
Apple and Google’s wage-fixing involved dozens more companies, over 1M employees - Hoff
http://pando.com/2014/03/22/revealed-apple-and-googles-wage-fixing-cartel-involved-dozens-more-companies-over-one-million-employees/
======
CoolGuySteve
People decry the greed of financial sector employees, but one of the best
things about moving there from silicon valley was that people had a pretty
good idea of their worth as a proportion of the firm's balance sheet.

I really appreciated that compensation expenses on the balance sheet of a
typical investment bank are fixed at 37-39% throughout the year, with the
delta between salary and allotment being paid out as bonuses. It significantly
improved my income.

I would gladly work at a tech company with a similar incentive structure, and
I think more engineers should start asking for it. Financiers get paid a lot
in the form of bonuses, but the correct answer is not to daisy cut by
hollowing out their income. We should be asking why tech employees don't also
make the same kind of revenue.

When Google and Apple have profits per employee of over $1M but the average
engineer salary is only slightly higher than $100K according to glass door
while both these companies are building stockpiles of cash holdings, something
is obviously broken.

I suspect part of it is the 'doing it for passion' mantra, but another part of
it was Apple HR's now obviously crooked refrain of 'we pay the prevailing
market wage'. Just because I'm doing something I'm passionate about doesn't
mean I like getting ripped off.

~~~
birken
While I don't agree with the wage-fixing thing, I can tell you that the
"average engineer salary slightly higher than $100K" at Google is not even
close to true. When I worked at Google 7 years ago, in the heart of this
controversy (IE when salaries were theoretically depressed), as the lowest
level engineer just out of college, my salary after bonus was over $100k. Any
current mid-level engineer will probably be making between $200k-$300k in
total monetary compensation from salary/bonus/stock. And this isn't counting
the tons of other benefits (cadillac health coverage, free food, generous 401k
matching, etc).

I'm not trying to be a shill for Google here, but I think it is a little
misleading to say Google is hoarding all of this money and making their
engineers live on pennies. The engineers are paid well, and while they (and
other tech companies) don't have the partner-type structure, there still are
competitive forces driving wages up (assuming the companies are generating
profits and can afford it). And... if an engineer wants a partner type
structure, they can always just quit and found a company where the wealth
accumulates for them just as directly as it does in finance.

~~~
droopyEyelids
>I'm not trying to be a shill for Google here, but I think it is a little
misleading to say Google is hoarding all of this money and making their
engineers live on pennies. The engineers are paid well,

It seems to me you're sneaking in a little argument about what people
'deserve' here, and appealing to a predatory modesty. OH, sure, google is
making an insane amount of money, and they're not passing it down to the
people doing the work, but do workers NEED that money? Couldn't they, in fact,
get by with _less_ than they're paid now?

~~~
birken
No, not at all. I quit Google to work at a startup not because I didn't like
Google, but because I felt a startup was a way for my compensation to more
directly align with the value I could help create. And obviously my belief at
that time was my "real value" was far higher than I was being paid at the
time.

I really just wanted to dispute the numbers here, because I disagree that big
tech companies are somehow more unfair to the employees than finance
companies. Assuming there aren't illegal anti-poaching agreements, market
forces operate in SV the same way they operate in the finance sector to drive
up salaries of talented employees.

And it seems to me that if you want to strike off on your own (which is a
risky but good was of generating "true value" for yourself), it is easier to
do that in SV with a tech startup than it is in the finance industry.

~~~
etherael
> Assuming there aren't illegal anti-poaching agreements, market forces
> operate in SV the same way they operate in the finance sector to drive up
> salaries of talented employees.

Isn't the entire point of this debacle that there _are_ anti poaching
agreements, however?

------
ChuckMcM
I've lived and worked in the bay area for 30 years this month. Scary to think
about but it lends an interesting perspective.

At some point in their growth, senior management is far enough away from the
day to day engineering that the differences between individuals becomes nearly
completely obscured except for a small percentage of standout folks.

This level of management is incenting a group to 'grow the company' and they
need more folks to do more things. The problem is that engineers have wildly
variable effectiveness in a role (they aren't fungible as folks would like)
and the recruiting group is being rated on 'quality hires'.

So if you split the population of engineering talent into loosely defined
groups of 'employed at a hot[1] company', 'employed at a non-hot[2] company',
or 'unemployed' the recruiters consider these (unreasonably) to be 'best',
'ok', and 'not ok' groups to recruit from because they correlate the hot/not-
hot bit to their incentive probability.

