So Silicon Valley execs were illegally conspiring to drive down wages, and who knows how much more was done outside of the paper trail mentioned.
Then we have an article discussion yesterday and blog posts etc. in the past few weeks about how companies can't find great engineers, and how we need immigration law changes that blocks Mexicans etc. but brings in more engineers to drive down engineer wages etc.
Maybe if CEO's weren't illegally conspiring to drive wages below their market value, there wouldn't be a so-called "engineer shortage"?
I mean it's risible. They conspire illegally to drive down wages, then whine that not enough people want to work in this field where wages have been artificially and illegally deflated.
How does someone this stupid rise to such a high position of wealth and influence? Are we talking luck here, or are Faustian bargains involved? Where do I get some of that action?
I'm only being half-facetious; this is weapons grade stupid. "Let's take this conversation offline because we'll get sued or indicted if it gets out." Yeah, that will totally work in a grand jury room.
If low IQ isn't the explanation, and I don't see how it could be -- given the respect and reputation we all accord Eric Schmidt for his other achievements -- what is? Drugs? Mental illness? Distraction? Forgery? Did he fail a saving throw versus reality distortion on one of his walks on the beach with Jobs? What?
You can be sued over lots of things, whether or not they have merit, and keeping things verbal is one of the "standard" techniques of defending against that. In this case, were this the only document in the pile, Eric would be in a position to either not recall the conversation he had with Omid, or deny its content. Further he would argue that it is a general state of mind for a CEO that they don't want to create paper trails over anything that could be construed by a litigious opponent as evidence if misdeeds.
The problem in this case is that there is a bunch of other circumstantial evidence that makes it pretty clear that everyone on Google's EMG was on the same page with respect to this particular policy. I note however that Google has yet to settle in the class action, so they may still believe they can defend their position.
That said, the "valley" has always been a really small place with regard to hiring. If you work here for any length of time a tapestry of opinions about you will be formed and those opinions will affect to a larger or smaller degree who offers you work and who doesn't. Is that legal? I don't know. There are folks I have decided to never work with again, and people for whom I would change jobs in a heartbeat. Is my private 'blacklist' and 'whitelist' of good and bad co-workers legal? As a generic engineer? What about now that I'm a VP and perhaps these folks are trying to get a job at my company? Do you know how many people are sued each year because someone suspects (or knows) that they told a potential employer that they personally wouldn't hire them? My point is that people and employment and fuzzy criteria is a fertile ground for lawsuits, so paper trails are always bad.
That's all fine and dandy, but what is 'weapons grade stupid' is to not only have the conversation in email, but then to use a key word like 'paper trail' to lead any investigation straight to his conversation. And in that exact email, say WHY he wants it done in-person. I mean, 'paper trail' has to be up there with 'take this offline' and 'this is sooo illegal' for phrases that serve up incriminating evidence on a silver platter to the DOJ.
A non-WGS response would have been, "Come up to my office: we'll discuss further."
Reminds me of another industry-centered town in that part of the country. How do people feel about Silicon Valley becoming the next Hollywood?
I have friends who testified for Microsoft in the DOJ trial in the nineties. Schmidt testified for the DOJ and was well-aware of what happens with corporate email.
He might be smart, but he did a very stupid thing. Whether it amounts to a slip-up or hubris, time will tell.
I never had a feeling that he's a smart guy watching him talk (in contrast with Larry and Sergey and Zuck) and I generally despise his attention-whore attitude and kissing ass in political circles.
And everyone knows not to use lex.
A couple of times better than what? Being multi billionaires and leading one of the most powerful and most respected companies in the world?
Most experts agree that picking Erick Schmidt as CEO was instrumental to Google's success.
Brin seemed pretty complicit in it. He didn't make the final decision to appease Jobs, but he asked for a temporary stay in recruiting Apple employees and obviously agreed with Schmidt's decision to ban all recruiting.
I actually started another thread discussing this exact topic:
"If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place."
The irony must be pretty painful.
> "People are treating Google like their most trusted friend. Should they be?"
> "I think judgment matters. If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place. But if you really need that kind of privacy, the reality is that search engines, including Google, do retain this information for some time. And it’s important, for example, that we are all subject in the United States to the Patriot Act. It is possible that information could be made available to the authorities."
Which, in light of the the legal lengths the federal government will go to get their hands on every bit of data--let alone the illegal lengths they'll go--is a pretty important warning.
But we didn't talk about that, because the internet and the media operates on sound bites. It mattered what Eric Schmidt may or may not have approved of (that statement literally takes no position either way), not the important point he made immediately afterwards. Not a lot of PGP and OTR discussions on the internet that day, just knee-jerk "oh the irony!" contentless posts.
About the new privacy policies, here's another interesting part from that same interview, which to my knowledge hasn't been transcribed anywhere:
But Eric Schmidt says protecting user privacy is Google's top priority.
- Where does all my search info go?
- Well first place our privacy policies are fully disclosed on our website and it's all written down very carefully. The most important thing we do is that after 18 months, the search information that you entered is so-called anonymized, it's literally gotten rid of and we can't go back and track it back to you.
(To be clear, I'm not blaming Eric Schmidt since he was no longer CEO. I just want to highlight the striking fact that his whole defence would fall apart.)
What is stupid exactly?
Saying "We should discuss this verbally so we don't risk to get sued" is not illegal. It's not even acknowledging doing something illegal. You could even argue in court that you are explicitly taking an action to not do something illegal.
You could argue that, but you'd have to be pretty deluded to think anyone would believe you.
It doesn't matter, courts need to prove you're guilty. My point was that this sentence in an email doesn't get the prosecution any closer to that goal.
True, but you don't have to be quite so helpful.
Maybe the fact that so few executives ever receive any negative feedback (jail, fines, firing, etc).
I think you thought to much into that line.
> Maybe if CEO's weren't illegally conspiring to drive wages below their market value, there wouldn't be a so-called "engineer shortage"?
