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

People decry the greed of financial sector employees, but one of the best things about moving there from silicon valley was that people had a pretty good idea of their worth as a proportion of the firm&#x27;s balance sheet.<p>I really appreciated that compensation expenses on the balance sheet of a typical investment bank are fixed at 37-39% throughout the year, with the delta between salary and allotment being paid out as bonuses. It significantly improved my income.<p>I would gladly work at a tech company with a similar incentive structure, and I think more engineers should start asking for it. Financiers get paid a lot in the form of bonuses, but the correct answer is not to daisy cut by hollowing out their income. We should be asking why tech employees don&#x27;t also make the same kind of revenue.<p>When Google and Apple have profits per employee of over $1M but the average engineer salary is only slightly higher than $100K according to glass door while both these companies are building stockpiles of cash holdings, something is obviously broken.<p>I suspect part of it is the &#x27;doing it for passion&#x27; mantra, but another part of it was Apple HR&#x27;s now obviously crooked refrain of &#x27;we pay the prevailing market wage&#x27;. Just because I&#x27;m doing something I&#x27;m passionate about doesn&#x27;t mean I like getting ripped off.

I&#x27;ve lived and worked in the bay area for 30 years this month. Scary to think about but it lends an interesting perspective.<p>At some point in their growth, senior management is far enough away from the day to day engineering that the differences between individuals becomes nearly completely obscured except for a small percentage of standout folks.<p>This level of management is incenting a group to &#x27;grow the company&#x27; and they need more folks to do more things. The problem is that engineers have wildly variable effectiveness in a role (they aren&#x27;t fungible as folks would like) and the recruiting group is being rated on &#x27;quality hires&#x27;.<p>So if you split the population of engineering talent into loosely defined groups of &#x27;employed at a hot[1] company&#x27;, &#x27;employed at a non-hot[2] company&#x27;, or &#x27;unemployed&#x27; the recruiters consider these (unreasonably) to be &#x27;best&#x27;, &#x27;ok&#x27;, and &#x27;not ok&#x27; groups to recruit from because they correlate the hot&#x2F;not-hot bit to their incentive probability.<p>In the 80&#x27;s it was Intel, AMD, and National Semiconductor all trying to growth by hiring the &#x27;hot&#x27; talent from their competitors. In the 90&#x27;s it was Ebay, Yahoo, and Sun, and in the naughts it was Google, Oracle, Intuit, Paypal etc.<p>So you have this system set up and the &#x27;cheapest&#x27; way (in an economic sense) for a recruiter to be successful is to exploit the work of some previous recruiter that was successful and recruit the top talent from their pool into your pool. Combined with California&#x27;s labor laws which favor employees and you end up with a situation that repeats itself over and over and over again.<p>The issue is that recruiting quality people out of the entire pool is &quot;hard&quot; and poaching the top engineers at a competitor is &quot;easy.&quot; We don&#x27;t incentivize recruiters to do the hard work, which leads to a host of other problems as well (like ageism, university discrimination, etc)<p>[1] &#x27;hot&#x27; in this context is buzzworthy or having good growth and execution press. (exemplars, &#x27;Google&#x27;, &#x27;Facebook&#x27; or &#x27;Apple&#x27;)<p>[2] &#x27;non-hot&#x27; is a company that is idling along (not failing) but not generating a lot of buzz either (exemplar &#x27;Computer Associates&#x27; or &#x27;IBM&#x27;)

Thinking about it a bit, I bet this wasn&#x27;t born out of a desire to want to keep wages down per se, but a desire to avoid turnover of productive up-to-speed people.<p>It&#x27;s quite funny to see that the downsides of near-instantaneous at-will employment are hitting companies so hard that they&#x27;re willing to engage in such a boneheaded scheme, when sympathy is normally focused on employees.<p>Perhaps if these companies want to bring back some semblance of employee loyalty, they should start incorporating longer termination notice periods in their contracts and making employees happy <i>before</i> they want to leave, rather than treating individuals as interchangeable cogs and getting what they ask for.

What I don&#x27;t get is that I see Eric Schmidt strutting around in all kinds of media these days, how come no one ever asks him about his role in this shit?

&gt; The agreement prompted a Department of Justice investigation, resulting in a settlement in which the companies agreed to curb their restricting hiring deals.<p>Wait, the result of an investigation where wrongdoing was found is ... that the companies agreed not to do it anymore? Yes, I know there is a still a civil class action lawsuit going, but still.

The funny thing about all of this is that a&quot;cold call&quot; block is actually something the engineers might want.<p>As a software engineer: I&#x27;ve been chased by recruiters while heads-down on a project. It&#x27;s an annoying distraction. With the tools at my fingertips (glassdoor, social and professional networks of other engineers that aren&#x27;t particularly restricted by corporate borders in a deeply-interconnected era), I know the market value of the job and I know who&#x27;s willing to offer more and less; I also can know about the corporate and engineering culture of the other companies. In short: if I want a change, I know where the door is and I know who&#x27;s hiring. While in general, I&#x27;d agree with the notion that decreased price signalling could depress wages, I think it&#x27;s a stretch to push software engineers working at the listed companies into an &quot;oppressed workers&quot; mold; it&#x27;s a notoriously well-compensated field.<p>It&#x27;s certainly a booby-trap to reason from one&#x27;s own experience. But I find myself thinking that software engineers themselves might welcome the idea of a &quot;no cold-call&quot; list.