In the 80's it was Intel, AMD, and National Semiconductor all trying to growth
by hiring the 'hot' talent from their competitors. In the 90's it was Ebay,
Yahoo, and Sun, and in the naughts it was Google, Oracle, Intuit, Paypal etc.

So you have this system set up and the 'cheapest' way (in an economic sense)
for a recruiter to be successful is to exploit the work of some previous
recruiter that was successful and recruit the top talent from their pool into
your pool. Combined with California's labor laws which favor employees and you
end up with a situation that repeats itself over and over and over again.

The issue is that recruiting quality people out of the entire pool is "hard"
and poaching the top engineers at a competitor is "easy." We don't incentivize
recruiters to do the hard work, which leads to a host of other problems as
well (like ageism, university discrimination, etc)

[1] 'hot' in this context is buzzworthy or having good growth and execution
press. (exemplars, 'Google', 'Facebook' or 'Apple')

[2] 'non-hot' is a company that is idling along (not failing) but not
generating a lot of buzz either (exemplar 'Computer Associates' or 'IBM')

------
mindslight
Thinking about it a bit, I bet this wasn't born out of a desire to want to
keep wages down per se, but a desire to avoid turnover of productive up-to-
speed people.

It's quite funny to see that the downsides of near-instantaneous at-will
employment are hitting companies so hard that they're willing to engage in
such a boneheaded scheme, when sympathy is normally focused on employees.

Perhaps if these companies want to bring back some semblance of employee
loyalty, they should start incorporating longer termination notice periods in
their contracts and making employees happy _before_ they want to leave, rather
than treating individuals as interchangeable cogs and getting what they ask
for.

~~~
riggins
_Thinking about it a bit, I bet this wasn 't born out of a desire to want to
keep wages down per se, but a desire to avoid turnover of productive up-to-
speed people_

I understand your thinking but I don't think it logically holds together. If
the main concern was stability, that could be addressed by matching/topping
any competing offers ... so you're right back to this being about holding down
wages.

~~~
mindslight
Your method would increase complexity while making the pact harder to hide,
and keeping down wages is a nice side benefit. Keep in mind people generally
don't _start off_ trying to do overt wrong.

~~~
riggins
I really struggle with some of the thinking on HN.

If anything I might buy the argument that Jobs was a huge control freak and
that's what drove him to do this more than anything else, but how do you think
this went down.

Jobs really didn't like having his engineers poached because it disrupted
continuity. So he said to himself ... what am I gonna do? what am I gonna do?
Offer 2x whatever Google is offers? Noooo ... that would never work. I need to
call up Google and threaten a poaching war?

I'll go with Occam's razor. The simplest explanation is the best.

~~~
mindslight
Jobs's ego could certainly have been a large part of it. But doubling salaries
isn't a solution because the competition will raise salaries to counter their
people leaving and you'll be back in the same insecure position while paying
twice as much.

And please note, I'm certainly not defending any of this behavior, just
examining possible motivations.

(And well that's how exploration of different narratives goes, it's a constant
struggle compared to simply picking from the limited two-sides-max of
mainstream press)

~~~
sitkack
You just mentioned two doublings like it was nothing. 4x salary. Not something
that can be glossed over.

------
kryptiskt
What I don't get is that I see Eric Schmidt strutting around in all kinds of
media these days, how come no one ever asks him about his role in this shit?

~~~
TDL
Cynical view: The media does not challenge the powerful and the wealthy, they
merely act as PR hacks.

~~~
nerfhammer
industry media is usually fawning

\- why pay a writer to write a whole article when you can just reprint a press
release with slight edits?

\- they live in fear of "losing access" because they have nothing else to
cover

\- kool-aid-drinking sells

E.g., can you imagine TechCrunch announcing a new startup and then criticizing
its concept? it would make startups would think twice about giving them any
releases, writers would be able to produce less content, no kool aid.

outsider media, on the other hand, can land on the other end of the pendulum
of being overly cynical, paranoid, underinformed etc.

~~~
bztzt
I actually think a lot of media has both sets of problems at the same time.
They will take press releases or whatever and reprint them coated in identical
thin layers of snark and generic cynicism, without providing any real
criticism or context.

------
cottonseed
> The agreement prompted a Department of Justice investigation, resulting in a
> settlement in which the companies agreed to curb their restricting hiring
> deals.

