Notice the difference:
"<i>Top executives</i> of leading tech companies secretly agreed among themselves not to hire each other’s employees"<p>"...brought charges against the <i>companies</i>"<p>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.
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...<p>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 <i>direct</i> 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 <i>all</i> 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.<p>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 <i>did</i> hire remote workers, <i>the same thing would happen in their communities</i>. Inflation is the flip side of higher wages; when everybody gets paid more, everything costs more.
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.<p>Another example of (usually giant) companies deciding to risk breaking the law because its cheaper in the long run to do so.
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).<p>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.<p>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.
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.
> estimated $3 billion in lost wages. Before the case went to trial, the companies settled for a total of $435 million<p>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?
> Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees<p>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.<p>I still think it was bullshit, but it wasn't quite as egregious as the article makes it sound.<p>Disclaimer: I was one of the affected employees, and got a share of the settlement.
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.<p>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.
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.
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.
> 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.<p>How would we know if they resumed the bad behavior?
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.
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 <a href="https://www.npr.org/sections/money/2018/07/11/628137929/episode-427-lebron-james-is-still-underpaid" rel="nofollow">https://www.npr.org/sections/money/2018/07/11/628137929/epis...</a>). 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 <i>much</i>, 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.<p>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.
By depressing tech wages, workers are forced out of big tech companies and into smaller companies with competitive salaries but fewer open positions.<p>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.<p>I can totally imagine Steve Jobs writing that email over "no poaching" to the other big tech companies.
Powerful people colluding? Sounds like one of those "conspiracy theories"</sarc><p>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.
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.
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.
“A separate class action lawsuit was filed on behalf of 64,000 tech workers for an estimated $3 billion in lost wages.“<p>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.
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.<p>Now it all makes sense.
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 ?
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<p>FAANG companies average of 50% more compensation than average. Especially outside of the bay area.<p>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 ).<p>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.<p>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.