To entrepreneurs, business people, managers, etc.:<p>Please remember that your company is more than its product – it’s a group of people surrounded by a community of family, children, neighbors, etc. Whether your goal is world-changing or niche, do your best to take care of those people as professionally as you can. Business is business of course, but don’t rationalize bending the rules just to make a few more bucks.<p>If you get caught, you’ll pay. But even if you get away with it, remember how powerful a guilty conscience can be at turning profits into dust.

[edit] Yes, I know we have a title limit here, thanks for pointing it out again and again. The question is why the, in my humble opinion, most important word of the original title was dropped.<p>OP: Revealed: Apple and Google’s wage-fixing cartel involved dozens more companies, over one million employees<p>HN: Apple and Google’s wage-fixing involved dozens more companies, over 1M employees<p>Maybe this is too nit-picky even for HN, but: Why does the headline here on HN only name &quot;wage-fixing&quot; (aka the symptom of the problem) instead of also naming the underlying cause like the article does: This is a <i>cartel</i>. Dropping the word has a whiff of spin.<p>I sure as heck hope they get the treatment they deserve and that this will strengthen the understanding that this type of stuff is exactly why you want strong unions. Judging from the history of both in the US, I&#x27;m not holding my breath, though.

This is absolutely ridiculous. There should be some seriously punitive fines for this.<p>While I can see the lack of sympathy because these employees are so well compensated and rewarded for the work, if this affected blue-collar jobs instead there would be people on the streets, and quite rightly.<p>As someone else pointed out, Google and Apple are probably making on the order of $900k&#x2F;year profit per employee - there is obviously cash in the bank to pay market salaries without resorting to disgraceful tactics like this.

So, what people don&#x27;t realize, is that this affects the entire industry, whether you were employed by one of these companies or not. With over 1M employees driving &quot;market rates&quot; for salaries, others followed and competed on those terms. This also impact hiring and employment for so many.<p>Basically, anyone paying a competitive market rate these days is effectively benefiting from this. As a programmer, you should approach companies with this mindset.

Anecdotaly, I recently moved home to San Francisco from Charlotte, NC. The dominant employers in Charlotte are the big banks, and there aren&#x27;t a lot of major tech companies there. I was surprised to find that the pay scale -- contract or salaried -- is about the same or less in SF for a senior web developer, despite the great difference in the cost of living in those cities. Maybe this explains it.

Shocking, but not necessarily surprising given what has already been revealed.<p>Seems like the kind of thing that a union would help protect against.

The apologetics here are nauseating. You want to be slaves. Maybe technical labor ought to form its own cartel and stop working for these companies. Let the executives clean their own toilets.

I wonder what the general mood is regarding this in Apple and Google. More importantly, I wonder if there are going to be any significant repercussions. Would appreciate comments from employees of these companies, whether this information being uncovered has had any effect in the workplace so far.

Interesting that it has reached the UK. Maybe we need an investigation in the Uk&#x2F;EU as well.

I seem to be in the minority here, but legality aside, I don&#x27;t see an agreement between companies not to poach each other&#x27;s employees as a terribly sinister thing. In fact, it seems entirely reasonable to mutually agree not to actively recruit employees from another company.<p>Once you talk about refusing to hire potential employees who apply of their own volition, that would be another thing, but in my mind &quot;no cold call&quot; != &quot;wage fixing scheme&quot;.

Tech workers totally don&#x27;t need a union.

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

All the law firms in NYC (perhaps other cities) pay the same salary to all associates. It&#x27;s agreed upon between them.<p>That being said, it&#x27;s not exactly a suppression of the salary as I believe it is quite reasonable, but more like an equal playing field. You wouldn&#x27;t go to another firm based on salary.

Your contribution at a big company amounts of a little under half the compensation equation (the rest is politics). If you want to work at a big company spent half your time playing the game. If you want your life to be about your work go to a startup.

Does anyone know how we sign on to the class action? I was at Microsoft and then Google during this time and this probably affected my starting salary at Google.

Don&#x27;t be evil.

Reading the actual text that&#x27;s included in the article it seems to say that this is a non-poaching agreement for senior level roles. Specifically it says not to &quot;Cold Call.&quot; It specifically excludes engineers and non-senior level roles so the allegation that it&#x27;s over 1M employees is also not accurate as that number would include non-managers.

Oh good ol&#x27; Silicon Valley

Oh boy! It&#x27;s just worth asking what kind of world we&#x27;re leaving behind for our predecessors.We&#x27;re pushing humanity forward but at what cost .

Incredible how so many people still kill to work at those companies. Maybe this is a sign that likes of Google on are on decline at least as far as their ability to attract top talent is concerned.

What is the going salary in a general sense for a UI&#x2F;UX Developer in Silicon Valley these days? From junior to mid to senior level? Thanks!

I&#x27;m actually really confused. I don&#x27;t understand how companies agreeing to not cold call each other&#x27;s employees is &quot;overwhelming evidence of wage fixing&quot;.