Wait, the result of an investigation where wrongdoing was found is ... that
the companies agreed not to do it anymore? Yes, I know there is a still a
civil class action lawsuit going, but still.

~~~
CoolGuySteve
For those who don't know, to sign up for the ongoing class action suit, go to
[https://www.hightechemployeelawsuit.com/](https://www.hightechemployeelawsuit.com/)
and request a form.

Apple gave them my old address (even though they know my current address), so
I had to request a claim number since the mailing got lost.

------
fixermark
The funny thing about all of this is that a"cold call" block is actually
something the engineers might want.

As a software engineer: I've been chased by recruiters while heads-down on a
project. It's an annoying distraction. With the tools at my fingertips
(glassdoor, social and professional networks of other engineers that aren't
particularly restricted by corporate borders in a deeply-interconnected era),
I know the market value of the job and I know who's willing to offer more and
less; I also can know about the corporate and engineering culture of the other
companies. In short: if I want a change, I know where the door is and I know
who's hiring. While in general, I'd agree with the notion that decreased price
signalling could depress wages, I think it's a stretch to push software
engineers working at the listed companies into an "oppressed workers" mold;
it's a notoriously well-compensated field.

It's certainly a booby-trap to reason from one's own experience. But I find
myself thinking that software engineers themselves might welcome the idea of a
"no cold-call" list.

~~~
tricolon
Do recruiters actually call you? I've gotten countless emails, which are easy
to ignore—but I think I'd go insane if they started trying to call me.

~~~
mjolk
Recruiters definitely sell telephone contact sheets to each other (or take
them along when they change companies).

I've even had recruiters call me on my desk phone at work trying to do a sales
pitch.

------
Clanan
To entrepreneurs, business people, managers, etc.:

Please remember that your company is more than its product – it’s a group of
people surrounded by a community of family, children, neighbors, etc. Whether
your goal is world-changing or niche, do your best to take care of those
people as professionally as you can. Business is business of course, but don’t
rationalize bending the rules just to make a few more bucks.

If you get caught, you’ll pay. But even if you get away with it, remember how
powerful a guilty conscience can be at turning profits into dust.

~~~
Roboprog
That's a nice thought, but I don't think sociopaths suffer much from a guilty
conscience.

I do believe fines and jail time have some effect on them, though.

------
skore
[edit] Yes, I know we have a title limit here, thanks for pointing it out
again and again. The question is why the, in my humble opinion, most important
word of the original title was dropped.

OP: Revealed: Apple and Google’s wage-fixing cartel involved dozens more
companies, over one million employees

HN: Apple and Google’s wage-fixing involved dozens more companies, over 1M
employees

Maybe this is too nit-picky even for HN, but: Why does the headline here on HN
only name "wage-fixing" (aka the symptom of the problem) instead of also
naming the underlying cause like the article does: This is a _cartel_.
Dropping the word has a whiff of spin.

I sure as heck hope they get the treatment they deserve and that this will
strengthen the understanding that this type of stuff is exactly why you want
strong unions. Judging from the history of both in the US, I'm not holding my
breath, though.

~~~
cpncrunch
The Pando article itself is spin. It wasn't a 'wage fixing cartel'. It was a
non-poaching agreement, which may or may not have resulted in lower wages as a
side-effect. I'm not sure it's even accurate to call it a 'cartel'. A cartel
agrees to fix prices, which didn't happen in this case. They didn't even agree
to fix wages, so the article is essentially bullshit in my opinion.

~~~
corresation
A cartel are competitors who privately agree to essentially not compete, and
this can include on the production side (which in this case are tech workers).
The unavoidable, and intentional impact of that is wage suppression. This
isn't a "maybe", this is absolute certainty: A rising Google upset the apple
cart by offering more than those other companies were, and everyone else was
sour that they'd have to start paying more to keep their employees. This
agreement, without any doubt at all, took money out of the pockets of tech
workers.

I'm generally a fan of Google, but I have a negative opinion of Eric Schmidt.
So many times he says and does things that seem so fundamentally detached from
real life.