What illegally driven-down wages mean is that the shortage is more acute that previously thought. That's because the main way to measure the relationship of supply and demand is through price; i.e. the more the salaries grow, the less supply there is relative to demand. So if salaries have been held down, some of that evidence was masked.
Secondly, it means that non-giant companies could be competitive in making job offers, whereas perhaps in a more free labor market they might not be able to compete salarywise with Google, Apple, Microsoft, etc. Thus, as seen from say, a startup's vantage point, this check on the upward price pressure actually kept the supply of affordable engineers up.
So I remain sympathetic to the there-aren't-enough-programmers line of thinking, and certainly don't think of this as hypocritical or antithetical to that line. Of course, that doesn't excuse any of Google's behavior here; they've effectively stolen a great deal of money from all of us through illegal collusion, pocketing the money that an honest market would direct into the engineers' bank accounts. I hope there's hell to pay.
Edit: I suppose it's theoretically possible that if the salaries went up to their natural levels, then people would pour into the field, and perhaps that's what you're trying to say. I think that's very unlikely, since software engineers are already paid a great deal more than most fields, so these people are either people who don't care about money unless it's a lot of money, or they're people who instead chose to be doctors and lawyers. I'm sure more people would say, "hmm, maybe I should be a programmer", but you have to ask why those people aren't doing it now. As economists might put it, this is a structural problem, not a market problem (I hope I'm using those terms right).
Not really, price ceilings have a well-known effect of causing shortages because purchasers who should have been priced out of the market use up some of the supply. If the price had been allowed to rise naturally, those willing to pay the higher price would get what they need.
Sure, you can find examples of people who went into other areas, but given the very low barriers to entry (put some good stuff on Github repeatably, no industry requirement for an advanced or even undergraduate degree if you have talent, no unions or guilds, no competency certifications required to practice software engineering), I don't think there's such a big pent-up supply.
I'm sure there are a lot more people like me.
Furthermore, it's not like quantity supplied is perfectly responsive to price. It takes time for new people to enter the industry.
Talking about the long-term is rather pointless because technically, from a theoretical standpoint, everything is supposed to equilibriate over the long term. All shortages self-correct over the long term. Again, this is theoretical.
It's not an option for them to re-train, they don't work that way.
1. Companies in the Google/Apple/MS cabal
2. Other companies
Companies in 2 can always just pay more for what they want, since they're not governed by the cap. If they did that, of course, they could pull a bunch of people away from 1 and the price level would keep rising. That didn't happen because (mostly) only companies in 1 are able to pay at near the cap level anyway. So there might be inefficient hoarding, but it's just companies in 1 hoarding from each other.
It doesn't analogize exactly to, say, anti-gouging price caps for gasoline in a snowstorm (which, I agree, lead to terrible shortages and inefficient allocations), because this is equivalent to the gas stations setting a price floor (people shop at places with the lowest prices but work for the place with the highest wages). And then some gas station down the street opens a gas station with prices lower than the floor...
> ... what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP
You can also see Microsoft in the screenshot of Google's "Do not call" list.
Said company would gladly go along since it benefits as well.
Neither Bill Gates nor Steve Jobs would get in the DOOR at a tech company today. They didn't finish college... Or the RIGHT college. Their own companies would buy their startup and boot them.
It's a culture of childishness that they have so much money and resources they don't have to value WISDOM that employees might bring. In fact they actively ROOT OUT those employees in their hiring processes.. That's why all the games.. They don't want employees that won't play. They have myopic NIH syndrome hard.
It helps a bit if you are filthy rich at the beginning.
Oh, I have a feeling they'd squeak by, somehow.
Actually, it just gave the non-engineers more leverage. If the engineering rates where higher, there would be more engineers who would be founders. Engineers would have a larger % of the startup, since non-cash compensation would have to be offered.
Also, the artificial deflation caused some engineers to be stuck in a bad job.
That's why I won't be anyone's employee. It's a bad deal for me. It's a bad deal for many engineers who are employees right now.
Unfortunately, it took me a while to learn the game. There's a business side to being an engineer. You don't learn that being an employee. It's against the interest of the management to have their employed engineers think that way.
No, it just means the sense of entitlement amongst tech CEOs is even greater than previously thought.
But if the salary was higher, there is a good chance that I would have worked at that job for longer than I did. So I think salary does affect labor supply, and the supply of engineering talent is not as inelastic as you may think.
Rules for wage negotiation for ordinary employees have generally much bigger impact.
Well then you are not reading it correctly. What does it say?
>> Google is the talk of the valley because we are driving salaries up across the board
Schmidt says as plain as day, in e-mails that escaped his admitted attempts to remove a paper trail, that this is about holding down wages. He says it as plain as you can say it.
I can read this, and the other HN readers can read this in black and white. That people like you feel the need to deny this happened when they have been caught red-handed says more about you then it does about what happened.
Yes, I read it very well. Schmidt indeed mentioned holding the wages down, BUT from the context it's clear they mean those who are targets of employee poaching. And that's certainly not everyone - quite the opposite, only exceptional individuals or strategy hires.
Hint: It doesn't go down.
Amazingly short-sited argument. It forces people to either accept a low paying job in a field they love, or find another field just to make ends meet.
The companies themselves have created the shortage they're complaining about.
When Harvard grads start choosing Google over Goldman Sachs, I'll believe in the engineering shortage. Now excuse me while I return to my 10 hour Craigslist odyssey to find an affordable Bay Area apartment...
I'm not even sure if finance beats CS pay for those in the top-tier, especially on a per-hour worked basis. It may be hard to track as so much comp in finance is bonus and so much in CS is equity.
It also means that the deflated salaries/compensation may have led to managers/business/finance decisions being all wrong - investing in some projects but not others and skeweing the technical landscape. Im thinking of things like GWT or dartlanguage, and the like, which if engineer prices would have been correct probably would not have been made at all.
The conspiring to lower compensation has hurt the field and profession of software engineering as a whole.
