How Apple, Google, and other tech companies conspired against their own workers

https://www.whenrulesdontapply.com/

by alienlid • 7 years ago

717 276 7 years ago

keepper5• 7 years ago

So while this is bad... I don't know how to feel about this. The other side of the coin is that these companies pay WAY ABOVE average salaries. I'm intimately familiar with this having

FAANG companies average of 50% more compensation than average. Especially outside of the bay area.

Typical range TC Sr. SDE in nyc: 150-250k + Bonus. Typical range TC for Sr. SDE in nyc: for Google/Facebook/Amazon 300-400k ( and goes higher ).

Only the most well paid Quants working in horrible environments made 500k+ There's a good portion >E5 engineers at these companies making well over that.

Anti-competition is bad.. but they are at the top of the industry on compensation. :( So again, don't know how to feel about this.

izzydata• 7 years ago

Who gets to judge how much an engineer is worth to a company making billion upon billions of dollars a year? If some of these engineers are what is enabling these companies and their executives to make millions then maybe they really are worth a 1 million dollar salary.

inlined4• 7 years ago

Also, this happened many years ago. Wages have soared since this was uncovered. Now (actually 4hrs ago, the last I checked) a college hire’s signing bonus is 2/3 my base salary was 6yrs earlier.

DannyBee• 7 years ago

Sure, but the ones who aren't doing that are also getting paid really well.

In your scheme they would not :)

munk-a6• 7 years ago

I think the fair thing to realize, as a society, is that corporate profit taxes just make sense. If a company is operating in a high profit margin line of business it has more than enough money to invest in future growth, fairly compensate employers and owners _and_ provide a societal benefit for all those other community members that work in less high profit margin societies. Sure, you've got good healthcare and what not, why not make sure your barista has the same access before buying that third house.

I applaud anyone who decides to do this of their own volition, but I think we can agree this makes sense societally and it'd just be easier if a third party was responsible for shifting the money around as needed and made sure everyone was paying proportionate to their ability.

keepper5• 7 years ago

you're right. But there's MANY other companies making similar profits.. yet not of them pay anything similar?

I think you guys can't separate your dislike for these companies, with an actual, thoughtful analysis.

Most oil companies make similar profits.. yet the average oil engineer makes 80-100k. With a lot more risk, and in similar high demand as a software engineer.

kjar3• 7 years ago

This argument is very weak IMO. Paraphrased “I got paid happily, industry collusion to suppress wages is therefore OK”

skybrian13• 7 years ago

It was never OK but was settled long ago and compared to the many, many other forms of injustice in the world that are ongoing and more severe, why focus on this one? Even if you limit your scope to tech companies, there are more important things.

keepper5• 7 years ago

Have you actually look at wages in other industries?

Why are we focusing on the companies that actually do PAY ABOVE. how about we focus on the industries that UNDER pay. Someone getting compensated many times the average income is not the person we should trying to advocate for. The market can decide that.

That industrial or service worker not getting paid a living wage. THATs who we should be fighting for.

I love how i'm getting downvoted for my parent comment, but no one has taken the time to compare to other industries and companies with similar profits, who pay their engineering talent SUBSTANTIALLY less. Oil industry has similar profits, yet pays engineers 80-100k.

samirillian• 7 years ago

Yeah, until you compare how much they spend on wages to their market cap, which is just insanely low relative to most other industries.

deogeo3• 7 years ago

Now compare the wages against CEO and shareholder compensation.

munk-a6• 7 years ago

Yea, this is where things get really stupid. The contribution of shareholders is very close to nil - the CEO may be the most impactful employee (though I think they're honestly not nearly as important as modern society says, being a replaceable cog themselves) but they are not worth the equivalent of 20 or 5000 employees.

keepper5• 7 years ago

How about we compare to engineering wages in other companies with similar profits? Pretty much any other large engineering company. Or how about the oil industry? where profits are higher, the risk to life way higher, yet engineers make 80-100k?

What you have in these companies are single large shareholders vs institutional or family shareholders. That's what you're ultimately uncomfortable with. One person having so much net work.

cobookman• 7 years ago

There is a lot of ageism in this industry. I'd be curious if SWE at FAANG is equivalent to football players in the NFL.

Aka, Sure you might make more but what's the earnings over total career?

skybrian13• 7 years ago

The salaries and other compensation are often high enough that if you live modestly, invest your money, and most importantly, the stock goes up, the career might be over when you realize you have enough to retire early.

But as they say, past performance is no guarantee of future results.

fullshark2• 7 years ago

Remember this happened before FB / Netflix / Unicorns started an open war for talent and blew salaries up.

ummonk2• 7 years ago

You've got the timeline backwards. The compensation only went up after this collusion ended.

defen4• 7 years ago

So while this is bad... I don't know how to feel about this.

Just to be clear: you are saying it's possibly ok for a cartel of billionaires to collude to suppress wages for a bunch of people making six figures? Because those employees have it "pretty good" and should be happy with what they're given, even though they are working to build world-historical fortunes and power for the business owners?

kjar3• 7 years ago

Serfdom

Frost1x2• 7 years ago

Additional irony is, that behavior is condemned while any sort of orchestrated labor union in the industry is met with resistance at every turn.

Your employers, even as competitors dealing with monetary counts in billions, try to unionize (aka collusion). Stop pretending businesses are looking after your best interests. Chances are, if the business supports something, unless your goals align on that thing with the business, you probably want to do the opposite. Compensation maximization and labor expense minimization are nearly orthogonal.

FireBeyond2• 7 years ago

Exactly.

I don't think people really understand the gravity of those fortunes.

Jeff Bezos could now (in theory, at market prices) buy Tacoma, Washington.

As in buy every piece of real estate, private and public, all utilities and infrastructure.

A town of 200,000 people. One man could buy it all. The assessed property value for 2017 was just over $105B, including government-owned, plus wiggle room for other properties.

That "should not" be possible. Buying (or being able to buy, rather) a "mid sized urban city", as an individual.

keepper5• 7 years ago

No, being clear, since it seems you aren't separating concepts.

You're not happy that these companies have SINGLE large shareholders. That the founders kept so much company equity. I FULLY AGREE no one should have that much wealth. But, no one here is complaining about families or others having similar wealth. They are complaining that founders kept that much ownership.

