Nearly a decade ago, in the aftermath of the financial crisis, Congress passed a law requiring publicly traded companies to report the median pay of their employees and compare it to the CEO’s pay. The goal was to highlight corporate excess and income inequality, with an eye toward curbing the outsized executive-compensation packages that Congress viewed as contributing to the crisis.
The requirement kicked in for most companies last year. And now, a tech companies begin to report their median pay for a second time, the figures offer a further glimpse into the compensation of some of the nation’s highest-paid workers. But they also reveal the shortcomings of reducing the pay of tens of thousands of people to a single number.
Case in point: The median pay at Google parent Alphabet rose 25 percent last year, to $246,804, the biggest increase and highest pay among a dozen tech firms tracked by WIRED. An Alphabet spokesperson says the large increase reflects a shift in when the company distributes stock and stock options. In 2017, employees essentially received only half of their typical awards; when the company resumed what it calls “full-size awards” last year, employee compensation jumped.
On the flip side, Facebook endured multiple crises last year and has been reported to be struggling to recruit new hires. You might have thought that would prompt executives to boost pay in order to attract and retain employees. But Facebook reported that the compensation of its median employee declined almost 5 percent last year to $228,651—the biggest decline among the companies in WIRED’s analysis. A spokesperson says there was “no specific reason” for the decline.
Valerie Frederickson, a veteran Silicon Valley human-resources consultant, says she’s not surprised. “Candidates still want to work [at Facebook], and take pay cuts to work there,” she says. “I see people take huge pay cuts and demotions to go there.”
Overall, the filings reveal that big tech firms pay extraordinarily well. Twitter, Square, human-resource software maker Workday, and graphics-chip maker Nvidia each reported that median employee pay in 2018 exceeded $150,000. Government data show that the average wage for a software engineer in the San Francisco Bay Area last year was roughly $140,000, far higher than the national average of $104,000.
“It’s a competitive environment,” Frederickson says. “CEOs are realizing that they really have to pay to play, they have to pay top dollar to get the people they want.”
Pay differences among tech firms reflect their differing businesses and the differing ways the companies are run. For example, the median pay of Google employees is higher because it does not include the many temporary and contract workers who labor alongside its 99,000 employees. Bloomberg reported last year that more than half the people working at Google were not employees.
Similarly, Amazon’s comparatively low global median wage of $28,836 reflects the fact that most of its employees don’t write software, but manage inventory and fulfill orders in warehouses. A spokesperson says median pay for Amazon’s US employees last year was $35,096; on November 1, the company lifted its minimum US wage to $15 an hour.
Ditto for Tesla, one-third of whose employees work in its assembly plants. The maker of electric cars reported median pay of $56,163 for last year, up 2.5 percent from 2017. A spokesperson did not respond to requests for comment.
For a company that does employ a large proportion of programmers, IBM’s median salary looks low, at $55,088. But that figure reflects the fact that IBM has a large workforce outside the United States. The New York Times reported in 2017 that IBM has more employees in India than in the US.
Microsoft, composed primarily of software engineers, last fall reported median pay of $167,689 for the fiscal year ended June 30, 2018. (Because of their fiscal calendars, some companies have only reported median pay once.) By comparison, Apple, many of whose employees work in its retail stores, reported a median of $55,426.
The ratios of employee pay to CEO pay are not as meaningful for tech companies, many of whose CEOs are founders or longtime employees who receive minimal salaries. The annual salary forAlphabet CEO Larry Page and Facebook CEO Mark Zuckerberg? One single dollar.