This shortage of "engineers" is another excuse to make government pay for education or take more immigrants and pay for them, their health care costs, language education etc, to make tax-payers pay for recruiting engineers to the tech giants.
I think the opposite. It is not in the best interest of "the product and output" for engineers to keep switching jobs every few months to get increasingly greater salaries for the same work. It creates incentives to not care about the product.
How many lawyers do you see switching jobs every few months?
Anyway software engineers shouldnt care about the product once the project is completed - the job to take care of the product is with devops or maintanence people. Development, and thats it.
It's all propaganda plastered with a nice marmalade of feel goody "let's help the immigrants", or "everything great about our country came from immigrants", or other such variants of rhetoric. It's actually very smart, because it plays to the tune that people dance to.
That said immigration policies do need to change, and immigration is indeed a good thing for this country. Attracting talent is a lot of what makes this country great, but we need to be careful with the fine print of such policies as to not destroy our own economy.
I want them to change too... but in a different way. I'd rather that we take the unwanted and wounded, the homosexuals threatened to receive capital punishment in Uganda, the atheists who worry for their lives in Saudia Arabia, the homeless in Mexico yearning for just a small improvement in the access of opportunity (no matter how small of a step it may be). Let the Indians keep their talented engineers -- let them improve India, god knows it's got enough problem of its own, don't send them to us here so they can make another silly app. Let China keep its engineers, so they may one day create technologies that truly challenge the great firewall.
Seriously, is it just me who sees this aggressive attempt of siphoning the world's talent as being opportunistic and predatorial? This is not the spirit of America that Emma envisioned, this isn't something to be proud of.
"Keep, ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
I seriously, honestly doubt this.
Consider the main force behind FWD.us: Mark Zuckerberg.
You're telling me the most positive good for humanity to get out of talented people is at Facebook, where the most valuable people to the company are those who optimize advertisement algorithms that exploit cognitive biases of a population already being challenged in all sorts of horrendous ways?
I really don't think your perspective is getting things right. If the engineers want to make great apps for Android or iOS, they can make it sitting in India or China or Brazil or wherever.
Silicon Valley is definitely a place where talented people can find their own, and thrive.
Americans move there, to take part in the opportunities only available by meeting and visiting personally. Its a second-rate experience to try to do it from afar (this from a guy that is 2000 miles from SF), especially if you've never been there and have no contacts.
Aha! Eric Schmidt had to just write a clever email like this instead and he would be applauded instead of criticized. To Apple: We would rather that you keep your Engineers - god knows you've got enough problems with your services! We will keep ours in return!
I guess if the huddled and poor learn programming, get good at it and start working for less - that'd be the right time to send them home to fix problems in their homeland and look for other huddled and poor - lather, rinse, repeat and all of world's problem magically disappear. Hey "the other" people are malleable masses with no ideas/likes/visions of their own - we can do as we please with them. Oh and they all, being Engineers have absolutely magical powers to solve any problem you throw at them - Terrorism, poverty, energy, hunger - you name it and they will solve it no matter how much oppression and apathy and violence confronts them!
Yeah, you made it sound idealistic but it's hypocritical and has no chance of working. It isn't far fetched to say that if the Engineers in China/India saw a way to make great opportunities happen in their own homeland to further their and their country's interests, they would never migrate to whole another continent in the first place. It isn't easy to migrate you know.
It's all about the choice, isn't it?
Me staying in my home country doesn't improve it anyhow.
Those who try hard to improve it somehow tend to end up in jail.
So using a short poem as a way to justify the complete overhaul of American immigration policy seems a little odd.
Can't make a living in the information economy? Uncle Sam wants you!
You could argue that this is the actual natural order of things. Let the free market decide the value of an engineer, not arbitrary government regulation. It is the Silicon Valley way, after all.
If you don't object to google's selling it's services across the world on free-market principles, it'll take a rather large leap of (il)logic to constrain the employment to be restricted to the physical location of the HQ of this global company.
The free market is what the actual value of the engineers is - not how the CEOs choose to work together to suppress prices.
Au contraire. Many Americans and Europeans would get a huge and valuable smack with the clue-bat if there were no immigration restrictions, and if licensing schemes designed to create arbitrary shortages of e.g. doctors were eliminated.
Economies need to become less decentralized, and more global in their scope. Which arguable is very much a reality today, but I think this is simply the beginning.
And there's a whole host of other developments that need to happen, but I believe eventually will happen in the coming decades. We'll see a more homogenous world, yet also a more diverse one.
Don't be fooled by altruistic PR coming from Zuck and others...
That's not necessarily a consequence of there being an engineer shortage. You'd expect much the same behaviour if most people who emerged from uni, or worked commonly in IT, didn't have the criteria they were interested in.
I'd note you don't see Microsoft in this because they stayed in Washington and bought employment laws they like. So they can force employees to sign non-competes in Seattle while they poach from California that won't allow companies to do that.
Working in an auto state, I've seen that in other industries and it's actually kind of sickening. In the auto industry it's in bad taste to do that. Many auto suppliers have no-poaching in their business contracts. Which ties up a lot of the industry because everybody does business with everybody. As an EMPLOYEE you can apply to another job, but recruiters aren't allowed to cold-call between companies.
I've worked in an office where we would get cold call agents during work. They'd call all the extensions in the office and it was just offensive being put on the spot like that. I can't imagine working at Apple or Google and getting calls like that... And the work environment becomes "awkward" for the rest of the day because everybody knows everybody got a call... There's nothing good about that type of hiring practice.
Micrsoft was one of the (many) companies listed with which Google had similar non-poaching agreements.
Not really all that true, for the professions as a whole, except for medical doctors, who are far above any of the others.
Per the BLS Occupational Outlook Handbook , 2012 Median salaries for various professions:
Securities, Commodities, and Financial Services Sales Agents: $71,720
Software developers: $93,350
Physicians & Surgeons: >$187,200
None of them has yet taken me seriously, but thankfully this reduced the number of calls I was getting.
I wish more people were like you.
Disclaimer: I do the same.