The real wage suppression is happening in other industries and companies. How about the lack of a livable wage in industrial and service industries? How about that fact that the average wage has not kept up with cost of living?

Why are you advocating for engineers like myself making many times the average income and living way above average lives? That's insane!

How about oil companies with similar profits paying engineers 80-100k? at an actual risk of loss of life?

We should focus on the actual problems. The lack of ability to tax generational and asset wealth. The reason they accumulate so much is that we can't tax their share of ownership.

inlined4• 7 years ago

One of the things that made my mind explode was that this was blatantly recommended in The Hard Thing About Hard Things. Horowitz argues that your relationship with your business partner is worth more than the employee and you shouldn’t entertain solicitations for employment.

aswanson• 7 years ago

I mean, at least he kept it real.

munk-a6• 7 years ago

This is why, as an employee, I am not willing to put my neck out for my employer - modern society and goings on are a pretty clear lesson that employees that take risks for a company end up eating them and nobody higher up cares (unless it's essentially free to care, which is more easily explained by self-interested behavior than any sort of altruism).

kjar3• 7 years ago

Reminds me of the work “Disposable People”

Nevermark4• 7 years ago

Balancing the risk/reward of poaching employees from a partner company makes sense.

This is not about backroom agreements to artificially keep wages down, but about weighing the pro's and con's any particular action which could derail important projects.

If the employee is worth more than the risks of poaching them, then do so. If not, it would be foolhardy to do so.

basetop• 7 years ago

Sadly, employees are just another resource ( human resource ) in the modern world.

drdeadringer• 7 years ago

I don't know how this is still a super secret unknown to the public at large. This has been reported for years. What am I missing?

Spoom• 7 years ago

The project was made possible by a grant from the eBay Settlement Fund.

arebop2• 7 years ago

These employees aren't very sympathetic victims. Nobody wants to hear about how some 5%-er with a bunch of good alternatives should be making more and having more choices about who to work for.

You'll even find in the comments here that many of the affected employees themselves feel they got at worst a fair deal, because after all some (most!) workers get paid less and work in harsher conditions and so forth.

turc16563• 7 years ago

Notice the difference: "Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees"

"...brought charges against the companies"

They should have been indicting both, or just the executives for their explicit role in this criminal behavior. I really detest the lack of individual accountability in all these cases when we deal with large companies. If this was a couple of small, local competitors who were the only two [whatever] in the area and they did this, I guarantee you the owners would be individually indicted.

munk-a6• 7 years ago

I agree, there is far too much ability to transfer liability in the modern world which lets this sort of stuff get abstract and easier to dismiss. Companies should be held accountable to the extent their growth has encouraged bad behavior, but individuals at that company committed the behavior and, if they were instructed to do so and blindly followed then...

1. "Just following orders" isn't now and has never been a valid excuse

2. Go after the coercers or modify our understanding of liability to allow those targeted to make the argument that their superiors deserve to repay them every bit of penalty they owed.

Really, in the modern world, just sue someone and tell them they're on the hook but they'll be allowed to sue whoever is responsible for their portion of the responsibility and watch this all work itself out quickly.

crowdpleaser• 7 years ago

"Just following orders" was a valid excuse until the Nuremberg trials.

jammygit• 7 years ago

Transfer of liability? There are candid emails between Steve jobs and Schmidt about the topic.

Edit: They made a minor settlement and there was a lawsuit that got a tiny amount of press.

http://time.com/42322/steve-jobs-chilling-response-after-get...

Edit 2: there was not even a slap on the wrist legally speaking:

"The proposed settlement, which if accepted by the court will be in effect for five years, prohibits the companies from engaging in anticompetitive no solicitation agreements. "

module0000• 7 years ago

> 1. "Just following orders" isn't now and has never been a valid excuse

Yes it is, see: https://definitions.uslegal.com/c/corporate-immunity/

That said..I agree with the spirit of your post. The only officers that cannot receive corporate immunity are the CEO and CFO - they can be held liable in criminal and civil litigation.

6gvONxR4sf7o• 7 years ago

In a frictionless system, sure. When lawyers cost so much, this kind of chain-of-lawsuits system would be a huge payout to lawyers.

thereare5lights2• 7 years ago

1. "Just following orders" isn't now and has never been a valid excuse

That's not true. Just look at Lt. William Calley.

samatman• 7 years ago

I would agree with both.

But bringing charges against a company is important. Boards of directors are supposed to, well, direct the executives, not look the other way while they break the law and abuse their employees.

The way to encourage this is to hit the company, hard, right in the wallet.

shdh• 7 years ago

The cost was probably less than the profit in this outcome for each of the companies.

turc16563• 7 years ago

Oh I definitely agree. Both should ideally be charged because these people were acting on behalf of the company and were in management positions, which makes the company legally liable for their actions.

But if I only get to choose one to charge, I go the individual route any day of the week because it reduces/removes the moral hazard of getting to shift your criminal activity to an intangible, legal entity like a corporation. Sure, you'd never get the $435M settlement from these people, but once everyone knows the government is coming after them personally, I would bet my last dollar that this type of crap virtually never happens again.

citizenkeen• 7 years ago

But that's half the problem - we never do. These kind of criminal charges result in a few million dollars worth of fines. It's never enough to really hurt a company the way that losing one year in jail hurts a person.

maxxxxx3• 7 years ago

It has been shown repeatedly that boards won't do much and repeated fines are more and more just another cost of business. Either the fines need to be raised to a level where the company loses profit for one or more years or we need to go after individuals.

i_am_proteus• 7 years ago

Part of the reason modern corporate bureaucracies are so bloated and complicated is to reduce the personal risk to executives by muddying the apparent decision-making process at the top. Executives can make it look like they're people who execute complicated processes rather than decision-makers.

They end up taking credit when things go well, and they might look bad when things go poorly, but they essentially never get held criminally liable. Nice work if you can get it.

erikpukinskis3• 7 years ago

This is a powerful insight, thank you.

I am fascinated by the way "fitness landscapes" manifest in companies OUTSIDE the financial fitness of the company's trade. People often act like trade fitness is the only realm where we compete in capitalism, but there are so many more.

