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The Cost of Commuting - Did You Know There's a FSA for the Morning Commute?

Is the Honeymoon Over at Google? Daycare Cost Goes Up 75%...

First up, let me get a disclaimer out there - I'm as enamored as anyone by Google.  I use the products, and get green with envy as a HR pro when I see the things they do for their employees.  It's a cool company that has an employment brand like no other. 

Here's the thing - it's tough to sustain the level of perks they have in play over time.  When you'reGoogle3oct2001 printing millionaires and have growth well, well into the double (maybe triple) digits, you can fund the goodies.  Even if you're printing money, as the growth rate comes down and the multiple Wall Street assigns to you changes as a result, the operational pressure is on to cut costs.  It's happened at hundreds of premiere companies before Google, and logic suggests it'll happen at the big G as well.

Has the cost cutting at Google begun?  Did the Big G just blink?  From the New York Times:

"Two months ago, Google held a series of secret focus groups with employees who have children in Google’s day care facilities. The purpose was to gauge their reaction to the company’s plan to raise the amount it charged for in-house day care by 75 percent.

...someone at Google woke up one day and realized that the company was subsidizing each child to the tune of $37,000 a year — which nobody had noticed up until then — compared with the $12,000-a-year average subsidy of other big Silicon Valley companies like Cisco Systems and Oracle.

Parents who had been paying $1,425 a month for infant care would see their costs rise to nearly $2,500 — well above the market rate. For parents with toddlers and preschoolers, who were charged less, the price increases were equally eye-popping. Under the new plan, parents with two kids in Google day care would most likely see their annual day care bill grow to more than $57,000 from around $33,000.

Do you think you know how this story ends? You’re probably guessing that because it involves “do no evil” Google, Fortune magazine’s “Best Company to Work For” the past two years, this is a heart-warming tale of a good company reversing a dumb decision.

If only. Although Google is rolling back its price increase slightly and is phasing in the higher price over five quarters, the outline of the original decision remains largely unchanged. At a T.G.I.F. in June, the Google co-founder Sergey Brin said he had no sympathy for the parents, and that he was tired of “Googlers” who felt entitled to perks like “bottled water and M&Ms,” according to several people in the meeting. (A Google spokesman denies that Mr. Brin made that comment.) On Monday, Google began the first phase of its new day care plan, letting go of the outside day care firm it had been using.

In recent months, Google has hit the first rough patch in its short, magical life as a public company. From November to April, Google’s once high-flying stock dropped 44 percent, to $412 from $744. (It has since gained some of that back, closing on Thursday at $537.) It may be a stretch to equate the day care fiasco with the fall in Google’s stock. But maybe not."

The balanced side of me feels compelled to point out that a company that provides day care benefits still remains in the upper crust of employers.  I'm also assuming that as crazy as it sounds, 57K for two kids in daycare full-time represents a discounted rate in Silicon Valley.

So Google still leads in the perk category.

Still, when the growth rate slows, companies are forced to be lean where they can.  As much as we love any company and the values presented, when growth/profitability goes down, so will the total benefit spend.  As Sergey Brin alludes to, Google can still be an employer of choice.  It's just that the M&M's may not be free.  Is that bad? 

The employee relations issue is that the perks become entitlements over time.  That's what makes it a tough situation, whether you are Google or ACME Metals.

See the serious of communications from Google HR to employees here...

Comments

Rosie Sherry

It's a shame really. As a parent with two young (pre-school) kids it would definitely make me think again whether it is worth going to work if the costs of childcare would go up that much.

As it's in dollars, am not entirely sure how it relates to wages, but childcare costs are often very similar income of one parent (at least in the UK), especially when there is more than one under 5 involved.

I know many mothers/families who could work, but don't because everything they'd earn would go into childcare, (spare a few pennies).

Flexible working and childcare are my number one concerns. If an employer or client can't offer me that then I won't bother.

Evil HR Lady

You lost me on the $57,000 for two kids in daycare. Holy cow. And I thought the offspring's daycare was expensive at $300 per week (full time cost, she was only in for 2 days a week, so we paid $128 a week). She had triplets in her class and I wondered why on earth both parents worked.

Then I thought, if I had triplets, maybe I would WANT to work just to get out of the house. Triplets would be hard.

Boy, this is one irrelevant post!

Meg Bear

can't help but think that Google could learn something from Harry Burns (When Harry met Sally).

Kris, why is it that your posts always make me want to quote movies?
___
Harry Burns: You take someone to the airport, its clearly the beginning of the relationship. That's why I have never taken anyone to the airport at the beginning of a relationship.
Sally Albright: Why?
Harry Burns: Because eventually things move on and you don't take someone to the airport and I never wanted anyone to say to me, How come you never take me to the airport anymore?

KD

Hi Evil - I know, I know... 57K kind of lost me too, but I believe Meg lives in the area, and can probably give us a better bay area/silicon valley perspective on this one.

Meg - I'm glad my posts make you want to quote movies!! That's one of the classic ways to communicate in my eyes. I'm going to follow up with a benefit expectations/entitlement post next week, I'll use the clip if I can find it (with a hat tip to you, of course). if you have a Central CA perspective for Evil, KD and the readers on the cost of quality daycare, please share....

Rosie - thanks for the thoughts and stopping by....

Meg Bear

OMG you don't want to get me started on the cost of high quality childcare in the Valley.

First, let me say that I am fortunate enough to have wonderful Nanny help for my kids but I do pay much more on childcare per month then I do for a house payment (which is also outrageous here).

Nanny rates can be from $13 to $25 an hour (and not that is NOT a typo) "depending on experience". I don't have intel on center rates but I would expect them to be in the $10/hour range which would put them around $20k a year for one child.

So, net net I think Google has put themselves on the high side but not out of the ballpark, considering that there would be no extra commute-time cost for childcare (assuming you worked at the same location.)

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