The median price for a 3br house in SF is (I used zillow's numbers for this) 1.1Mil.
(btw, check the pay for the other "top 10" professions in high cost areas like SF. It does make economic sense for top students with good options to choose other fields).
The whole conspiracy has not been driven by a desire to bring down wages (most of the involved company can pay the price), but by the instability caused by an already existing shortage.
Yes, driving down wages only makes the issue worse, and lobbying for migrant workers whilst doing so is extremely hypocritical.
But at the end of the day it's a symptom of the problem, not the root cause.
"For each of these 'Restricted Hiring' companies...
"3. Additionally there are _no_ restrictions at _any_ level for engeineering candidates"
The majority of the companies included were just on a "Do Not Cold Call" list, but Google would actively recruit people from those companies based on referrals, and of course based on applications.
So, if you worked at Apple and applied to Google, Google would actively recruit you.
I fail to see how this policy has anything to do with an engineering shortage. It may well be deemed illegal, but it's certainly not as bad as you're making it out to be.
I'm sure there will be apologetics, but it's not like one side was behaving ethically.
They conspire illegally to drive down wages, then whine that not enough people want to work in this field where wages have been artificially and illegally deflated.
This field where wages are still significantly above mean values? Where are these engineers going to go en masse for better wages? Into medicine? Hello for another 10 years training. Law? Already overstaffed, and wages are similar for most anyway. Finance gets some, but isn't going to hold them all. If the engineers are in the career for the dollar, restarting in another career that will pay more is going to be difficult as a group.
A legal practice which increases competition and increases the allocation of resources to productive individuals can't be compared to an illegal practice which decreases competition.
I do not think it's ethical to scare the other party by threatening actions that you have zero intention of carrying out.
Regardless of your opinions about the morality of this practice, there's no basis for calling it collusion.
It's not to say that all engineers were doing it (which I think is a salient point), but in all these arguments, the engineers are painted as naifs who had done nothing as a group to merit this. To be clear, I don't agree with the ethics the companies displayed, I just think it's unfair that the collusion between some engineers gets glossed over amongst all the outrage.
>Here, Schmidt relates a phone call he had with eBay CEO Meg Whitman and then orders his own recruiter to be fired because that person tried to poach the COO of eBay.
Reading the email, it doesn't seem like the recruiter was fired for trying to poach the COO; it seem like he was fired for lying to the target about the position (as Schmidt calls them, "falsehoods"). Don't forget recruiters usually get a significant finder's fee, and are not above misrepresenting a position to generate interest.
Effectively stealing from their employees to give to their shareholders just blows my mind.
Yes, Google's "don't be evil" mantra is tempting low hanging fruit. They dropped the ball here, but so did most of the valley. Nobody should be getting free passes in the court of public opinion.
The fact of the matter is these are companies that are self interested, it just so happens that a lot of their technologies agree with what many people believe. Decentralization of power, power to the people, internet, technology, rebellion against old ways, etc. etc. But we can never forget that these companies are exactly what was in the past, just in a new era with new toys.
If we're to make progress it's important to try, and do things differently.
Why is that? All evidence points to the contrary. Take for instance, the collapse of the housing market a few years ago. Not only were the borrowers not jailed, most people even blame the bankers.
The bankers deserve blame and jail time for endangering the entire economy with their short-sighted greed.
For some perspective: In the UK, if a bank extends credit to people who were obviously not credit-worthy at the time of applying, based on the information available to the bank, not only is the debtor not at fault, but the debts can in many cases be wiped out by the courts. And it happens regularly - people have had entire mortgaged just struck off because the banks were found to have acted irresponsibly when giving them out.
The banks here have a legal responsibility to understand their customers ability to repay, and to not extend credit that is likely to cause their customers substantial financial hardship.
The reasoning for this is that there's a massive information symmetry - most people do not understand the full risks, and are easily seduced by the thought of a new house and possibly smooth talking real estate agents to look at think in the most rosy way possible, while the banks know very well the hard data on what financials are likely to cause defaults when you take into account risk of unemployment, budgets, unexpected repairs, likely interest rate movements etc..
Yes, that's because debtors' prison is considered immoral. Failing to pay back a contracted loan is not stealing, since the loan was given with the lender's consent and, had they done their homework and acted honestly, their exactly quantified knowledge of the risk of nonpayment they were taking on themselves.
I started at Google in 2005 as an ordinary software engineer, and I've not yet left them. Back then, Google recruiters were constantly bugging employees for referrals. But this "no poaching" thing wasn't some weird dirty secret among execs -- it was just sort of a common knowledge thing, and nobody seemed to think it was a big deal. "Oh, we have a gentleman's agreement with Apple not to poach them and vice versa -- so give us the names of your friends to reach out to, but not if they already work at Apple."
AFAICT, the reason I (and my coworkers) never thought of this policy as illegal is probably for two reasons:
1. Hey, poaching back and forth would create a lot of disruption and churn and mess up both companies' ability to get things done. Let's not start a pointless war.
2. We, as programmers, are ridiculously overpaid already. How could anyone possibly be "taking advantage" of us at these salaries? The notion seemed as absurd as a Programmer's Labor Union!
Again, the idea was not to poach, not to avoid hiring. If somebody from Apple applied for a Google job of their own will, that was fine.
In hindsight, I /guess/ I understand how this looks like evil collusion to keep salaries down... but really it seemed like common sense and civility at the time. At least that's how it was sold to us. It was sort of like the nuclear policy of Mutually Assured Destruction: "the only way to win is not to play." It's the same attitude that still explains why giant companies don't (typically) begin patent wars -- there's no point if everyone ends up destroying each other.
Finally, the notion that this was an individual thing and there were no class impact is not so. The reason is that these companies have "brackets" for pay. If you are at a certain job title you make $X - $Y and corresponding amounts for options etc. These companies are also very interested in equity among the employees so if prices start rising they will have to draw up the low end affecting prices across the board.