Moat fitness for a company doesn't benefit their trade at all. Customers don't benefit when you kill a competitor, but you do.

Similarly PowerPoint doesn't benefit the customer or the business. It's a tool for employee theater, using it makes employees appear less fit to be fired.

And I like your point that unaccountability fitness is also an existential competition for executives.

I wish there were a big list of these for me to ponder.

Spooky232• 7 years ago

That’s a very one dimensional view. Bureaucracy exists to standardize control and improve consistency.

Think of a group of friends who go out for dinner. When the group grows, you generally need to set rules to avoid folks stuffing on tips or itemizing their bill to save a buck.

macspoofing• 7 years ago

Meh. It really wasn't that big of a deal. They got caught and fined and that feels like an appropriate level of punishment. There are times when a prison-term against bad-actor executives is the right punishment ... this isn't it.

If this was a couple of small, local competitors who were the only two [whatever] in the area and they did this, I guarantee you the owners would be individually indicted.

No. 100% NO. I guarantee you that the regulators wouldn't care. And if they did care, the 'local competitors' would get AT BEST a slap on the wrist like a strongly worded letter with a time-frame or MAYBE a fine (if that). There would be no indictments.

I work with regulators all the time (FDA, Health Canada), and they will work with you to get you under compliance. Consider the fact that all companies are under a large amount of legal and regulatory constraints and chances are every company is doing something against some law or some regulation (knowingly or unknowingly), and you can see that as long as what you did didn't result in undue hardship (though I'm sure you'll try to claim that this was an egregious action - I disagree) and you fix your behaviour, you'll be fine.

dsfyu404ed4• 7 years ago

No. 100% NO. I guarantee you that the regulators wouldn't care. And if they did care, the 'local competitors' would get AT BEST a slap on the wrist like a strongly worded letter with a time-frame or MAYBE a fine (if that). There would be no indictments.

Unless of course an indictment is the politically determined goal. E.g. that one small Chinese bank that got screwed for the lending bubble that popped in '08.

turc16563• 7 years ago

"...they will work with you to get you under compliance"

Sure, as long as they are doing so in good faith. An act like this is clearly not in any sort of good-faith attempt to be in compliance with the law. It's obviously illegal. I would expect (hope?) that regulators and law enforcement would act swiftly and with much more than strongly worded letters and small fines for anyone who does this.

Yes, you are correct that I would definitely claim that this was an egregious action. If people are conspiring to limit the employment prospects and potential income of others and are doing so in a manner that violates the law - yeah that's pretty f'ed in my book and they should, in my opinion, be subject to the harshest punishment the law allows for these instances.

justfor1comment• 7 years ago

Being a rich executive is essentially a get out of jail free card in America. Only good outcome for us commoners is that they can't screw us in the same way again. They have to invent a new way next time.

rexpop• 7 years ago

...not really, though. Laws aren't always changed based on such incidents, those that do are eventually struck down, and if the employer's not "caught," they can perform all the classic exploitative tricks.

dominotw• 7 years ago

Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees

How do they enforce this agreement?

Reminds me of Phoebous cartel agreeing to produce lightbulbs below certain lifetime. https://en.wikipedia.org/wiki/Phoebus_cartel

lern_too_spel2• 7 years ago

Enforced with threats from Steve Jobs himself:

https://www.engadget.com/2014/03/24/emails-reveal-that-steve...

https://www.cultofmac.com/316682/how-steve-jobs-reacted-when...

JDulin• 7 years ago

This is an important point, and I couldn't agree more.

This idea overwhelms me when I read the newest filings and indictments of pharmaceutical companies in the opioid crisis. A corporation, fundamentally, cannot "learn lessons" like people do. It is a collection of incentives, with men inside directed or manipulated by those incentives. If gently nudging 47,000 people a year to kill themselves with overdoses would create more revenue for the corporation, after lawsuit settlements, than not, they would likely do it all over again. Even if you change the men making the decisions - "Finding more moral men" is not a plan.

Executives must have skin in the game, because the possible upside to their career at the highest levels of American business are too great to hope they'll take a moral stand. The potential upside for Richard Sackler, and John Kapoor, and Steve Jobs is so high (Massive bonuses, stock prices), and the potential downside so low (They are fired, with a generous golden parachute), they are willing to take the chance they'll get away with it. The most likely outcome is that attorneys will get rich, and nothing much else.

The only solution to †his type of white collar crime and leadership malfeasance is to make executives, the individual human beings, feel a tinge of reptilian fear in their gut that they may go to prison and the livelihood of their families could be put in danger.

josho• 7 years ago

While I agree, in our current political climate it’s not going to happen.

In the interim I would be willing to settle on significant punitive damages. Eg. Make getting caught very expensive and those corporate nudges will start nudging in the directions of protecting employees, consumers, etc.

feenix5662• 7 years ago

A corporation ... is a collection of incentives, with men inside directed or manipulated by those incentives ... "Finding more moral men" is not a plan.

I couldn't agree more, and that analysis applies to all systems of human interaction, not just corporations. I wish people would use that framework to understand everything, specifically government.

sneak• 7 years ago

Google’s shareholders and board kept Eric Schmidt in a position of power for approximately a decade after his fraud against the staff was revealed.

jhanschoo• 7 years ago

Depending on their position and the law, it is possible that liability is limited so that they cannot be sued by external entities. That is, external entities can sue the companies, but only the company and shareholders and possibly the state can sue the execs.

fulafel• 7 years ago

Was there a criminal case to be made?

Animats3• 7 years ago

It should be possible to crunch through LinkedIn histories and determine where there's collusion between employers. If moves between employer A and employer B are lower than between A to C and C to B, something funny is going on.

stcredzero3• 7 years ago

With something as complex as employment decisions, there could be a lot of confounding factors. Example: What if A and B are located somewhere more desirable? There may naturally be a desire to stay where you are and less impetus to move. A and B might be in a class of company which confers more prestige, so there would be less impetus to move. A and B might entail more risk somehow. There are many of these.

Using bulk statistics to show things like bias and collusion is fraught with these issues.

tomjakubowski• 7 years ago

If A and B are both located in desirable locations, and C is not, then the strangeness of there being more A->C->B jumps than A->B is only stronger.

