within our organization,” she says.
Kendra has decided to return to the office, rather than taking a pay cut equivalent to losing a recent pay bump that’s taken her years to get. “But I also have a manager who is incredibly flexible,” she says. Her manager has already told her that she won’t need to come into the office the full three days a week. But what if that hadn’t been an option? “I think it would have put a deadline on my participation,” she says. Simply put, she would have quit within a year.
Such policies are only made more stark by other tech companies, such as Reddit and Zillow, going in the opposite direction. In October 2020, Reddit removed its long-standing “geographic compensation zones,” positioning itself as the type of forward-thinking organization that Google used to be. Meanwhile, Google, Facebook, Microsoft, and others, have adjusted their strategies to match up with JP Morgan. “I’ve been asked to review several résumés, and I’ve had conversations with people, from a career perspective, about where they could move to,” says Kendra. “The rest of the industry is changing, and Google isn’t keeping up with it.”
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