To the doubters, I point to the Facebook/google incident. Google was forced to give across the board 10% raises to every single employee because Facebook wasn't willing to sign anti poaching agreements.
It's interesting that arguments essentially from das kapital are being raised here. Wages vs productivity. Intrinsic ideas of fairness are universal (and possible primate, studies showed).
Google is in a weak position here.
> We, as programmers, are ridiculously overpaid already. How could anyone possibly be "taking advantage" of us at these salaries?
Overpaid by what metric? Compared to society at large, you make a lot money, yes, but you're also contributing significantly to one of the most profitable companies in the world. Google has a profit of about a million dollars per employee per year; why aren't you capturing more of that? 
If you're not taking that money home, someone else is. What do you bet those people are the ones telling you this is all in the name of civility?
 E.g. https://signalvnoise.com/posts/2283-ranking-tech-companies-b... I confess I don't know the numbers for 2005, but it should be easy to look up.
Revenue, not profit. Profit is closer to $250k
Note the numbers are quarterly, so that comes out to $900K. I was off a bit, so point taken, but my original point mostly stands, I think.
Using Google finance:
Google made almost $13B in net income last year. They had 47,000 employees in Dec '13.
That's about $275k/employee in net income.
I would love to know how much they make per employee from that department alone...
The way your leverage mutually assured destruction here is just sugar coating the very nature of collusion like the telecomm companies. When no one lowers prices and compete fairly, the customers (and by analogy the programmers) loses out. So it doesn't just /look/ like evil collusion because it /is/ evil collusion.
I just wanted to clarify to anyone reading this passage here.
It's evil collusion to keep salaries down.
Not discussing your compensation is another example of something we've been sold on as "common sense and civility" though it's illegal to restrict it.
This must not have been true, if collusion was necessary to keep wages down.
1. It is not illegal for a company to have its own “Do Not Cold Call” list. If you know that poaching your allies’ employees is likely to jeopardize the joint projects, you may choose not to poach your allies’ employees. If you know that poaching your competitor’s employees will likely provoke them to poach your own employees, you may both choose to avoid the mutually assured destruction. As far as I know, it is only illegal to collude with your competitor to make such a list. But it appears that Google did have illegal agreements.
2. One of the quotes from a Google memo, “Most companies have non-solicit agreements which would limit or prohibit a candidate from asking a coworker to interview with us as well,” appears to have nothing to do with anticompetitive behavior. Instead, it probably refers to non-solicit agreements that employees often must agree to when joining a company that prohibit the employee from poaching one of their coworkers for a time after leaving the company. The memo warns not to pressure employees to violate contracts they have signed with their prior employers.
This is even more unsettling when you realize that Google, Apple and such have employees that generate revenue in the range of a million dollar per head yet pay a average salary that is 10-20% of that. They end up with absurdly large piles of cash that banks and financial institutions never see because they compensate their employees more fairly.
Another kind of "fairly" is that Labour is its own market, and employees should be paid commensurate to their replacement cost.
Both are valid models, though the latter is much more common. The difference between which model is followed can often come down to the negotiation abilities of the individual employee (or their agents) and their relative scarcity. E.g. an extra for a hollywood blockbuster movie is paid the same daily rate as an extra on an independent art-house film - because it's easy to hire extras and they are interchangeable. The movie stars on the other hand are more scarce (at least those with marketable reputations are) and so can negotiate points on the gross.
If a 10 person team builds a product that delivers $100 million in revenue for a company, and the team members are paid $90k on average...then they're pretty underpaid.
Like, IT maintenance staff, HR, accounting, marketing etc.
Without either of those, the programmers would not earn a single cent. Now, how do you determine how to pay the support staff? What do you do when one group of HR staff works for a stellar, 100M+$ team and another HR staff group works for a 1M+$ team? Pay the same? Pay different?
Bonus programs could cover rare events of massive success so employees don't feel so taken advantage of. Certainly if this team could regularly produce $100 million in revenue, they wouldn't be paid $90k.
So no matter how you do it, you're quantifying how much some people are worth. Sometimes it's the employee, sometimes it's the owners.
What I find interesting in this whole story is the value that these executives put on the teams they have built. Of all of the things that Steve Jobs could be worried about as the CEO of one of the largest companies in the world, he's spending his time stressing about losing a few engineers to Google? As an engineer this makes me happy, but I still find it a bit surprising.
These executives knew an agreement like this would have to be delegated to a vast number of people. To me this means they didn't think it was a big deal. I say that because if they were doing something they viewed as extremely illegal they would have been concerned that someone in the delegation path would blow the whistle. Seems to be a crisis of perspective at that top.
That is the amusing part! The agreement explicitly excludes engineers.
From the article:
"3. Additionally there are _no_ restrictions at _any_ level for engineering candidates."
This was about sales and management.
I find this agreement and the Facebook sponsored stories feature baffling. They remind me of when Korean companies have gotten caught up in price fixing and invoked the excuse "we had no idea this would be illegal!"
It's basically just another variant of a dark pattern.
They're everywhere. It's basically what fast growth is all about. It's about skirting some rule that you know very well is illegal or at least unethical -- and later when you get caught doing it, saying "Ooops!!! I didn't know this was illegal, LOL!"
Go to http://darkpatterns.org to get more examples of dark patterns. Facebook in particular is expert at it, e.g. see http://darkpatterns.org/library/privacy_zuckering - the clear lesson to take away for startups is, don't give a fuck, do whatever unethical shit you can do to attain a large userbase, get big, get funding, and then either a) deny any wrongdoing was ever done, or b) justify it with some excuse like "we were young :)" or "we didn't know!" Sometimes you have to pay a fine, but you can be assured that the fine will be smaller than the profit made/growth achieved by some particular action. It's a winning strategy.
p.s.: Here's a fun challenge: try to turn off targeted advertising on an Apple device. Can you do it? (fwiw, it's much easier to do on iOS7 vs iOS6).
Edit: It's been clear at least since Nichols v. Spencer International Press in 1967, and arguably since Radovich v. National Football League in 1957.