EDIT: Just wanted to add that the hero of this story -- the only one who
actually saw that it was wrong and probably illegal, was Edward Colligan, then
the CEO of Palm - [http://pando.com/2014/02/19/court-documents-reveal-steve-
job...](http://pando.com/2014/02/19/court-documents-reveal-steve-jobs-
blistering-threat-to-ceo-who-wouldnt-join-wage-fixing-cartel/)

~~~
cpncrunch
Not according to any defn i can see. All defns say a cartel regulates
production and output.

------
martinald
This is absolutely ridiculous. There should be some seriously punitive fines
for this.

While I can see the lack of sympathy because these employees are so well
compensated and rewarded for the work, if this affected blue-collar jobs
instead there would be people on the streets, and quite rightly.

As someone else pointed out, Google and Apple are probably making on the order
of $900k/year profit per employee - there is obviously cash in the bank to pay
market salaries without resorting to disgraceful tactics like this.

------
jasonlotito
So, what people don't realize, is that this affects the entire industry,
whether you were employed by one of these companies or not. With over 1M
employees driving "market rates" for salaries, others followed and competed on
those terms. This also impact hiring and employment for so many.

Basically, anyone paying a competitive market rate these days is effectively
benefiting from this. As a programmer, you should approach companies with this
mindset.

------
daphneokeefe
Anecdotaly, I recently moved home to San Francisco from Charlotte, NC. The
dominant employers in Charlotte are the big banks, and there aren't a lot of
major tech companies there. I was surprised to find that the pay scale --
contract or salaried -- is about the same or less in SF for a senior web
developer, despite the great difference in the cost of living in those cities.
Maybe this explains it.

~~~
eranation
My unproved explanation is about age, young people tend to not want to work
for banks (citation needed).

Young people can afford less salary but prefer equity, fun culture, amenities
and perks (citation needed 2).

A Sr. Java Developer living in Charlotte, Atlanta or Texas needs to make a 6
figure salary to stay in a middle class level quality of living (2 kids,
single family home, 2 cars, hole foods market)

A Single Developer in SF needs the same amount of money to live well in the
city with roommates.

a NC bank wanting a good web developer can either pay a young SF developer the
same money she is making there to compensate for the loss of "living in SF is
more fun for young adults than in Charlotte" \+ "it's a bank, we don't have a
ping pong table or beer in the fridge" effect. Or pay a salary that is going
to be enough for a bit older developer who has a family, to live comfortably.

If you consider that there is a cost to moving to Charlotte that is more than
a monetary cost, that cost needs to be taken into consideration in the
compensation.

------
justinph
Shocking, but not necessarily surprising given what has already been revealed.

Seems like the kind of thing that a union would help protect against.

------
ChristianMarks
The apologetics here are nauseating. You want to be slaves. Maybe technical
labor ought to form its own cartel and stop working for these companies. Let
the executives clean their own toilets.

------
danra
I wonder what the general mood is regarding this in Apple and Google. More
importantly, I wonder if there are going to be any significant repercussions.
Would appreciate comments from employees of these companies, whether this
information being uncovered has had any effect in the workplace so far.

------
walshemj
Interesting that it has reached the UK. Maybe we need an investigation in the
Uk/EU as well.

~~~
lotsofmangos
I think this is the relevant bit of law, point (e) about the conclusion of
contracts being subject to other parties, as this covers the conclusion of
employment contracts, among other things.

1\. The following shall be prohibited as incompatible with the common market:
all agreements between undertakings, decisions by associations of undertakings
and concerted practices which may affect trade between Member States and which
have as their object or effect the prevention, restriction or distortion of
competition within the common market, and in particular those that:

(a) Directly or indirectly fix purchase or selling prices or any other trading
conditions

(b) Limit or control production, markets, technical development, or investment

(c) Share markets or sources of supply

(d) Apply dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;

(e) Make the conclusion of contracts subject to acceptance by the other
parties of supplementary obligations that, by their nature or according to
commercial usage, have no connection with the subject of such contracts

[http://eur-lex.europa.eu/Notice.do?val=262491:cs&lang=en&lis...](http://eur-
lex.europa.eu/Notice.do?val=262491:cs&lang=en&list=262491:cs,262487:cs,201150:cs,114690:cs,71708:cs,27020:cs,426:cs,108:cs,&pos=1&page=1&nbl=8&pgs=10&hwords=article%2081~&checktexte=checkbox&visu=#texte)

------
tempestn
I seem to be in the minority here, but legality aside, I don't see an
agreement between companies not to poach each other's employees as a terribly
sinister thing. In fact, it seems entirely reasonable to mutually agree not to
actively recruit employees from another company.

Once you talk about refusing to hire potential employees who apply of their
own volition, that would be another thing, but in my mind "no cold call" !=
"wage fixing scheme".

~~~
tempestn
(I assume I'm likely missing something though, so I welcome counter-arguments.
Would this still be a problem even if all they had done was avoid actively
recruiting?)

------
aspensmonster
Tech workers totally don't need a union.

~~~
nerfhammer
Part of the kool aid is that you, yes you, are merely a plutocrat-in-waiting
so of course don't make things worse for yourself when you're going to be CEO
of a billion dollar company.

The extremely enginuitive and extremely lucky are going to strike it big and
have these concerns. But you're enginuitive and lucky, right?

