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Apple and Google’s wage-fixing involved dozens more companies, over 1M employees (pando.com)
325 points by Hoff on Mar 22, 2014 | hide | past | web | favorite | 120 comments



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.


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.


>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?


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.


> 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?


I would argue that there are yet some cultural impediments to labor market efficiency in SV:

- People don't want to look like, think of themselves as, or hire those that just in it for the money. It would be incredibly crass and uncool to change jobs just for salary, it should only be about caring more about something.

- Time-consuming and unpredictable hiring processes inhibit switching. There is probably a better company for most people somewhere, you know you might switch if you could predict whether you were going to get an offer. But if takes 3 days of vacation time for all-day interviews, and you have absolutely no idea whether you would be accepted or if you will happen to know the CS trivia they'll happen to ask, and you probably won't because of the supposed false negative bias, maybe not.

Finance sector, on the other hand, has to hire super geniuses willing to work 120 hours a week because to do otherwise would be to admit that most of what they do is dumb luck, defeating the whole façade.


> 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.

Um... did you even RTFA?


I was at Google for a time during the tail end of this time period, as well. I cannot claim anecdote to match data, but the pay of people I knew of, as well as my starting pay both there and at Microsoft, do sit in the "slightly higher than 100k" range. (After writing this, I realized I hadn't calculated in stock options well, which probably pushes it up towards 200k, but not so high that the "higher end of 100k" seems unreasonable) Perhaps I'm simply a low-end engineer, and the mean values are in fact higher, but this was my experience.

Having been at Google as well, you can tell me if you shared my experience that seemed the most enlightening about this, that during the various periodic review processes, there seemed no question of "are you adding additional value, should you be compensated as such." This is a discussion that I haven't had at any of the tech jobs I've worked, in that I've honestly never felt my wages were in any meaningful way tied to the value I contributed. (qualifier, I think I've fell on both sides of this line, in that it hurt and helped me, I just find the lack of incentive alignment may be the "way to approach this problem")


It's not just about Google, et al. At this scale, it affects the workers down the chain. Maybe the Google employees were getting $250K instead of $500K, which meant that companies downstream could get away with offering less, because they didn't have to get in a bidding war with those upstream.

Something this big clearly had effects on salaries across the board, at a scale where its difficult to casually judge the exact effects. Would wages everywhere be higher if it wasn't for this? I don't know, but I don't think we can rule out the possibility.


The thing is, it takes some incredible network effects that require a company at scale or an extremely fat market to generate this kind of money per employee, it's not like most smaller companies are holding back.

At that point, the infrastructure of the company is creating a lot of that value - the same engineer at another company would not generate nearly the same amount of revenue.


If a company gets away with breaking one law then what law do they break next?

Most police in the USA are believers in the broken widows theory - surly the same applies in corporate law.


> 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.

Liar's Poker[0], here we go again. This is the exact sentiment that plagued the finance industry in the 80's and lead to the bonus fiasco that exists today on the Street.

The question is what do we do about and is it the same? (I don't have an answer, just curious)

A couple of interesting notes:

1. In Raghuram Rajan's HAS FINANCIAL DEVELOPMENT MADE THE WORLD RISKIER[1]? he notes:

Therefore, the incentive structure of investment managers today differs from the incentive structure of bank managers of the past in two important ways. First, the way compensation relates to returns implies there is typically less downside and more upside from generating investment returns. Managers therefore have greater incentive to take risk.

2. Daniel Pink talks about the Candle problem[2] and two main points on his thesis:

- As long as a task requires only mechanical skill, bonuses work as they would be expected – the higher the pay, the better the performance.

- Once a task calls for even a rudimentary amount of cognitive skill, a larger reward often leads to poorer performance.

[0] - http://www.amazon.com/Liars-Poker-Hodder-Great-Reads-ebook/d...

[1] - http://www.nber.org/papers/w11728

[2] - http://www.spencertom.com/2009/10/25/daniel-pink-on-the-surp...


