Beginning in the 1990s, the high-tech industry has gained a reputation for offering employees not only generous pay, but also lavish, and even outlandish, perks. Massages, free food and even napping pods were but a few of the benefits companies lavished on engineers in hopes of retaining their talents.
Despite the dot-com bust and the Great Recession, financial crises that ushered in new age of austerity -- and massive layoffs -- in many sectors, tech companies today are showing even more largess with engineers and other key workers. In fact, there's a new job category: people in charge of devising newer and more effective treats for these elites.
We're not talking free sodas here. Riot Games, creator of video game "League of Legends," had 10 tons of snow pumped into the company's basketball court for an event. A software company called Asana has a $10,000 per employee allowance for computer and office furniture and décor. The yoga classes and in-house chef are additional. Adobe (ADBE) is reportedly at least considering a Slip 'N Slide water for use during working hours. Many tech companies have staff, and sometimes entire teams, devoted to keeping their tech talent happy.
The copious benefits tech players are bestowing is starting to raise questions about who foots the bill for the perks. The IRS, for one, has ruled that free food for employees represents a taxable benefit. A Wall Street Journal analysis concludes that workers who get two meals a day courtesy of their company could be on the hook for an additional $4,000 to $5,000 in taxes.
Over-the-top benefits for some employees in Silicon Valley also underscore the far more humble pay that non-technical workers who work in tech typically earn. Companies often hire contract workers at low rates for jobs such as security or driving the shuttle buses that transport engineers to work. The more money saved on such work, the more that is available for perks.
That has begun to change, though. Google (GOOG) plans to bring its security staff in-house as regular employees rather than using a contractor. The workers will be entitled to full benefits. Other employees are taking matters into their own hand, including Facebook (FB) shuttle drivers who recently voted to unionize.
Who else pays for corporate perks? Investors. Money spent ultimately comes out of shareholder value. This gets particularly sticky when a company that used to dole out the employee goodies suddenly starts to struggle.
Zynga (ZNGA), for example, used to serve employees fancy lunches and dinners every day. But some of the social gaming company's former titles lost their luster and so did the company, with its shares having fallen 80 percent since 2012. According to The Journal story, Zynga stopped providing haircuts to employees earlier this year.