If A and B are in the same desirable location, all the weirder.

Animats3• 7 years ago

It's not determinative, but it shows who to investigate.

fullshark2• 7 years ago

It is pretty amazing how this story was memory-holed by so many in the industry.

DontGiveTwoFlux• 7 years ago

Can any member of the class lawsuit here comment on the settlement? How did that work out for you?

shereadsthenews• 7 years ago

Not a member of that class but one of the things that happened as a result of these revelations was that everyone at Google got a large raise (much larger than typical annual raises) and a substantial one-time cash bonus which appeared to be, during the announcement, just Eric being Uncle Moneybags but just after the all-hands we all found out the reason from the newspapers.

inlined4• 7 years ago

Are you talking about the 2010 adjustment or something in more recent years. I don’t remember this.

throwawwway• 7 years ago

I was a member of the class. After the settlement went through, I remember receiving a few large booklets in the mail from a law firm explaining the settlement and offering the opportunity to opt out.

After what seemed like a really long time - at least a year - I received a check for about $5000, which I had to pay taxes on, so it ended up being around $3000 net. I had left the company by that time, but still owned a substantial amount of stock, so I wouldn't be surprised if I ended up losing more from the negative impact on the stock price than I got in the settlement.

The people who really came out ahead in this were the lawyers, who took something like 25% of the settlement for themselves.

dnr• 7 years ago

I got some stuff in the mail, and eventually two checks for the two phases. I think they were something like $1100 and $7000.

I was kind of annoyed because the initial settlement was apparently so embarrassing that the _judge_ rejected it, something like $330M on supposedly $3B in lost wages. So they went back and increased it to the $435M, still nowhere close to what it should have been. Of course at this point the lawyers' incentives and the class' incentives are not aligned at all, so that's how it ended.

wyldfire2• 7 years ago

A separate class action lawsuit was filed on behalf of 64,000 tech workers for an estimated $3 billion in lost wages. Before the case went to trial, the companies settled for a total of $435 million.

How would we know if they resumed the bad behavior?

rak00n• 7 years ago

That's only $6796.87 per person.

dsfyu404ed4• 7 years ago

Depending on how much the mean/median person's base salary is that's on the order of a bonus. On one hand it's not that much. On the other hand I'd be pissed if I didn't get my bonus because of some back room deal between execs.

cliffy2• 7 years ago

The settlement is laughable given the number of people whose salaries were held down as a result of this collusion. It's not just workers at these companies that suffer. It has a network effect of holding salaries down at companies which aren't even colluding.

Another example of (usually giant) companies deciding to risk breaking the law because its cheaper in the long run to do so.

skybrian13• 7 years ago

It was a long time ago. I got a raise out of it and later retired early, and I'm a pretty average software engineer, for Google anyway. Your argument that I "suffered" when actually they treated me very well by almost any standard isn't going to work.

Based on what I've heard about current salaries for in-demand people, I think it's safe to say that any depressing effect on software engineers' salaries is long gone?

And if not, and this is what holding down salaries looks like, imagine what the housing market would be like without it.

cliffy2• 7 years ago

This reads like Stockholm Syndrome at its finest.

You're OK with them paying you less because you still got paid well by some standard? You (and as a result many other people) would be making more both in the past and today if they hadn't colluded.

For at least some subset of those affected by this collusion the salary lost will make a significant difference in their families' and their own quality of life either now or in the future.

mehrdada• 7 years ago

The fact that some "average software engineers" got lucky to join at the right time and a sweet deal (by some metric) does not make a criminal act okay that makes thousands of more software engineers who would join later and did not share the same economic upside suffer. Note that people who joined Google before 2010 are a small minority of the current employees.

I think it's safe to say that any depressing effect on software engineers' salaries is long gone?

Every problem can be solved with one level of indirection. At scale, all of the big tech report their salary stats to survey firms who "aggregate" them and give it back to them. Yup.

glalonde• 7 years ago

Probably no one is arguing that SV programmers have particularly hard lives in the larger picture, but if you get in the habit of punishing collusion insufficiently because, 'eh, I've got enough flex in my budget', you're being a little selfish. That's like boomers supporting an unsustainable social security system: 'Look, it works well enough for me today. And I'm not going to be in the system when it turns sour.'

mrmuagi2• 7 years ago

The critical point is that, potentially, you were a candidate of having your wages colluded to be depressed illegally. Ponder about this fact for a moment. Now, how could you straightforwardly make an argument that you are okay because they "treated me very well" or that it's a good thing because it helps the housing market (less income on your end)?

These are not in any way, shape or form arguments or defences for these practices.

lern_too_spel2• 7 years ago

This was going on at the height of the smart phone wars, which was a trillion dollar opportunity that ultimately made Apple the most valuable company on the planet. If Apple defended its early market position by poaching employees instead of by litigating competitors, there would have been a huge jump in engineer salaries that would have rippled across the industry.

You can see this going on today with autonomous cars increasing salaries for engineers working on that problem, which has had knock-on effects for machine learning engineers and top tier software engineers in general.

As a Google employee, you were especially shafted by the settlement. Google's compensation structure at the time had a significant performance bonus component, even for low performers, but the settlement distribution was allocated based on base salary, so employees at companies with smaller bonus compensation got a disproportionate amount of the settlement.

taurath2• 7 years ago

Let's call settlements what they are: Bribes. Sometimes a bribe can bring justice, but in cases like this where they've created a systemic problem, the knock-on effects are too large for a bribe to ever be true justice. Thats why people need to go to jail.

mi100hael• 7 years ago

Hardly.

Settlements go to the plaintiffs, not the authorities. Plaintiffs have to agree to the settlement offer.