In theory, the engineers have incentive option plans with vesting terms that provide incentives that make them work cooperatively, and make the company more valuable, and less brittle, than an ibank. It is often suggested that ibankers receive their bonuses some years out from the year they earned them, otherwise there is an incentive to load up on future risk.

In practice, it looks like tech companies were able to avoid wage competition through collusion, while keeping their workers hopefully waiting for the option payout.

If collusion like this gets appropriately punished, wages should get bid up, along with option incentives.

An ibanker like compensation might work at a "hits" business like a casual game company, where there is strong reason to believe that whatever confection you are coding on this year isn't going to last beyond the vesting period for your initial option grant. If you overtly reward making hay while the sun shines, there would be less bitterness when it gets cloudy.


Ibankers broker financing rounds and acquisitions, they don't load up on risk because they don't actually own anything.


Presumably this whole cartel was around trying not to get where investment banking and other areas are. Many of those companies (like Goldman Sachs) were once partnerships, where paying out a lot of income is normal. It may take tech companies a while to get there as there is huge level of founder and VC control in most companies and they want payouts rather than employees getting them.


In investment banking, your bonus is based on the profit generated by (1) the company as a whole, (2) your team, and (3) yourself. In tech companies, all but the first one are usually 0.


Exactly. Bonuses based on profit generated a much easier to calculate when each employee (or groups of employees) have a direct link to the profit generated. In addition, the profit generated in banking comes in clearly delineated lumps, i.e. you work on a deal that has a start and an end with a short timeframe.

If you're a tech person, how do you determine how much of the profit was generated by that one person? Also, how do you pay based on profit generated when the profit is spread out over the life of the product?


For each engineer's new feature/enhancement, A/B test it and use the result in bonus calculations.


so which engineer is going to do all that backend stuff? Database upgrade testing? Or sysadmin related tasks? Stuff that customers don't directly see? Coz that bonus calculation scheme is going to net them nothing.


startups.

Google and Apple are huge money-printing machines, not startups.


Yeah it would run profitably for years if you gutted R&D.

How much profit per employee is not the right way to approach compensation. It should and often is based on what it will take to keep an employee happy.


Look at the growth rates of their cash hoards -- none of that is being spent on R&D.


It's high time we make an International Programmer's Union.


Periodically there are attempts to unionize engineers in Silly Valley. I've never seen one come anywhere close to success. Most of the engineers I've worked with have seen unions as rent-seeking organizations that simply want to line their own pockets.

(There are similar periodic attempts at licensing software engineers at the state level in CA. These generally don't go well either, and appear to be the same kind of rent-seeking behavior as unions, judging from the howling nonsense proposed as core competencies to test against, e.g., lots of EE knowledge, and stuff involving obsolete technology and software development models that don't work).


Maybe it must be done by people from the trenches.


No offense to you personally, but whenever I see someone proposing a union of any kind, if it doesn't involve real safety issues, I see someone trying to hold down those who can excel and protect themselves from more competent up and coming competition. It's a barrier to entry and control by seniority, period.


You don't think it's a logical response to companies colluding to hold down salaries?


Looks like the law has a proper response?


Yes, just the other day I was thinking how cool it would be if the software industry worked more like the auto industry.


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')


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.


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.


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.


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.


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)


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


Thats a misapplication of the aphorism. People don't start off trying to do wrong, they start off trying to benefit themselves.

And an ignorant, unstructured, or illegal approach to benefiting yourself often hurts other people.


People do want to benefit themselves, but nobody wants to thinks of themselves as the bad guy either. In the simplest case, they invent a justification where their actions are actually positive or they're a victim, in more complex cases they tell themselves they're doing something for an innocuous reason even though there is a huge moral hazard and self-interest ends up winning.


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?


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


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.


>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.

On the other hand, that's the only thing that would make me read TechCrunch and take them seriously.


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.