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Doesn't that make this an 'aware' and 'intentional' crime, therefore the only resolution would be for him to go to prison for some time? Is it really possible for someone to settle their way out of this with a general prosecutor?
Unfortunately, the US class action system is somewhat corrupt and in many cases the suing attorneys get the lion's share of the money, while the class members get injunctive relief, a coupon, or a nominal payment. Or sometimes they get nothing at all, and a charity gets the money (this is called a cy pres award).
More information about the class action lawsuit:
But it's tough to shake up markets that tend toward oligopoly, and the big players can simply acquire any threats before they can deliver a punch in order to maintain the status quo.
Having said that, I want to play devil's advocate for a second. It's just my natural reaction when the press embeds big unquestioned assumptions in reporting for the sake of sensationalism -- namely that this is obviously "illegal" and nefarious behavior. Because, after all, it kept down wages for people like me who might otherwise have been more actively recruited.
If your reaction is OF COURSE IT'S ILLEGAL, just hold on a second. Try to think about the counterargument rationally, even if it's against your personal interests. (That's what I'm doing.)
There do exist many precedents for agreements and restrictions on seemingly "competitive" behavior that is deemed "unfair".
Let's consider a related example from another domain: countries "dumping" cheap goods into foreign markets. For example, China is accused of "dumping" subsidized steel into the U.S. market, which hurts the industry here. The U.S. steel industry works with the government to put in place tariffs that block the practice.
So is the U.S. steel industry being anti-competitive here? Have they engaged in an anti-competitive pact with the U.S. government conspiring to keep up the price of steel here?
Well, on the surface, yes they have. But the distinction is that "dumping" is meant to describe a particular form of competition that is short term and unsustainable in nature and designed primarily to destroy competing business. It is meant to isolate a specific practice that actually hurts competition in the long run.
So, what about the practice of poaching employees from competitors? Well think about it for a minute.
What is the value of a Safari engineer to Google's nascent Chrome team? The truth is, it's a lot more than just that engineer's skillset. There's also the value of undercutting Apple's Safari development. That's HUGELY valuable to a competitor.
So, I just wanted to put it out there that at first blush at least, that the practice of "poaching" may actually have an anticompetitive angle. Just like with "dumping", you have to look beyond the immediate act (restricting/boosting prices) and examine the particular practice it's attempting to curtail.
One way to look at anti-competitive rules is that the point isn't to protect companies at all. In the steel case, the point is that dumping will destroy the American industry and then--this is the crucial part--China can hike up its prices way above current levels because there's no competition. If China couldn't do that for whatever reason, then that would be great for American consumers, who would benefit from cheaper steel, and--in principle at least--the competition rules would do nothing about it. In other words, in theory, the law doesn't care about the American steel industry; it only cares about the long-term well-being of steel consumers, which requires sane pricing. That industries have co-opted that in all sorts of ways to ironically entrench their positions in anti-competitive ways should not distract you from the core purpose of the rules.
So applying that here, since the rules in question are meant to protect the workers, the problem would be if Google were hiring all these people to destroy Apple and then be able to slash salaries, since no one would have anywhere else to go. Since that strikes me as implausible, and at the very least not established, I can't see how we can think of Google's poaching as anti-competitive.
 I'm not sure I buy the US steel argument either, but that's a separate discussion.
But to complete my devil's advocate argument, "poached" offers could in fact be unsustainable in the long run. It may be worth it to Chrome to add a $100K signing bonus to a Safari engineer. But they're not going to be paying them an extra $100K above market year over year.
If there actually were a poaching war kicked off, you can imagine that the value of inflicting targeted damage on competing teams, and protecting teams from such damage, could balloon to a very large amount. Theoretically all the way up to expected profit, if there were no other mechanisms to prevent it.
This could have a chilling effect especially on startups entering competition with deep-pocketed big companies. They could just poach the best talent with offers the startups couldn't match. That's exactly like a big chain engaging in loss-leader tactics to destroy local competition.
You could maybe also draw a parallel with what's going on with patents right now. It's a huge tax on development, especially to startups.
Now that I think about it, this could very well backfire on all of us. Anti-poaching agreements among companies aren't the only way to prevent this sort of thing. If they get sued over that (which is targeted at the practice of poaching), what companies may start doing is figuring out more restrictive covenants in employment contracts. Exclusivity clauses, etc. I'm a little scared to think what they may come up with and standardize if their attention is focused on it.
I agree that would be seriously problematic and run afoul of at least the intent of the rules, but I haven't actually seen any evidence that it actually happens that way. And in the meantime, anti-poaching agreements clearly do undercut salaries; that's why they were--at considerable risk to the companies--implemented in the first place.
On your last paragraph, I have two thoughts: a) at least that would be above-the-board and could be evaluated by potential employees, and b) while employment law varies considerably state by state, it's generally not the case that the employer can enforce arbitrarily restrictive clauses. I know in Massachusetts, enforcing a non-compete requires meeting some reasonability requirements  and AIFAK California is even more pro-employee on those things. Just because you sign it does not make it so.
The problem is you seem to think it's only additive and therefore great for employees. Hey, more bonuses, more equity.
But if everyone adopts it as a standard operating procedure, it could lead to a lowering of base salaries. So then we get paid like salespeople: little salary, mostly performance based. Do you want that?
Bottom line, it could be opening a can of worms. My personal philosophy is that it's rarely good to be righteous and inflexible. It often backfires or escalates a situation.
If the execs didn't think what they were doing is bad, why did another major CEO refuse citing that it's probably illegal? why did they take efforts to hide it from the public and employees?
Tariffs aren't done in secret, nor is there a lack of public input on the practice.
There should be no issue in people hiring from each other and thus no need to make agreements behind everyones backs.
These internal policies did not restrict hiring for the most part, they just restricted cold-calling and active poaching.
Mostly, the last thing any of us wants is a select group of dominant companies making a collective decision for the industry.
Fuck. These. Assholes.
"[I]s you taking notes on a criminal fucking conspiracy?"
