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How Silicon Valley CEOs Conspired To Suppress Engineers' Wages
Oneflower writes "As we discussed last week, a lawsuit is moving forward that alleges widespread conspiracy among the CEOs of Apple, Google, Intel, Adobe, Intuit, and Pixar to suppress the wages of their tech staff. Mark Ames at Pando explains how it happened, and showcases some of the emails involving Steve Jobs and other CEOs. Quoting: 'Shortly after sealing the pact with Google, Jobs strong-armed Adobe into joining after he complained to CEO Bruce Chizen that Adobe was recruiting Apple’s employees. Chizen sheepishly responded that he thought only a small class of employees were off-limits: "I thought we agreed not to recruit any senior level employees. I would propose we keep it that way. Open to discuss. It would be good to agree." Jobs responded by threatening war: "OK, I’ll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly?" Adobe’s Chizen immediately backed down.'"
...the apologist Libertarian/pro-Corporate/free-market/Tea-Bagger rump swabs.
CAPTCHA: "wastes"
There's a knock-on effect... for those of us not employed at the named offenders, the salaries are suppressed. I hope they're convicted.
You'd think, from a free-market standpoint, that collective bargaining would somewhat equalize the sale and purchase of labor.
But nah, us engineers are too smart for that. We're all superstars and we're always looking to stab eachother in the back for a percentage.
Jeez, cmon. This is just about agreements to not directly recruit each other's employees. Nothing stopping those employees from applying to another company to gain better salary...
If anti-competitive practices were not in place (much like the 90's), you'd end of killing the market--for example, who'd pay for a $300K/yr J2EE architect? Really? The demand chain would realize these social apps have zero business value aside from advertising and next thing you know J2EE architect would be making 70K. Really, ruby "rock stars" making 200k/yr (cause folks in the valley are complaining now when the average is $125k/yr)
Why do I have a feeling this 'we're not making enough salary' attitude is not about fairness, but about creating a boom market in the valley? Which we truly haven't seen since 2003 (aka the current market is just a bunch of clique groups padding each other pockets much like DC is with all their contractors "job hopping").
The secret agreements were based on relationships, and those relationships were forged in Silicon Valley’s incestuous boards of directors, ...
So, tell me again how I can "work hard" and get into this upper echelon of business society and socio-economic class again? Old boys network even in the "meritocratic" Valley? It can't be!
Google’s human resources executives are quoted sounding the alarm that they needed to “dramatically increase the engineering hiring rate” and that would require “drain[ing] competitors to accomplish this rate of hiring.”
That's right! Because we all knoooowww that there are NO talented people outside of Silicone Valley!
....they generally considered cold-calling recruitment of “passive” talent — workers not necessarily looking for a job until enticed by a recruiter — to be the most important means of hiring the best employees.
Best? By whose standards?
You know folks, SV doesn't represent the rest of the World when it comes to tech talent. They all have their heads up their asses out there. They are where Wall Street was in 2007 - they thought they were top of the heap, could do no wrong, and everyone else was stupid. Then Wall Street got a wake up call.
It's coming Silicone Valley. Yours is coming.
If only the tech workers of the world had a touch more self and class-consciousness, they'd be able to see that, often, management is actively working against their interests. From wage-manipulation & collusion, to selling sitting cheek-to-jowl with coworkers as "open" and "collaborative," there's enough to give even a naïve, "everything is awesome!!!," workaday programmer pause.
He always had the reputation of being a visionary and major league a**hole. I guess he's dead long enough now that we can acknowledge the latter again?
21st Century style
These CEOs should all be perp walked and have all of their ill-gotten bonuses confiscated and re-distributed to their employees. Apple's $147 billion cash on hand should have a big bite of it redistributed to the employees shafted by these dirty thieves. Same with the other companies. A rising tide lifts all boats only when you don't have captain a-hole drilling holes in some boats... And yes, I am a libertarian free market guy. I want a free market where the government enforces fair play. This is definitely not fair play!
How is this not self-defeating?
I would expect higher salary offers coming from outside the colluding companies. This would push many applicants to smaller shops and spread the wealth.
