Why employee pay—and not remote work conditions—is causing tech companies grief
In the long run-up to the return of in-person work, some employees warned they would only go back kicking and screaming. Various surveys showed a significant chunk would consider quitting their jobs if forced back into a corporate compound full-time.
Several weeks into the Great Reopening, the promise of mass resignations hasn’t quite materialized. Instead, tech companies are now staring down a different kind of discontent: frustration with low pay.
In the past few months, several top tech firms faced mini-revolts from employees who feel underappreciated and who argued that lagging compensation represented a bigger irritant than work-from-home policies. While the staffers often earn wages north of six figures—well above national averages—their services are in high demand.
The compensation backlash arrives at a particularly inopportune time for large tech companies, which are struggling with sagging profits, fallout from the first-in-a-decade bear market, and competition for labor from the fast-growing crypto sector. Meta, Uber, and Netflix, among others, have committed in recent weeks to trimming budgets and scaling back on hiring.
A dramatic decline in stock prices recently also puts unprofitable outfits in a bind, given that many startup employees are compensated largely through equity shares.
“The share price reversal left some employees uneasy about their fortunes and increased the odds of a rush to the exits, according to tech recruiters and people at these companies,” Bloomberg reporters wrote Saturday.
Some firms have responded with immediate action, while others are trying to temper employee expectations.
Google announced Friday that it will change its employee evaluation process, which will produce higher salaries for most staffers, per CNBC. The shift followed an annual staff survey, commonly known as Googlegeist, that gave the company poor marks for compensation.
By contrast, the return-to-work effort has gone relatively smoothly. CEOs didn’t warn about major employee losses during earnings season. Few employee groups are organizing in protest. No reports of mass resignations have emerged.
The issue certainly remains front and center, with a few recent developments signaling some burbling conflict.
An Apple executive, machine learning director Ian Goodfellow, resigned in apparent protest of the company’s requirements for in-person work, which include gradually ramping up to a mandatory three days a week in the office by later this month. A tweet about Goodfellow’s resignation this weekend by The Verge’s Zoë Schiffer, who broke the news, garnered nearly 30,000 interactions.
Goodfellow’s move came as hundreds of Apple employees signed a letter last week protesting hybrid work mandates at the company, arguing the tech giant has proved it can function at a high level while staffers labor from home, according to CNN.
Meanwhile, Airbnb CEO Brian Chesky, a newfound remote work evangelist, claimed in an interview with Time that “the office as we know it is over.” He forecasted a “true hybrid” model, in which employees gather sporadically as needed.
Yet those issues largely remain outliers in the bigger picture. The Apple protesters remain a tiny fraction of the company’s 80,000-plus employees. Alphabet, Meta, and Microsoft brought back staffers with minimal public fuss, embracing hybrid schedules for now. Several companies, including Amazon and Twitter, allowed employees to continue working from home full-time under certain conditions.
Bending to the will of employees on hybrid and remote work hasn’t been too difficult so far for Big Tech. Finding the cash needed to keep the rank and file happy won’t be nearly as easy.
Want to send thoughts or suggestions for Data Sheet? Drop me a line here.
No more burning cash. Uber plans to tighten spending, reduce hiring, and focus more on free cash flow in an effort to please skittish investors, CEO Dara Khosrowshahi told employees in a letter first published by CNBC. Khosrowshahi said the change in direction followed several recent meetings he had with shareholders, who are concerned that the broader market downturn will weigh on tech companies indefinitely. After burning through billions of dollars in its first decade, Uber posted two quarterly adjusted operating profits in the second half of 2021. Uber shares were down 9% in midday trading Monday.
Bottoming out? Bitcoin prices continued to tumble Monday, extending a five-day run of losses that pulled its value below $32,000 for the first time since last July. The cryptocurrency traded Monday afternoon at about $31,750, down about 20% from its value as of last Thursday morning. The selloff signaled that interest rate hikes and high inflation continue to impact the appetite for volatile investments like cryptocurrency.
Getting out early. Rivian’s stock plummeted 19% in midday trading Monday on news that Ford and JPMorgan Chase were selling millions of shares in the electric-auto maker ahead of an insider lockup expiration date. CNBC reported Saturday that Ford planned to unload 8 million of its 102 million shares in Rivian, while JPMorgan Chase aimed to sell 13 million to 15 million shares. Rivian shares spiked in the days after its IPO last November, but its stock is down 87% from its peak as the market cooled on upstart Tesla competitors and supply-chain issues dragged down production targets for 2022.
Getting connected. Tens of millions of Americans will become eligible for essentially free broadband internet service after 20 providers agreed to offer access at deep discounts, the Associated Press reported Monday. The Biden administration said the internet providers will offer 100 megabits per second access for $30 monthly to about 48 million households, which can cover the entire cost with a federal subsidy. Participating companies include AT&T, Comcast, Spectrum, and Verizon.
FOOD FOR THOUGHT
Losing its bite. The latest sign that investors are bracing for a lengthy bear market: Analysts are finally cooling on the so-called FAANG stocks. Bloomberg reported Monday that brokerage firms now have lower 12-month forecasts for the tech quintet—Meta (formerly Facebook), Amazon, Apple, Netflix, and Alphabet (formerly Google)—than they did at the start of the year. Analysts still expect share prices for the five companies to rise by about 50% over the coming 12 months, bouncing back from a nearly 20% decline to start the year, but it’s a less-optimistic outlook than the one given at the beginning of 2022.
From the article:
Steadily rising profit estimates—a hallmark of the group for years—are now hitting a wall. The average 2022 earnings per share estimate for Amazon has fallen more than 50% over the past month, according to data compiled by Bloomberg. Alphabet has seen its estimates drop 1.7% over the same period, while Apple, Microsoft and Meta Platforms projections are little changed.
Even after a 22% drop for the Nasdaq 100 this year, some investors say tech stocks are still too pricey. Amazon sits at the top, trading at about 40 times estimated earnings, while Apple is at 25, Alphabet and Netflix are at 16 each and Meta at 14. The Nasdaq 100 Index is at 18 times projected profits.
IN CASE YOU MISSED IT
Death of the NFT? CryptoPunk bought for $1 million sells for $139,000 just 6 months later, by Christiaan Hetzner
BEFORE YOU GO
Eat, pray, crypto. Welcome to the latest thriving crypto community: Silicon Bali. As the Financial Times reported Saturday, the Indonesian island best known as an exotic tourist destination has become a popular place for crypto entrepreneurs and investors to decamp. Expats are flocking to Bali for its cheap cost of living and lush landscapes, giving the island a tiny boost after a huge decline in foreign travelers amid the pandemic. Though foreign visitors should be forewarned: The legal status of semipermanent visitors is a bit murky. So as with everything crypto, enter at your own risk.
This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.