The plaintiffs could have gone to trial over this matter. They chose not to because fundamentally they must have perceived that the guaranteed settlement money was better than the risk that they walk away empty-handed. If the case was a slam dunk, the settlement would have been higher or they would have just gone to trial.

iheartpotatoes• 7 years ago

EXACTLY. I remember us engineers getting 0% raises for years in the mid 2000's when I worked at the Evil-i. Managers had to have meetings to explain to us it was only temporary due to the bubble bursting (options from '97 were underwater until practically 2011). And what, they throw a few $k at us and that's supposed to make up for it? Glad I got out of that toxic shithole. My peers who left in the 90's tried to encourage me to leave, but I thought I'd be stable and loyal. I remember around 1990-91 when former employees who had been "wrongfully terminated" were protesting, and I was a just some mid-20something laughing at them for being slackers. Joke's on me, they were dead right.

skybrian13• 7 years ago

This happened but it's old news. I remember when they announced the raise we got as a result. If you never heard of it, you weren't affected.

DINKDINK• 7 years ago

I wonder how much small firms/startups have /benefited/ from this arrangement. By artificially reducing demand for labor, big tech firms have effectively made it more profitable for smaller firms to compete against them.

rightbyte4• 7 years ago

I think you got it the other way around. They have decreased the price of labour and thus increased the demand for it.

This is more or less an employer union.

jorgemf• 7 years ago

I don't get your point. As I understand it they have decreased the demand to decrease the price.

abvdasker• 7 years ago

I prefer "buyer cartel". It sounds more sinister.

ummonk2• 7 years ago

That, along with regulatory enforcement, was basically what broke the collusion scheme. Facebook as a growing company did not want to play ball, and aggressively poached from the other tech companies with bigger offers, forcing them to raise their compensation to retain employees.

paul7986• 7 years ago

Rules sooner or later will apply!

They didn’t apply to Harvey Weinstein until they did!

thorwasdfasdf• 7 years ago

It's interesting the lengths they'll go to rip off their own workers, and yet they won't even make the slightest effort to hire in locations where labor is much cheaper. There's countless places in the US where they could've fairly paid 1/3 less. And significantly more savings outside the US.

skybrian13• 7 years ago

These companies have offices all over the world, including China and India.

chillacy2• 7 years ago

A lot of companies have satellite offices in smaller cities with lower CoL. But they still want to be in urban centers with lots of people and next to strong CS colleges.

ChuckMcM6• 7 years ago

The critical thing here is that if pay was uncontrolled, then skilled employees could market themselves to the highest payer, and that would put more of the profits of the work of those employees into employee pay instead of into company margin (aka profit).

It is pretty clear when you look at the revenue per employee numbers at some of these 'digital product' companies (specifically Google and Facebook), that rank and file employees are not sharing equally with management in the returns.

That is not to say that pay is bad, or that wage theft is going on (extreme positions), employees in California at least are at will and can quit at any time to offer their services to another player. The regulatory requirement though is to identify and prevent collusion between those players in keeping salaries low.

nathanvanfleet• 7 years ago

That is not to say that pay is bad, or that wage theft is going on (extreme positions), employees in California at least are at will and can quit at any time to offer their services to another player. The regulatory requirement though is to identify and prevent collusion between those players in keeping salaries low.

Wait, but isn't this situation actually making them getting hired at other players much more difficult due to the collusion?

skybrian13• 7 years ago

It was not "much more difficult." They didn't have recruiters calling them, which I guess is market information of a sort.

pathseeker2• 7 years ago

equally with management in the returns.

Managers at Google don't make much more and in some cases don't make more than the SWEs they manage. Did you mean to say shareholders?

joshuamorton2• 7 years ago

I expect he means rank and file employees including middle management vs. Execs, which is probably limited to the set of people who are VP or above. (maybe Director, but I think the data would disagree).

e40• 7 years ago

I was told by someone in HR that has HR friends at Google that the manager of a group always makes at least as much as the highest paid employee in that group.

matz1• 7 years ago

Employee compensation at these companies significantly tied to the stock price. So if these practice somehow outlawed, doesn't mean that company will have to spend more thus lower the stock price thus lower the employee compensation ?

gok2• 7 years ago

Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees

That's not accurate. The agreement was about recruiters cold-calling each other's employees. Employees were free to reach out on their own between companies. Workers routinely switched companies while the agreement was in effect.

I still think it was bullshit, but it wasn't quite as egregious as the article makes it sound.

Disclaimer: I was one of the affected employees, and got a share of the settlement.

elicash• 7 years ago

Recruitment is a vital part of the work companies do and they traditionally pour a ton of resources into that aspect of hiring. But yes, I agree specifying the deal was "limited" to recruitment hiring would be better and more precise.

That shouldn't be used to diminish how vast of a deal this was. But I generally agree with you.

arebop2• 7 years ago

Your statement is also not accurate, because there were several variants of "the agreement" and for some pairs of companies the agreement extended beyond cold-calling [https://www.lieffcabraser.com/antitrust/high-tech-employees/]. I'm sure multiple careers were set back when their prospective employer's HR department notified their current employer's HR department about the disloyalty.

gok2• 7 years ago

Those allegations didn't have very strong evidence. They were repeated by some lawyers looking for people to opt out of the class action. When I asked for details they didn't have anything.

morganw• 7 years ago

A lot of the discovery was never redacted & released; it remains under seal. I think there was more going on like a courtesy "we're going to hire your person. You want us to turn them down & earn a chit for the future?".

splonk• 7 years ago

I was a member of the class and got a settlement. It's been quite some time so I don't recall the details exactly, but I think the settlement was divided through some combination of the amount of time you were employed through the time period in question, and maybe base salary or title? I would have been in the maximum bracket for time but probably pretty low in the salary/title spectrum as software engineers go. I think the amount I got was just under $7k.

FWIW, I didn't feel particularly underpaid at the time, given that I was making way more than I'd ever had at any other point in my life, although I was relatively junior then and didn't have a good grip on the market. It ended up just being a bonus for essentially no effort on my part. I don't hold any major personal antipathy towards any part of the process.

nostrademons7• 7 years ago

So I was at one of these companies when the scandal broke. I didn't get screwed quite so much as my coworkers, since I'd only been working there for a year or so. The settlement was a joke - I got about $1100, but my compensation increased by roughly $100K/year the year after the cartel broke, and kept rising. Can't say I'm terribly pleased about either the wage-fixing or the settlement, but...