Alternately, perhaps the media don't report this because it's simply too complicated or nuanced for a sound bite, or irrelevant to their audience. Who wants to hear some of the most highly-compensated people in America complain about their employers conspiring to suppress their already unimaginable-for-many salaries?


If they smell Googles blood in the water they will be after them just like Murdoch does the BBC.


I still remember a HN thread which suggested that Larry/Sergey fire Eric Schmidt for this.


How could they not know? While Mr Schmidt was CEO, it was a three way decision makin process as I recall. I'm of the opinion that something this big, with such large long term consequences, would surely have been discussed among equal decision making partners.


Which is absurd because Eric continues to collect huge compensation packages from Google "for contributing to the company's success".


> 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.


For those who don't know, to sign up for the ongoing class action suit, go to 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.


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.


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.


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.


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.


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.


> 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.

Do customers care about that? When you search on Google, or buy a Macbook, do you care about the people behind them? I imagine most customers don't.


[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.


"Apple and Google’s wage-fixing involved dozens more companies, over 1M employees" - 80 characters

"Revealed: Apple and Google’s wage-fixing cartel involved dozens more companies, over one million employees" - 106 characters

HN has an 80 character limit for titles.


"Tech Corp wage-fixing cartel involved dozens more companies, over 1M employees"

would have fit snugly in 79 characters ;-)


Or "Apple & Google’s wage-fixing cartel had dozens more firms, over 1M workers"


>Why the, in my humble opinion, most important word of the original title was dropped

For the same reason HN wants to roll out pending comments.


HN titles have an 80 character limit. This has nothing to do with spin.


"this will strengthen the understanding that this type of stuff is exactly why you want strong unions"

Unions are fundamentally socialist. That isn't using socialism as a bad word, but as a factual description of the fundamental fairness and equality notions of union. In many situations it provides protection and balance between the employee and employer.

Does that really apply to highly paid employees who are actively recruited as standouts? The ones paid far above many of their peers because they're at the high end of the curve?

Unions are the antithesis of the solution. Indeed, the union approach would be the same problem (if not worse). There would be no standouts. No exemplary talents. Unions would mandate the specific lowest common denominator compensation and conditions.

Again, I see the value in some places, but it is woefully ill-suited for this situation.

Professional associations -- ala doctors and lawyers -- is more suitable for this field. Unions are not something most would benefit from.


That's not how M&P unions like the AMA and BMA work in practice your just repeating the union busters propaganda.

You negotiate the "rate for the job" if some one is good and need s more pay well promote them to a higher grade thats why you need to have a proper career track for all you staff.


> proper career track for all you staff.

That forces concepts which are nearly orthogonal in these types of companies (duties performed vs. value-added) to be artificially commingled.

While you could theoretically say that you can fix this by inventing enough job positions to be able to give the most-qualified the best wages, what really would end up happening is that you'd have a unique job position for every person (or in other words, exactly what you'd have without the union).

As a practical example, consider placing your union idea in the context of the NBA. "NBA Point Guard: Paid $11MM". But Michael Jordan was worth far more than $11MM to the Bulls, while even in 2014 Jose Calderon is not quite worth that much to the Mavericks.

So what do you do, split point guard up into "MJ-tier Point Guard: $33MM" and "not-quite-average Point Guard: $6.7MM"? Of course not; you negotiate with each player individually.


That is a straw man jobs in technology are not like professional sports or acting - having said that player unions and SAG/Equity do negotiate minimums so that not all the cash goes to the lucky few.


Piece of unsolicited advice - Stop declaring everything a strawman or propaganda. It does not strengthen your argument.

The situations we are talking about are actually more akin to professional athletes or sought after writers -- employers are actively seeking them out and recruiting them, at escalating wage levels, because they offer potential multiples of value to the company over "just any paper qualified candidate". Compare this to, for instance, auto-assembly or steel-working, where the difference in company value between resources is largely a wash.