~~~
mjolk
If you're going to be smug and offensive, at least don't make up words.

~~~
nerfhammer
I couldn't think of the word I wanted and that sounds like the word that would
mean what I wanted it to mean, so I was very enginuitive in my wordification

------
walid
Will the CEOs ever go to jail for this. This is clearly more than a TOS
violation, which can land people in jail.

------
patrickxb
All the law firms in NYC (perhaps other cities) pay the same salary to all
associates. It's agreed upon between them.

That being said, it's not exactly a suppression of the salary as I believe it
is quite reasonable, but more like an equal playing field. You wouldn't go to
another firm based on salary.

~~~
nerfhammer
There's no part of that that isn't illegal collusion and if true then there
would be overwhelming incentive for some aspiring legal minds to launch class
action suits against that

------
cykho
Your contribution at a big company amounts of a little under half the
compensation equation (the rest is politics). If you want to work at a big
company spent half your time playing the game. If you want your life to be
about your work go to a startup.

------
outside1234
Does anyone know how we sign on to the class action? I was at Microsoft and
then Google during this time and this probably affected my starting salary at
Google.

~~~
dbloom
Go to
[https://hightechemployeelawsuit.com](https://hightechemployeelawsuit.com) .

If you were affected, you should have gotten a (snail-mail) letter.

------
jroseattle
Don't be evil.

~~~
hippee-lee
My impression of that as a corporate mission is that is sounds good enought
that most folks think, yeah that's a good thug to pursue.

Having said this irl to other developers, the more I think about that, the
more it disappoints me. Why? Because when I think about the mid level employee
faced with making decisions, and they have to have an internal dialog with the
selves as to if something is evil or not there are a lot of influencing
factors that come into play. Is compensation bonus or promotion tied to the
thing under consideration. How do individuals differentiate between evil and
just really bad? My guess is that human nature (my own included ) is a lot
easier swayed to 'well this is morally or ethically bad but not evil' when my
own self interest is a factor in the decision to do or not do certain things.

Thinking about that slogan for the last fee years makes me wish they had gone
the opposite direction and raced to the top: be righteous, be ethical, be
morally strong.

For full disclaimer, I live in a world of my own construct where the glass is
always half full and the scales always balance. However for, practical
reasons, I have learned to understand the motivations behind the way the world
and adjust my expectations accordingly.

------
graiz
Reading the actual text that's included in the article it seems to say that
this is a non-poaching agreement for senior level roles. Specifically it says
not to "Cold Call." It specifically excludes engineers and non-senior level
roles so the allegation that it's over 1M employees is also not accurate as
that number would include non-managers.

~~~
chrismcb
reading the actual text in the article, how do you come to the conclusion that
it is for "senior level roles" only? It talks about "staffing talent"
"recruiting teams from any company" "one of our sales guys" Nothing in the
article seems to limit it to just senior level roles. Where does it
specifically exclude engineers and non-senior level?

~~~
Roboprog
Some do-not-call agreements were at the senior management level, and some were
not. (at least, that's what I thought I read)

------
ulfw
Oh good ol' Silicon Valley

~~~
Roboprog
It's funny how the alternative to S/V wages and staff is almost always to go
to India (or similar place), as well, rather than ever consider branch offices
in any smaller towns in the US.

But of course, there's no talent in Denver or Des Moines, but plenty overseas
(if it's cheap enough)

It's intolerable to have to call somebody on Mountain Time or Central Time,
but OK to have to coordinate meetings on the other side of the world.

------
pskittle
Oh boy! It's just worth asking what kind of world we're leaving behind for our
predecessors.We're pushing humanity forward but at what cost .

~~~
icebraining
I think you mean successors.

------
soheil
Incredible how so many people still kill to work at those companies. Maybe
this is a sign that likes of Google on are on decline at least as far as their
ability to attract top talent is concerned.

------
paul9290
What is the going salary in a general sense for a UI/UX Developer in Silicon
Valley these days? From junior to mid to senior level? Thanks!

------
rco8786
I'm actually really confused. I don't understand how companies agreeing to not
cold call each other's employees is "overwhelming evidence of wage fixing".

~~~
walshemj
And presumably if you found some one standing over a corpse hacking at it with
a blood stained axe you'd think they where trying to administer a new form of
CPR?

Its direct evidence for Christ's sake.

~~~
rco8786
Ehh, no? Look I'm not saying it's a fair/legal practice what they did. I'm
just not a law expert and don't see how it's direct wage fixing(indirect,
sure).