My wife works in philanthropy, and one of her jobs is investing in homeless shelters. We were talking the other day about how the Bay Area's housing/homelessness crisis is a direct consequence of the collapse of the high-tech wage-fixing cartel. Before 2010, the wage distribution from one of these huge companies was that founders and VCs would make billions, ~1000 early employees would end up with millions, and the rest of the employees live comfortable upper-middle-class lifestyles. The ~1000 employees who could cash out pre-IPO stock options would bid up prices in Hillsborough/Atherton/PacHeights/Woodside to ~$5M, but the rest of the Bay Area would be priced at what an ordinary professional could afford. After the cartel broke, the compensation structure changed so we have ~100K engineers each making ~$300-400K/year. That's enough to buy all the available housing inventory in the region. So now house prices in Mountain View and Sunnyvale go from $800K -> $2.4M, and you must be a dual-tech-income family to afford a house.

I say this not to imply that the cartel was a good thing (cartels are bad, and I'd much rather the solution be greater wage equality for everyone and building more housing so everyone can stay in the area), but to highlight the problem of unintended consequences. I've seen many people ask "Why don't companies hire remote workers at Silicon Valley wages?" and in the same breath say "Because I would never move to the third-world hellhole that the Bay Area has become", not realizing that if they did hire remote workers, the same thing would happen in their communities. Inflation is the flip side of higher wages; when everybody gets paid more, everything costs more.

chillacy2• 7 years ago

Just a nit: Inflation is the result of too much money chasing too few goods, so not everything increases in price. Electronics and mass consumer goods typically stay the same price. Only goods which have limited supply and no substitution get more expensive, like housing.

Otherwise everything else makes sense.

TheTrotters3• 7 years ago

You’re confusing inflation with real prices. Inflation means that the level of prices rises. If house prices rise because local government forbid new construction then that’s an increase in real prices.

gcbw2• 7 years ago

You are widely assuming that because a pie was split to 10 people instead of one, there are more money buying houses. That's plain wrong. There is still a single pie. Houses were bought just the same, but by one person instead of 10. I don't know how much more first home purchases facilitate this when there are 10 people instead of one, but I doubt it had any impact since those folks are buying more than one house themselves anyway.

In the end, the only thing that prevents housing prices/bubbles, is denser desirable residential areas.

There might be other factors, but one is definitely NOT money distribution schemes from the top 1% to the top 10%.

nostrademons7• 7 years ago

One person doesn't need 10 houses.

ChuckMcM6• 7 years ago

Another (minor) nit, in my experience you have always needed to be a dual tech income to afford a house in the cities near the bay. My wife and I bought our first house in 1984 for $153,000 and it required us to both be working well paid tech jobs. You can also buy a house usually if you have a lucky equity break and can use that to pay big chunk down so the mortgage is affordable on a single income but as far as I can tell buying a house on a single engineer's income, that is near the center of activity, hasn't been true since the early 70's or so.

nostrademons7• 7 years ago

I dunno - my in-laws bought their house in 1986 on a single engineer's salary (then renovated it into a bigger one when my mother-in-law went back to work). I also had a number of coworkers at Google who bought houses in 2009/2010 as single tech workers. Heck, I could've done so myself (2BR condos in MTV were going for $400K at the time), and am kicking myself for not doing it.

Perhaps 09-10 was a bit of an aberration because it was the middle of the foreclosure crisis and housing prices bottomed out then. I guess another big "thing" is parents (particularly Asian ones) paying the down payment for their kids - 2 of the 4 coworkers I'm thinking of had that help, and one had a minor stock-option windfall from joining a company right before Intuit bought it.

pertymcpert• 7 years ago

It's just exposed and accelerated an underlying issue in housing policy. When demand goes up supply is also supposed to go up to meet demand in a healthy market, but because of artificial supply restrictions this is what happened. The government is to blame.

TimTheTinker• 7 years ago

New housing development plans in the Valley, especially plans for higher-density developments, suffer from zoning restrictions arising out of “NIMBY” attitudes at the local level.

However, I don’t think that’s the state or federal government’s responsibility to change. If American government is truly to be “of the people, by the people”, then the people’s decisions at the local government level ought to be respected, including letting them suffer the consequences of bad choices.

If anything, the local zoning issues should be fought via campaigns to persuade local voters of better approaches. Fight a bad idea with a better idea. Not every local policy problem should be fixed with a new law from the state or federal legislation, or with federal/state funding incentives.

pathseeker2• 7 years ago

So now house prices in Mountain View and Sunnyvale go from $800K -> $2.4M,

This just proves that the housing crises was the same before. A regular middle-class income cannot afford an $800k home. The problem is the same before and after: there isn't enough supply for people who want homes.

Until you look at sales numbers and supply, your analysis is meaningless. Increased wages don't make housing prices increase.

not realizing that if they did hire remote workers, the same thing would happen in their communities.

Again, this is bullshit. Google could hire 10,000 remote employees at SV wages in somewhere like the Detroit area and it would have a negligible impact on housing prices because the supply is so large.

Remember, techies still make up a tiny percentage of the bay area population. 1% of the population being flush with cash should have absolutely zero impact on a healthy housing market.

nostrademons7• 7 years ago

I don't deny that the root cause of this issue is lack of supply. I'm saying that over short time periods (and sometimes over long ones where NIMBY policies rule), lack of housing supply is a given, and so the consequence of more money for housing is not more housing, it's higher housing prices.

1% of the population being flush with cash has virtually no effect on a housing market where 5% of the housing stock turns over every year. It has a very large effect when < 1% of the housing stock turns over. If people start seeing an effect, they have every incentive not to turn their house over while its value is still going up. Right now, Mountain View has 111 homes for sale in a city of 80,000. Sunnyvale has 156 in a city of 150,000. Cupertino has 56 in a city of 40,000, San Francisco has 706 in a city of a million.

Realistically, if these big tech companies offered full remote work (which they actually do, if you've been at the company long enough, but a relatively small portion of the employees meet the tenure & job performance requirements), you wouldn't get 10,000 remote employees in Detroit. You'd get 100,000 remote employees who are free to move around the U.S. to whichever city they prefer most. It's highly likely they will clump in cities that are desirable for techies - Seattle, Portland, Boulder, Austin, Boston, NYC, Pittsburgh, Raleigh-Durham. All except the last 2 are already getting their own version of a mini-housing-crisis, but not to the extent that the Bay Area is.

