Vexed in the city: Working in Silicon Valley tech is much more lucrative than you think

Originally published August 21, 2014

By Ian Sherr

This story is part of a CNET special report that examines the controversy gripping San Francisco as a massive influx of techies feeds an unprecedented economic boom — and backlash.

Drive around the wine country located about an hour north of San Francisco and you might spot an eerily familiar bus that, if you look carefully enough, seems like one used by Google to shuttle its employees to and from its offices in Silicon Valley.

That’s because it is.

As tech industry cash hoards and company valuations soar, the perks dished out to employees are following close behind — and they’re getting as creative as the code behind the products and services tech companies are peddling. In the past couple of decades, the list of handouts has lengthened from free soda and coffee to free meals to commuter benefits, surprise outings, massages, and more.

Tech perks aren’t new. But it turns out they don’t just make for a nicer work environment, they’re also changing the nature of employee pay. Recruiters say that total compensation for tech employees in Silicon Valley and San Francisco is much higher than widely assumed, primarily due to all the sundry freebies they receive — everything from catered lunches and Wi-Fi-equipped buses to free laundry.

Because of that, companies in and around the tech industry are taking note. Perks across the country are beginning to expand; even a staid insurance company in the Midwest now offers free coffee and soda. But the benefits of working in Silicon Valley continue to outpace any other industry, with dry cleaning, saunas, and on-demand massages becoming not only routine but expected.

And so when companies attempt to lure tech workers away from those perk-filled jobs, potential candidates demand more money to account for what they’re leaving behind.

How much are those perks worth? The difference may be as much as 20 percent above and beyond their salary, recruiters say. That means on paper, a software engineer at Facebook, Twitter, or Google who makes about $120,000 a year actually pulls in up to an additional $24,000 — it just doesn’t show up in their paycheck, and the  Internal Revenue Service doesn’t collect taxes on it either.

“They say ‘In my last job, we got free gym memberships,'” said Jill Hernstat, a recruiter at executive search firm Hernstat & Co. “It’s gotten so out of hand.”