Google (NASDAQ: GOOG) has confirmed its decision to cut compensation for workers in the Triangle, citing “adjustments to align with the local market.” The reductions include in Durham, where the firm is in the process of setting up a cloud hub expected to one day employ 1,000 technology workers.
In an email, a spokeswoman said the firm’s goal “is to always pay at the top of the local market, including in the Raleigh-Durham area.”
“In our annual review, we found that our compensation guidelines in the Research Triangle region exceeded the market pay benchmarks, so we made adjustments to align with the local market,” the statement continues. “Employees working there have not seen a reduction in salary or in their existing equity grants.
"As we continue to invest in the region, new employees and those who transfer from other offices will still be paid at the top of the local market, and all employees have the potential to be rewarded further based on performance and promotion opportunities. We know that our employees have a choice about where they work and we’ll continue to make sure our total rewards support them and help them grow their career at Google.”
Google's revenue topped $250 billion in 2021, up more than 40% from 2020 numbers.
According to Google, the firm still pays at the top 5% to 10% of the local market for all levels, roles and locations. But the changes also apply to those who relocated to the region.
A report out of The Washington Post said some employees were informed of pay cuts after they had already moved to the Triangle from other parts of the country. The paper also reports that the fact that Google is using the area as a place to recruit more Black engineers compounds the problem.
Farad Ali, an entrepreneur and past president of the N.C. Institute of Minority Economic Development, said the issue raises concerns.
The Post report pointed out that the metros Google is reducing pay in are the same places it touted as areas to recruit diverse talent.
Ali said companies such as Google are supposed to provide “an oasis for intelligence and exposure to what we have going on in the world.”
“They help bring a consciousness for more parity for people and people of color,” he said.
The region is already nationally recognized when it comes to its diverse tech talent pool, and the implication that Google is cutting back salaries in areas with diverse demographics is concerning, he said.
Google spokespeople did not directly comment on those implications.
The devil in the details
Salary differentiation by region is not a new phenomenon, however. John Quinterno, a visiting professor at Duke University’s Sanford School of Public Policy said big companies having differences in pay for the same job based on geographic location “is not in and of itself unusual.”
“But I guess like anything the devil is in the details,” said Quinterno, who has no specific knowledge of Google’s practices. “The argument is, you can pay people less to reflect lower cost of living, particularly in the sense of housing markets. ... But in a place like the Triangle that has been growing over the years and has a housing market where prices have been elevating really quickly … do those assumptions fit?”
Brooks Raiford, CEO of the North Carolina Technology Association, said the Triangle is competitive in much of the country when it comes to wages. According to the group’s latest State of the Industry report, the average wage in terms of purchasing power (which includes cost of living) is just over $131,000, ranking it 12th in the nation.
But housing prices have been increasing. According to Redfin.com, Wake County home prices were up 24% in January when compared to last year, selling for a median price of $430,000.
Raiford, who also has no specific knowledge of Google’s wage practices in the Triangle, said the region continues to be extremely competitive for top-caliber talent, and local innovators would agree. Many firms are actually increasing compensation as a way to compete with big-name brands such as Google, Apple and Red Hat.
Durham-based Kevel, for example, is getting aggressive when it comes to sourcing talent, said CEO James Avery. Avery said in the case of one recent hire, Kevel is paying twice what the individual was making at another local company.
“We have reoriented our (compensation) around a model of paying more than the national or local averages to compete both locally and across the U.S.,” Avery said.
As for Google, the firm has beefed up hiring in Durham. The Bull City hub opened in January and while the firm has not released a local headcount, a source at Google said it had exceeded expectations. The firm had initially told the state it planned to hire 100 people last year, and eventually employ 1,000 at the site.
Google, unlike most other big companies promising jobs in the Triangle, did not pursue state incentives, meaning it will not be held to task when it comes to job creation numbers and salaries.