OrgNet• 7 years ago

I guess if they insist in staying in this area, they need to start building tiny homes neighbourhoods...

shard972• 7 years ago

I don't think they would open an office in Detroit, might affect their diversity numbers too much /s

jplayer01• 7 years ago

But this wouldn't have happened in the first case if the executives hadn't made this cartel. These are just second-order consequences of their actions - what might have happened over the course of two decades happened within 1 or 2. But this isn't the government's fault, this is a market imbalance caused directly by Google et al. acting in bad faith in the first place.

deepakhj• 7 years ago

"In the early 1960s, CA’s population was 15 million & we built 250K-300K homes/year.

Today, CA’s population is 40 million & we build 80K homes/year.

So our population nearly tripled while housing production dropped by over 2/3.

And people wonder why housing is so expensive."

jimmy12• 7 years ago

Wow this is jaw dropping.

By one estimate from the California Department of Housing and Community Development, the state needs to build 1.8 million units over the next seven years just to keep pace with population growth

You need to build about 257k just to keep up with growth, not to address any sort of shortage. This to me should sound like a builder's gold rush. Why are builders not flocking to CA to build? Are there some stringent set of regulations that greatly reduce the economic feasibility? Is this Prop 13 proving to be a failure?

flukus• 7 years ago

We were talking the other day about how the Bay Area's housing/homelessness crisis is a direct consequence of the collapse of the high-tech wage-fixing cartel.

Inflated housing costs are a worldwide phenomenon, you'll see a very similar story in Sydney, London, Tokyo and other places so I very much doubt the root cause is anything to do with the bay area. It might be worse there given the amount of money flowing in, but it's a much bigger problem.

TheTrotters3• 7 years ago

It’s not nearly such a big deal in Tokyo. It’s only a problem in cities where local government limits the supply of housing.

JDiculous• 7 years ago

if they did hire remote workers, the same thing would happen in their communities.

That's nonsense. There's a severe shortage of housing in Silicon Valley despite the fact that there's an abundance of housing in most of the country. Hiring remote workers means that you're hiring all around the country/world and people can move, not hiring in any one community. Also, hiring remotely means you can pay much less than Silicon Valley compensation because landlords aren't leeching an enormous bulk of it.

Silicon Valley could solve its housing problem tomorrow if it fixed its ultra-restrictive zoning laws, ended Prop 13, and built a ton of apartments. It won't do that because the people in power place the interest of wealthy landlords above that of the average people who live there.

zzzzzzzza• 7 years ago

how much do you pay for coca cola? If the price has gone up, it's probably not nearly as much as real estate has (probably more in line with what real inflation has been). And that's because real estate is a natural monopoly... luckily there's a solution, read Henry George: land value taxes.

heavyset_go• 7 years ago

So now house prices in Mountain View and Sunnyvale go from $800K -> $2.4M, and you must be a dual-tech-income family to afford a house.

Weird that this is a problem in Vancouver, Toronto, etc. The larger trend that you're ignoring is that global capital finds real estate in these areas to be good investments compared to their domestic options for storing value.

Instead of competing locally or domestically for real estate, people in the US, Canada, etc are competing with the richest people on the planet for a slice of the pie.

mnm1• 7 years ago

Yup. It should be illegal for non US residents to buy residential property in the US, especially in areas of high demand like the West Coast cities. Vancouver, BC implemented a tax which is somewhat helpful but clearly not enough. Land is a finite resource that's extremely valuable and selling it to foreigners for their vacation homes or investments is incredibly stupid. London is a place that's quickly learning this, although not doing anything about it. I wonder how bad it has to get until we change the laws. How many empty neighborhoods do we need to have before we reclaim the land for the people that actually live here? Probably a long time while the diversion is migrant workers crossing the Mexican border. It's amazing how stupid government and the people who support it can be.

hopler4• 7 years ago

The reason everyone at Apple and Google got a massive pay rise after 2010 is that Zuckerberg didn't join the cartel and Facebook turned on a firehose of money in SV. For employees of Apple and Google. Even of you never worked for Facebook, you owe Zuckerberg thanks for your raises.

mleonhard• 7 years ago

Here's an email I sent to my city councilperson on 2017-12-01. It contains information that refutes your claim. I received no response:

Dear Aaron Peskin, I live in Supervisorial District 3, at ... . You represent me and my neighbors in your position on the SF Board of Supervisors. Your work is very important. I have lived in SF for 6 years and have seen the housing market get more and more expensive while the city's businesses have grown. Economically, the city is prospering and adding many jobs which bring workers to the city every day. Unfortunately, the city has not added enough housing for these people. Here are the numbers:

- In 2011, SF jobs increased 2% (see [1] page 5) and housing increased 0.07% (see [6] page 4).

- In 2012, SF jobs increased 5% (see [2] page 5) and housing increased 0.4% (see [7] page 4).

- In 2013, SF jobs increased 5% (see [3] page 5) and housing increased 0.9% (see [8] page 4).

- In 2014, SF jobs increased 5% (see [4] page 5) and housing increased 1% (see [9] page 5).

- In 2015, SF jobs increased 5% (see [5] page 5) and housing increased 1% (see [10] page 5).

The 2016 reports should appear at [11] when they are available.

I took Econ 101 in college and learned about the Law of Supply and Demand. It's clear to me that SF's housing crisis is caused by demand growing much faster than supply. The city has enacted many policies and programs to boost the economy, creating more jobs. It has not done enough to make places for all of those workers to live. It's an imbalance of epic proportions.

Fixing this situation is the responsibility of the San Francisco Board of Supervisors. You are our elected member of the board. Please tell me what you are doing to increase the housing supply.

Sincerely, Michael

[1] http://sf-planning.org/sites/default/files/FileCenter/Docume...

[2] http://default.sfplanning.org/publications_reports/Commerce_...

[3] http://default.sfplanning.org/publications_reports/Commerce_...

[4] http://default.sfplanning.org/publications_reports/Commerce_...

[5] http://default.sfplanning.org/publications_reports/2015_Comm...

[6] http://www.sf-planning.org/ftp/files/publications_reports/20...

[7] http://sf-planning.org/sites/default/files/FileCenter/Docume...