We are specifically talking about the tech corridor right now. My home base is in the Toronto area but I seldom deal with Toronto area clients because the environment is dismal here: The pay is terrible, the product is terrible, and the mentality is of the "replaceable cog" variety, every project failing just enough until it's replaced by an innovative product made elsewhere. A union here might make sense because the situation already is pretty miserable. The same is true of the United Kingdom, to respond to another commentator. My comments about union specifically relate to the hyper-competitive, hyper-innovative and excellence seeking, silicon valley area.


I'm not "repeating" anyone's propaganda. I've worked in union situations before. I understand the ramifications of unions. As someone who tends to do quite well in this field, unions would be very deleterious for me personally: Unions are as much if not more about "equality" between union members, even where equality is measured by specious metrics (such as seniority), as it is about the employee/employer relationship.

The AMA is not a union by any traditional metric. It is a professional association. If a doctor is lured to a hospital for enormous sums of money, the AMA has absolutely no say over it. Nor do they dictate that another doctor has to be offered the job because they've been practicing for two months longer. Nor do they dictate that the doctor has to be paid for scale grade 7E because to do otherwise would cause resentment among other doctor's.

It would be great to have a professional association (presuming it didn't become too involved in its own enrichment). No thanks to unions.


The AMA is not a union by any traditional metric. It is a professional association. If a doctor is lured to a hospital for enormous sums of money, the AMA has absolutely no say over it. Nor do they dictate that another doctor has to be offered the job because they've been practicing for two months longer. Nor do they dictate that the doctor has to be paid for scale grade 7E because to do otherwise would cause resentment among other doctor's.

Nor does union have to do all that stuff. You're attacking a strawman.


But unions almost always concern themselves with such things. I may be attacking a "strawman" (ergo, how virtually every union on the planet operates), but humorously the salvation is just as much of a strawman, no?


Its how virtually all Unions don't operate - don't quote the propaganda leveled at craft unionism of the 1800's which has no bearing on real Unions of today.


You constantly speak of "propaganda" in this thread but do not provide any reliable data or citations to support your POV.


Looks like you are jumping on a bandwagon w/o offering any new argumentation. Echo chamber?


I don't see any unions representing M&P grades negotiating these sorts of agreements as it woudl not be in the members best interest.

You know the entire uk telecoms infrastructure was revamped with zero fuss about new technology one of the main reasons was all the techies where union members.

And I know one ftse100 CEO was a union member and had been an activist and the CTO of one of the worlds largest phone manufacturers was a member of my branch.

as I said you just repeating folk propaganda based on stories about decades old "craft unions" which have nothing to do with how a union for developers/engineers woudl work


Screen writers and actors have a union, both fill some needs that apply to the rank and file but not to stars.

May be the model could work for developers?


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.


While they didn't agree to "fix" wages. They did this for two purposes. One was to keep down employee churn , and so they can keep the salary lower. How do you hire someone away? One way is to offer them more money. How to keep the employee, one way is to offer them more money.


Then why the investigations by DOJ and Cal AG?


Because it is illegal. No need to be a dbag and downvote me because you didnt read my comment properly. Its illegal but not wage fixing and not a cartel.


Actually, I've never down-voted anybody.

Colluding to not recruit between those players sounds like an intent to limit (to some extent) employees options, which would reduce upward pressure on wages.

What would you call that?


Sorry, I assumed 3 comments = 3 downvotes. Anyway, I was just pointing out that it doesn't match any definition of 'cartel' that I can see. However it's still illegal (but not because it's a cartel).


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...


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


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.


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.


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.


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.


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

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


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.


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.


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


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...


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".


(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?)


Tech workers totally don't need a union.


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?


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


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


Have you considered making a HN poll for this?


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


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.


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


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.


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.


Go to https://hightechemployeelawsuit.com .

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


Don't be evil.


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.


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.


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?


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


Oh good ol' Silicon Valley


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.


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 .


I think you mean successors.


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.


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!


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".


Take a class in economics then. You will learn what happens what happens to the price when demand is suppressed.


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.


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).




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