Setting aside issues of ethics and legality, I cannot believe that any of these people would ever commit any of this to electronic record.
what's more astounding is that eric deliberately says in an email to send the message orally so they don't get sued
I still remember a HN thread which suggested that Larry/Sergey fire Eric Schmidt for this: https://news.ycombinator.com/item?id=3523513
> he was sure we were building a browser and were trying to get the Safari team
Well he wasn't wrong...
When did work start on Chrome? First release was in 2008.
1. That was a lie. Perhaps I'm naive, but I would expect him to say that he's not going to discuss the Google product line-up.
2. They were not building a browser, but Steve's accusation got them thinking about building a browser.
3. They were not building a browser, but later decided to build a browser.
Other professions (Doctors, Lawyers) use legislation to restrict the supply of labor and drive up prices, so why should software engineers be any different? We currently make ourselves vulnerable to manipulation and abuse in a way that no other profession has been stupid enough to do for centuries.
We should lobby aggressively for legislation requiring professional accreditation for practicing software engineers, as well as for the provision of training and documentation services. We need to shut down the technical MOOCs, as well as efforts like stack overflow and code academy. All of these things, whilst seemingly noble, do our profession grievous harm.
I'd be pissed if I applied for another job and was turned down purely because of my previous employer. But I'm not phased by avoiding cold calls. I still get loads of emails trying to recruit me and they're mostly annoying. If I decide to switch jobs, it'll be because I initiate it, not because of HR reps phoning me.
If you were around during the last dot-com boom, you may remember the ridiculous poaching that went on, startups offering insane signing bonuses and other perks, employees changing jobs after only a few months on the job. I worked for a company once that had $100+ million in Softbank funding, and funneled a huge amount of it through headhunters which received a bounty on each hire, and were incentived to bribe prospects to quit their current job.
I'm not sure this is healthy for the industry as a whole. There's already an apparent bubble in asset prices and cost of living in the Bay Area, and while it seems good for some tech workers in the short term to have salaries pumped through the roof, I'm not sure it's good for the overall tech economy, or the economy in general.
I'm somewhat sympathetic to the notion that companies want to avoid aggressive and invasive poaching on each other's workforces, it could turn into mutually assured destruction. If I had a startup, I'd be pissed of someone came along (and poached my employees instead of an acqui-hire) that I spent significant amounts of resources recruiting and training.
To read some of the press articles, you'd think this was the Grapes of Wrath or something, that poor tech workers, the ones who drive around in luxury busses and pay $3000-5000/mo for studio apartments in SF, are woefully under compensated. I wonder if this was a story about Goldman Sachs and JP Morgan conspiring to keep down the compensation of Wall Street money managers through no poach agreements, we'd have the same coverage.
Here's analogy. Let's say there is an employee marketplace. Employers list jobs for offer and salary. Employees list skills, availability, and asking salary. If the employers don't conspire to artificially restrict the offers and salary prices listed, would we say this is a competitive market with no price fixing?
Ok, now let's say that besides listing the jobs and prices, Employers activity solicit buyers. With stocks regulated because of issues (http://www.sec.gov/answers/cold.htm). But let's say employers cold call the employees and tell them to 'buy' a particular offer. Then at some point, the companies cease using sales forces to go out and cold call people to buy these offers. Instead, employees must come to the market of their own accord and bid on them. Is this really price fixing?
If all brokers stopped calling you trying to get you to "Buy XYZW", you wouldn't consider them trying to manipulate the price of XYWZ.
>I'm somewhat sympathetic to the notion that companies want to avoid aggressive and invasive poaching on each other's workforces...
>If I had a startup, I'd be pissed of someone came along (and poached my employees instead of an acqui-hire) that I spent significant amounts of resources recruiting and training...
I find the term "poaching" in this context to be disgusting. Employees aren't game captured by underhanded or illicit tactics. Employees are human beings that think and make decisions for themselves, and talk of them being "poached" as if it wasn't their choice is offensive.
>There's already an apparent bubble in asset prices and cost of living in the Bay Area
House prices are artificially high because of NIMBY zoning laws set by the very wealthy , and NOT the tech employees in question. The strata of middle class are being pitted against each other by the wealthy.
> and while it seems good for some tech workers in the short term to have salaries pumped through the roof, I'm not sure it's good for the overall tech economy, or the economy in general.
When a company keeps the money instead of paying its employees, the money is funneled to stockholders, who are in general richer and fewer in number than the employees. Are you seriously suggesting, in spite of the abject failure of trickle down economics, that giving money to the middle class tech workers instead of the wealthy (owners of the company, and shareholders) is bad for the economy?
>To read some of the press articles, you'd think this was the Grapes of Wrath or something, that poor tech workers, the ones who drive around in luxury busses and pay $3000-5000/mo for studio apartments in SF, are woefully under compensated
"No poaching agreements" ineluctably means THEFT. $10,000 a year extra is a lot of money for tech workers and their families. The victims were skilled workers that were deserving of the pay stolen from them. Your suggestion that we shouldn't empathize with any victims of theft if they're not destitute is fatuous and offensive.
The word "poach" by definition isn't exclusively tied to animals, but rather refers to property or other potential resources associated with another.
Feel free to be outraged by the practice of collusion, but is it worth getting upset about a vague slang industry terminology?
Calling this theft when the tech workers (im not counting executives and high level salesmen) in question could apply for positions themselves if there were dissatisfied with their current compensation is hyperbole.
There has been plenty of evidence over the past 12 months that there was exactly such an agreement "not to hire people who apply".
If you had actually read that far you would have seen that this was in fact a "no cold call" agreement for engineers.
If there is plenty of evidence to support your alternative claim, would you mind posting some? Because the original document posted in this article appears to show clearly that the policy was simply "do not cold call".
From the end of the article you just referred to:
>Google has agreed to the following protocol: 1. Not to pursue manager level and above candidates for Product, Sales, or G&A roles - even if they have applied to Google.