[8] http://default.sfplanning.org/publications_reports/Housing_I...

[9] http://www.sf-planning.org/ftp/files/publications_reports/20...

[10] http://default.sfplanning.org/publications_reports/2015_Hous...

[11] http://sf-planning.org/citywide-policy-reports-and-publicati...

bvd• 7 years ago

I really think that this is crazy. I mean, that they did these kinds of agreements and actually thought they wouldn't get caught.

JTbane• 7 years ago

IMO, there ought to be a law that makes it easier to pierce the corporate veil in these sorts of cases.

tbarbugli• 7 years ago

estimated $3 billion in lost wages. Before the case went to trial, the companies settled for a total of $435 million

So you get busted doing something illegal and walk away with a 2.5Billion in your pocket and 0 jail time. How do you expect execs to not do this all the time?

khalilravanna2• 7 years ago

If the number of 64,000 employees is correct, even that $3B seems like a pittance. One commenter wrote their wage jumped by $100k the year after this settlement. $3B / 64k ~= $50k per person, less than half that number[1]. In the end they only had to pay an amount that was < $7k per person. What a joke.

My guess is the executives who orchestrated this got a big bonus as a result. And why wouldn't they? They optimized for the corporation's good. How do we collectively start incentivizing not being evil like this?

1. Sure it's only one data point to extrapolate off of but anecdotally hearing that people were paid $100-150k in SF while this was going on is a substantial amount of wage suppression given that those same people employed now would be making $300-500k at those same companies without blinking an eye.

hopler4• 7 years ago

It was orchestrated by CEOs. They get big bonuses regardless.

Also you are conflating base salary with total comp in your example.

skybrian13• 7 years ago

We are talking about a hypothetical wage calculation with many unknowns versus a cash settlement. In truth, nobody knows what would have happened in the counterfactual case, but settlements require picking a number.

thatoneuser2• 7 years ago

The number ought to err too high, not too low. This is supposed to be punishment and deterrent, not a gamble to get ahead illegally.

yonran• 7 years ago

I think the tech anti-poaching lawsuit is kind of a strange case because these are the highly-paid employees, not entry-level laborers, and the free market for top employees is likely to increase inequality, which is sort of the opposite of the goal of the Sherman Act. It’s similar to how collusion in the NBA reduces wages at the top while increasing team profits as well as enabling higher wages at the bottom (sports teams are excluded from the Sherman antitrust act), making a more viable ecosystem (see Planet Money episode https://www.npr.org/sections/money/2018/07/11/628137929/epis...). So it’s possible that forcing a free market of top employees will increase wage inequality. And ironically, politicians now complain that these tech companies are paying too much, driving up the rent of housing (thanks to the region’s restricted housing supply), since the lack of housing channels high wages into the pockets of landlords.

How should the Bay Area economy have grown in the past decade if we had wanted to prevent the poverty created by tech and landlord wealth? We should have allowed far more housing supply, allowing apartments to bid down rents and also allowing new workers to bid down wages. We should have had higher taxes on land, allowing the poor to share the wealth created by the increasing concentration of employment centers. And we should have had higher national income taxes, spreading the wealth from the highest-paid workers in the winners-take-all economy to the rest. But given the dysfunctional local government (restrictive zoning), dysfunctional state government (Proposition 13), and dysfunctional national government (low top tiers and low taxes on homeowner rents), the collusion that the tech companies did was not clearly a bad thing. The Sherman Act is about enabling the price signal to be the “central nervous system of the economy” (U.S. v. Socony-Vacuum Oil Co) to mobilize labor and capital. But when the dominant factor in the labor market is local governments’ restrictions on the housing supply which prevent mobility, I don’t see much point in enforcing the antitrust act against companies.

yeahitslikethat3• 7 years ago

I can't reconcile how anyone with integrity would work at these firms. Which then it follows that only people without integrity work at these firms.

Now it all makes sense.

ngcc_hk• 7 years ago

669 ...

benologist2• 7 years ago

These companies still routinely conspire against their own workers to slightly increase profits by reducing benefits, salaried roles, sick pay etc.

Nevermark4• 7 years ago

And employees conspire to get more by gaining experience then moving to other companies, differentiating themselves and asking for raises?

You are describing negotiation.

Companies are not supposed to want to raise wages any more than employees are supposed to want to lower wages. The balance is how the market puts a value on different kinds of work and skills.

benologist2• 7 years ago

Sometimes it's a negotiation between parties each with some measure of power, but it can also be completely unilateral like using layoffs and redundancies and shutdowns and bankruptcies as an accounting tool and not necessarily because they're losing money or making strategic changes.

scottlegrand2• 7 years ago

I think the latest expression of this concept came out when a friend of mine was up for a senior role at Google and they ended consideration when they suddenly decided that he switched jobs too often to be a leader, but they were happy to continue considering him for a role beneath what he currently already had.

Nevermark4• 7 years ago

Isn't that a reasonable concern?

The decision is specific to that one candidate and related directly to the candidates work history.

Is there no N, where N is the number of jobs someone has had in the last five years, where you would consider someone to be a questionable candidate for a key position?

briantakita• 7 years ago

Powerful people colluding? Sounds like one of those "conspiracy theories"</sarc>

Given how these large companies have a penchant to buy a promising company just to kill the product a couple years later, it seems like it's in the market's best interest to encourage distribution of power. This includes encouraging entrepreneurship with technologists & incentives to grow individual businesses to profitability, while discouraging M & A.

acdc4life• 7 years ago

“A separate class action lawsuit was filed on behalf of 64,000 tech workers for an estimated $3 billion in lost wages.“

So they went through all this effort to save 3 billion/64000 = $46,875 per employee. Is that how it should be interpreted? If so, these executives are greedy scum.

ArtDev• 7 years ago

By depressing tech wages, workers are forced out of big tech companies and into smaller companies with competitive salaries but fewer open positions.

Big companies complain they can't find enough workers with their relatively low wages, and lobby for more H1b worker visas, depressing wages even further as foreign workers cannot change companies easily without moving back to their native countries first.

I can totally imagine Steve Jobs writing that email over "no poaching" to the other big tech companies.

How Apple, Google, and other tech companies conspired against their own workers

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