At an all-hands meeting on Tuesday focused on Google's 2022 strategy, executives announced they won't be raising pay company-wide to match inflation.
The topic came about after an employee submitted a question in the company's internal forum, Dory, which received more than 400 "upvotes": “With the U.S. inflation rates being as high has 7%, some companies are doing blanket salary adjustment to cover just the inflation. Is there any plans for Google to do the same thing?” CEO Sundar Pichai read the question out loud during the all-hands and then ceded the stage to Frank Wagner, the company's VP of Compensation.
According to CNBC, which first reported the exchange and obtained audio of the meeting, Wagner said, “As I mentioned previously in other meetings, when we see price inflation increasing, we also see increases in the cost of labor or market pay rate. Those have been higher than in the recent past and our compensation budgets have reflected that.”
In justifying the decision to not do any "across-the-board type adjustment," Wagner said the company prefers to adjust pay "by performance" rather than giving "smaller increments to everybody."
Inflation jumped 6.2% in October, the biggest surge in more than 30 years and essentially wiping out wage increases for workers across the country. The Labor Department said in a report that real wages after inflation fell 0.5% from September to October.
Meanwhile, Google's parent company Alphabet has seen a meteoric rise in advertising revenue this year: up 43% in the third quarter with its stock price up 68% year over year.
Across the board, U.S.-based companies are setting aside record proportions of their payroll budget to raises in 2022. A November survey of 240 U.S.-based businesses (half of which employ more than 10,000 workers) from the Conference Board found a 3.9% jump in wage costs for firms in 2022, the highest rate since 2008. Businesses are setting aside more for raises and feeling the pressure to compete on retention and hiring in one of the hottest job markets in years.