Facebook increases contractor wages to $15 an hour.

Facebook Just Gave Its Janitors and Cafeteria Workers a Raise

Facebook Just Gave Its Janitors and Cafeteria Workers a Raise

Moneybox
A blog about business and economics.
May 15 2015 11:51 AM

Facebook Is Raising Wages for Contractors to $15 an Hour

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More money, fewer problems?

Photo by Jonathan Nackstrand/AFP/Getty Images

Facebook is taking up the fight for $15, if not formally then through a wage increase it announced this week. The company has begun paying its U.S. contract workers—which include cafeteria staff and janitors—a minimum of $15 per hour. Contractors are also getting improved benefits: at least 15 days of paid time off, and a $4,000 new-child benefit for workers who don’t get parental leave. “Taking these steps is the right thing to do for our business and our community,” Sheryl Sandberg, Facebook’s chief operating officer, wrote in a memo. “Providing adequate benefits contributes to a happier and ultimately more productive workforce.”

With its decision, Facebook is getting ahead of the increasingly visible class tensions in Silicon Valley. Earlier this year, a study from Joint Venture Silicon Valley described how uneven economic growth in the valley has been. While Silicon Valley’s overall job growth was 4.1 percent in 2014, the best rate since 2000, middle-wage jobs actually declined slightly. And that year, the median gap between low-wage and high-wage jobs was $91,804 in Silicon Valley compared with $69,992 elsewhere in the Bay Area. “Though we’re proliferating high-wage and low-wage jobs, we’re steadily losing share in the middle,” Russell Hancock, president and CEO of Joint Venture Silicon Valley, wrote. “It’s as if the economy has lost its spine.”

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If these disparities are particularly acute in Silicon Valley, they’re also apparent across the country. Last summer, the Russell Sage Foundation delivered the shocking news that the median household was officially poorer than it had been in 1984.* Meanwhile, a report this week from the AFL-CIO found that the CEOs of America’s biggest public companies now earn 373 times more than the average worker. Microsoft’s Satya Nadella was the third-highest paid CEO on that list, with $84.3 million in compensation in 2014. Oracle’s Larry Ellison was right behind in fourth place with $67.2 million in compensation while Yahoo’s Marissa Mayer ranked 13th, with $42.1 million.

The timing of Facebook’s announcement probably isn't accidental. Since the start of 2015, several other majors companies—including Target, Walmart, and McDonald’s—have announced increases to their minimum wage. Their decisions have come alongside repeated, prominent labor rallying efforts from groups like Fight for $15, as well as a new Democratic push to raise the federal minimum wage to $12 an hour by 2020. Facebook said in its memo that the change is already in place at its Menlo Park headquarters and will reach more workers within the year. The company declined to tell Reuters how many contract workers it employs or who its vendors are, so it’s a bit hard to estimate what this increase will cost. But with a market cap of $226 billion at last count, chances are Facebook can afford it.

*Correction, May 15, 2015: This post originally misspelled the name of the Russell Sage Foundation.

Alison Griswold is a Slate staff writer covering business and economics.