So yeah, Scott_w is correct in saying that there was an explicit agreement not to hire people who apply. It does not get more explicit than written in black and white on an official hiring policy memo.
Regarding engineers, the poster above you referred specifically to 'people', not the subset 'engineers'. He was correct in his statement and it appears that he did, in fact, read the article all the way to the bottom.
1) keeping wages suppressed might be a good thing for the regional economy and long-term health of the tech industry
2) tech workers are already well compensated
Those are fair opinions, but the behavior described is still illegal. This is one of those situations where we can't have it both ways.
Yes, it's still illegal.
The Restricted Hiring section is actually rather interesting. Why the ban on pursuing managers from Microsoft, Novell, Oracle, and Sun? Of note it says that only for "Product, Sales, of G&A roles", but pursuing engineering at any level is fine.
Because the agreements quickly expanded to include those companies.
Are you free to use the power of the state to try an boost your salary? I don't think you should be able to do that. But apparently many people do.
No, they're not. This is anti-competitive wage suppression. It's illegal.
> Are you free to use the power of the state to try an boost your salary? I don't think you should be able to do that. But apparently many people do.
Pretty sure that's illegal too.
And rights are not duties. We can exercise them or not.
Just because people are wildly successfully and in charge doesn't take away their basic rights, even if you don't like the outcome.
Everybody is still free to work with whoever will agree to work with them. There is no right to coerce others to do what we would prefer.
And, yes, those lobbying for something are a different group than those approving. But I bet if I lobby for something you don't like that gets implemented, I'd be responsible for it, if not wholly responsible.
Too many on the right seem to think it's bad when the government does something but have no problem when corporations do the same. But in reality a government is just a bunch of people agreeing to act in certain ways, just as a corporation is.
Basically their agreed upon policy says that they can hire any engineers they want, but you better not hire one of our managers! What an indictment of the higher value attributed to managers over engineers.
Employees "conspire" to raise wages (unions) -- "bad".
Keep in mind the multiple dimensions upon which "privilege" acts -- including those of perception.
In other words, you think people should be "free" as "individuals" to earn whatever they are worth. Well, at its simplest, that is what you are going to get. You are ALSO going to get employers to work against this. Welcome to "libertarianism".
In other other words, I'm suggesting that we are all members of society, and that our personal interests do not lie solely in our own, personal remuneration.
And it woudl mean that the board woudl have to stand up and either defend what they did or admit they are law breakers.
BTW the FTSE threw out a company with restrictive stock classes out of one of its index's only last year - the Daily Mail trust.
One can hope.
If you want some evidence to back that hypothesis: the e-mails you're talking about right now are encrypted. They're encrypted inside Google's servers. But it doesn't matter in the face of a court order. It's not like the Justice Department accessed these files that are being reported on with wireshark.
I'd be worried to admit that I signed up for free pack of crisps from two different emails breaking T&C
My tweet: https://twitter.com/stefek99/status/448045158836097024
What the hell were they thinking?
I just wonder if anyone will go to prison... And how will stakeholders / stock market react?
Eric Schmidt says the practices are zero sum. In my opinion this is exactly correct. If all the big companies just move each other's employees around, nobody benefits. If instead they all agree to look outside of the talent that's already been recruited, everyone (including developers) benefits. New talent keeps coming in, and developers not in big tech companies have a shot at working at places their parents will recognize.
The companies may not benefit, but the developers certainly will! Not just the ones being moved around, either --- it'll raise market prices, and so _every_ developer will benefit, even those who don't move.
I think drawing a line from a handful of non-recruitment agreements to price depression in the specific world of the software engineering industry requires more than hand-wavy assertions based on generalized economic theory.
Finance pays out a fantastic amount of profits to the people generating them, i.e. the employees, rather than just the shareholders.
In fact, if you only consider the companies (and not the employees), this kind of competition is negative sum, not zero sum, which is kind of the point.
Are you suggesting we on hacker news attempt to write comments for the lowest common denominator? I think a lot of people who have English as a second language (American's for example) would still enjoy a bit of irony.
1) Big companies 'move employees around'
2) Industry salaries increase as a result
3) Supply of engineers increases as result of increased demand signaled by the higher salaries
4) Everybody benefits from influx of new talent
The 'new talent' is going to come regardless. It's the salaries in the industry that determine the quantity and quality of those new entrants over the long term.
There's one group of people who do benefit from this - employees themselves. The positive feedback loop that comes of such zero-sum scenario raises the salaries of developers and also gives them an advantage when negotiating compensation.
I do side with the companies on this one - such practices waste lots of resources and reduce the quality of company's output, so the society at large loses.
My first reaction when reading this was "well, duh". However, I just noticed that the title of the piece is incorrect. That's BI's bad, they should know better.
It's an anti-competitive business practice, plain and simple.
I don't agree with the statement but it does represent a possible solution - all companies involved in this should have their employees go on strike!
People think this idea is ridiculous because they've been told it is over and over and over again. Are unions really evil or are they ever more necessary to balance out the insane profits companies are making?
Just some questions worth thinking about before you arbitrarily down-vote someone...
My statement merely aims to say that I don't think there is anything currently wrong. These companies make billions. They could easily afford to pay larger salaries. Why should they if people will work for less? Why isn't everyone's salary like Eric Schmidt?
Step 0 would be to convince software engineers that other software engineers who don't perform up to the same level as them should be protected for the good of the working-class engineer, instead of kicked to the curb to make room for a more productive engineer.
A bit of a hard sell, as engineers tend to see themselves as co-owners of the solutions they create and hate to see their work fail to launch because they're saddled with bad coworkers.
If the issue doesn't clear up within the week, please seek further guidance from a licensed professional.
Thanks for the book suggestion, please feel free to quote more books without debating my comments.
obviously these companies were not competiting hiring engineers...
> People are still free to work for whoever they want.
Or, what 4chan/other trolls could potentially do with it.
Publicly disclosing internal matters for the courts is bad enough, but PII like internal mail addresses should be redacted before release!