
Engineers Allege Hiring Collusion in Silicon Valley - awok
http://www.cnbc.com/id/101457858
======
wavesounds
"Santa Clara County, in the heart of Silicon Valley, has the highest average
wage in the country, ... It would be a mistake to think of these plaintiffs as
an oppressed set of victims."

I think this is a pretty narrow minded view. If the economy needs a particular
skill set to grow then the wages for that skill set need to rise with demand
so that market actors (Students) can choose the correct profession and supply
the economy with the skill set it needs so it can properly grow and create the
products everyone wants.

If the largest employers in the tech industry manipulated the market to keep
salaries artificially low, it hurts not only the employees directly involved
but also other people employed in the same industry who use average salaries
to make employment decisions, students who are trying to decide what career to
pursue in school and the economy as a whole which is unable to get the
required labor it needs.

~~~
mgkimsal
doesn't it hurt all the ancillary people and industries and businesses that
those people would have patronized with those higher salaries as well? isn't
that the heart of conservative trickledown econ? or is it fine if your
employer breaks laws to keep the money from ever entering your pocket, but
it's evil if the government taxes it?

~~~
thesimpsons1022
you forget conservative economics is about protecting corporations, not
people. (except they consider corporations as people.)

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aresant
Apple has held the mantle for the highest profit per employee for several
years - coming in 2013 @ $500k/per.

Considering that takes into account ALL employee wages if you were to hone
that number to "per engineer" it would be several multiples higher.

If truly removing collusion left a free market would the top quadrant jobs see
a 2x improvement?

And how would startups fare if the $$$ in engineering roles doubled @ the big
valley firms?

Short term less as people flocked towards the cash?

Long term more as people built more dry powder to try it on their own?

(1) [http://nypost.com/2014/02/28/apple-has-biggest-slice-of-
prof...](http://nypost.com/2014/02/28/apple-has-biggest-slice-of-profits-per-
employee/)

~~~
hueving
> Apple has held the mantle for the highest profit per employee for several
> years - coming in 2013 @ $500k/per.

That number doesn't mean anything though. Employees' salaries aren't based on
profit unless they are paid entirely in company equity. You can't have it both
ways where you get income when the company isn't making money and you get the
extra profit when it is.

~~~
eli_gottlieb
His point is that Apple easily has the revenues to pay even higher salaries
than they already do, but choose not to simply to keep labor costs down.

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_greim_
It looks like they're playing the iterated prisoner's dilemma. They have to
compete in the same employee market over the long term. You snipe my engineer,
I snipe your engineer, same net engineer count, but loss of experience. We
both refrain, same net engineer count, no loss of experience. I wouldn't be
shocked if this colluding policy hasn't indeed benefited the participating
companies. And I could even see it primarily not being to keep salaries down,
but to keep productivity up.

But it sucks for the tech workers. Not going to call me at my desk and try to
get me to switch companies? Fine. But if I went to work for Google, it would
suck if that put me on some kind of blacklist at all the other companies. It
seems like they've crossed an ethical line here.

~~~
ptrinh
They should instead open more dev centers in other locations. e.g. Singapore,
HongKong have a lot of talents in the South East Asia area.

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sillysaurus3
Perhaps engineers' actual value is far in excess of their salaries? It seems
like if it wasn't, there'd be no reason to collude. Does anyone collude to
prevent bakers from switching bakeries?

~~~
JacobJans
Do you know anything about the bakery industry? Have you ever worked at a
local artisan bakery?

~~~
MichaelGG
If you're going to ask a rhetorical question with that tone, at least provide
some information. I don't know, is the "local artisan bakery" market hot
enough to actually collude to prevent bakers from switching? I know nothing
about bakeries, but I thought smaller ones usually were run by the owners.

From what I do know about food creation, there is a huge surplus of candidates
and people with jobs are happy to not be washing dishes. (My sister was
considering a $60K degree in baking and that was the summary that graduates
gave her.)

So the GP comment seems to be making a valid point. If you have some insight
into the "local artisan bakery" world, share it with us instead of providing
an slightly insulting, information free, apparently offended comment.

------
mentos
Companies complain there aren't enough engineers. Seems like that can be
attributed to wage suppression?

