On the Internet, it says: As of January 2023, as the company announced a mass layoff, it returned its revenue per employee at $1,586,880 So why does Google (or FAANG) skim on wages for the FTE (for $20k lower) or for contractors... for example, if regular employees can bring home $300k, why do they make it so that the company perhaps pay the agency $250k, but let the contractors bring home only $170k? I mean, it seems they can be more generous. If they are just afraid of having to fire people, why not just say, "OK, you are hired as an employee but there is no guarantee and it can be a layoff without severance any day", and let the contractors bring home $250k instead of $170k? TC: 390k #faang #business #capitalism
Because wages isn't their only expense? Regardless, shareholders are way more important that workers will ever be. Yay capitalism
Yup - correct. Returning max value to your stakeholders is the #1 duty for a company and its officers. They will pay as much as needed by the market - fiduciary duty to not overpay for anything - including wages
We are the "OK, you are hired as an employee but there is no guarantee and it can be layoff without severance any day" group. That's called working at will.
so why do these company hire FTE and contractors and let them take home $300k vs $170k?
Another thing to keep in mind is that this revenue isn't generated evenly by all employees. Certain teams and projects generate more (e.g. Search vs Dart team).
right, so... I mean, the engineers may be making more like $2M in terms of revenue, for example
Depends on the team. I worked in a Growth team at CB and we generated $20m/eng more (vs. control group) for a team of six over 12 months.
Because their shareholders don’t want all their money going to employees?
Because that's how they make a profit
Corporations are not employee welfare orgs and are in it to make a profit. They don't have to pay a cent more than what they have to.
yeah, I recently know of this trick: like you say $180k base but you still have 2 interviews lined up in 2 to 3 days. You tell them, if they give you $185k or $190k then you will stop those interviews and commit. Then it is "a reason" for them to pay you more -- they don't have to run the risk of losing you
OP net income per employee is 389k. If average employee is earning 389k that is a 50-50 split between labor and capital. Not too bad NOTE : Pretty sure average employee benefits is >400k including benefits and stuff ....
389 seems low, but you're not entirely wrong. The premise of the question itself is dumb when we base it solely on revenue.
Bloomberg I asked google 😄
Cost to company is 2-3x of TC paid out to employee. That reduces this margin.
Why should they pay a contractor same as fte? You are no where near as qualified. The impact you bring is way lower, they should pay half
some contractors I met, they write just as good code as the FTE. In some cases, the FTE talk and the contractors work, so to me the contractors are producing the real stuff
Fte design and manage while contractors do the coding. The first is much higher impact and value
Agreed to a point, but also, there are very real expenses some of that cash is necessary for. Compute, real estate, etc add up fast
Not to mention risk/reward. When google founders invested all the time and money, no employees were around asking to invest their time and money for free. Why would you ask only upside of a deal? What they are paying is already high enough.