~~~
eli_gottlieb
Wage suppression and the real-estate crunch are, in my opinion, probably the
top two culprits.

~~~
philwelch
Who the hell says "nah, $100,000 to $150,000 isn't nearly enough money, but
I'd get into software development for $200,000"? Once you reach 200k you might
run into a backwards-bending supply curve: you pay engineers so much they just
retire early and you have fewer engineers in the long run. So while I would
never complain about a pay raise, I also don't think it has much to do with
the shortage of engineers.

And don't even talk to me about "$100,000 isn't that much in the Bay Area".
Even in the Bay Area software engineers easily make double the median
household income.

~~~
eli_gottlieb
>And don't even talk to me about "$100,000 isn't that much in the Bay Area".
Even in the Bay Area software engineers easily make double the median
household income.

I've never earned $100k in the Bay Area, but I can tell you that I had to pay
$1100 to rent a single room in a shared house for a month, and that was
_getting a good deal_ compared to what I saw on Craigslist and Padmapper.

Yes, that level of real-estate cost _does_ discourage my taking a job in the
Bay Area.

At $100k you can spend 30% of your monthly gross income to pay a rent of
$2500/month, which will just about get you a one or two bedroom apartment
depending on how fashionable a neighborhood you want to live in or what
distance to work you're willing to commute. That is _lunacy_. Consider that
_most people don 't even make that much_, not even in the Bay Area, and that
the people who _are_ capable of making $100k could get a much nicer life for
it elsewhere.

For instance, if I could live in a decently cheap area while earning
$100k/year, _I_ would be able to save up enough to retire early after a while.

~~~
philwelch
If you lived in a decently cheap area, you would be much less likely to earn
$100k/year.

~~~
eli_gottlieb
This is quite true, which is why we now have to optimize the rather obnoxious
measure of ratio between average salary and average house cost. That is, the
tradeoff isn't perfectly linear, _but_ going towards either the cheapest land
or the highest salaries doesn't reach the optimal point on the map. It ends up
being counterintuitive, data-intensive, and bizarre to figure out what really
works.

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esperluette
It's not that wages would necessarily go up without collusion, it's that the
companies would become significantly less productive.

If you can keep your top people from being poached by your peers, you reduce
the number of opportunities for them to leave (even if they would leave for
much the same salary) and reduce your team churn, increasing productivity.

Increased productivity => MOAR PROFITZ, or so I've been told ...

~~~
steffan
If the only thing keeping your people from leaving is lack of opportunity,
there are many, many things wrong with your organization.

------
confluence
Oh would you look at that. Might just be the reason why minimum wage laws and
unions have been adopted by every single developed country on the planet.
Collusion is always cheaper than innovation.

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Ancorehraq
This story is a monthly fixture on HN.

Not sure why everybody and their mom is mad about something that affected a
handful of top engineers five years ago. Slow news day?

~~~
steffan
Because it indirectly affected the salaries of _everyone_ who works in tech in
Silicon Valley, San Francisco, and possibly a larger portion of the U.S. tech
industry.

It's standard practice in HR to calibrate salaries based on what other
companies are doing. Some large companies end up being benchmarks for entire
categories or regions.

If top engineer salaries at one company are suppressed, then so are junior
engineer salaries. If that company's salaries are artificially low, then any
company that uses that as a benchmark will duplicate those low salaries.

~~~
Ancorehraq
I don't believe you. Top engineers are in a completely different bargaining
category than regular, and especially junior engineers.

A junior engineer adopting "Steve Jobs is keeping me down" as his personal
narrative probably has problems other than the games Silicon Valley
billionaires play with each other.

~~~
steffan
Junior engineers are _more_ likely to be affected precisely because of this
reason; they have far less bargaining power than a top engineer and are
subject to the standard “This is the salary band based on our research on our
competitors' salaries”