"Schmidt instructed his Sr VP for Business Operation Shona Brown to keep the pact a secret and only share information “verbally, since I don’t want to create a paper trail over which we can be sued later?”"
Does this mean Eric Schmidt and Shona Brown could be going to jail?
but the rest of them shouldn't. Pricks.
Yep, can't wait to see Jobs spend the rest of his natural life in prison over this one.
I know nothing of the subject, nor am I a lawyer, or even associated with Silicon Valley in any way, but it sounds to me like these practices are anti-capitalistic from the worker's perspective, who are denied the opportunity of maximizing their profits in a high demand / low supply situation where this would normally apply were it not for their bosses trying to limit this in an illegal way.
It would be good for the culprits to be convicted. I don't know the laws over there, but over here if a company leader commits criminal acts, he is privately responsible for the financial losses. I would not be surprised if these guys can actually cough up the $9 bn together, but if they can, drain 'em dry, I'd say. If they can be thrown in jail for a few years too, good for the people. And not VIP jail - actual jail. For once I'm sorry Steve is no longer here to see this.
Extreme? If you take into account the sort of damages and punitive measures that can be taken against (even accidentally) inflicting monetary losses on a single individual or company, and you multiply that by the 100.000 or so (directly) affected workers, I would sooner call the above a "mild" punishment.
(also, reason #237059380 Google is more evil than it claims to be)
As usual His Steveness conspires to threaten other companies to go along with this scheme. Similar to his book deal conspiracy. Steve was the king of arsewipes.
As a Technical Director (read: Guy in charge of a group of programmers), I know our company had similar agreements with other programming studios and technical firms in the geographical area we were located in. I learned of it by a slip of the tongue by our HR Director during a meeting.
I responded along the lines of "Well, if we would pay our programmers what they're worth after 3 years, instead of insisting on keeping them at Junior programmer rates, then we don't have a problem, and shouldn't need special back room deals to keep our talent". I unfortunately did not have the final say in pay increases, and did lose some of my staff to better payment offers. It was all I could do to compensate with treating the team with the highest levels of respect to keep them around due to shitty pay.
This was happening in Canada for context.
A gentleman's agreement not to poach form a competitors employee ranks is NOT the same as conspiring to suppress engineers wages.
To prove the latter, they would have to show that the competitors didn't simply agree to not poach, but instead agreed to refuse to hire beyond a certain wage.
No poaching agreements are perfectly legal and reasonable for all parties. This is much ado about nothing. Move along.
The companies did conspire; the conspiracy was illegal; it almost certainly suppressed wages. But no, Steve Jobs was not interested in some grand scheme to shave a few % off the salaries of engineers; he was interested in not having projects disrupted by staff turnover. Wage suppression was just a side effect, about which he probably did not care at all. But instead of investigating that effect and explaining its size, Pando just rants, and rants, and rants...
In other words, a good subject for /., but a real piece of shit article about it. Maybe something better will come along soon ;-)
There is also often secret knowledge and skills. Most of Apple products are developed in total secrecy by small groups. Loosing key people cause product delays and extra cost. Companies cannot afford to pay too much to everybody to stop them looking for a new job. Instead they tried to limit attrition by hiding those opportunities.
OK, these companies colluded. But shouldn't the free market bring forth a new company, willing to pay more and hire away the best employees of all these firms and thus out-compete them? There's no need to regulate - the invisible hand should be squeezing these guys all by itself now. Clearly these engineers aren't worth any more money, or they would have left to form this new company (or companies) and beat all the existing firms at their own games. No need for unions or anything anti-competitive (red tape regulations) to be brought in by the government, as the problem should self correct.
but got flamed, there is no professional association for engineers like there is for accountants or lawyers. Keep playing with your Raspberry Pis and arduinos at 45 while other professionals lobby for higher wages. Engineers are overgrown children, easily distracted by chlidish things, and employers know this.
My father once told me: If ten employers can sit around a table and decide how much to pay you, the employee should be able to have ten people sit around a table and decide how much you will be paid to work. This would be a union. (Or if you wish not to be be labeled union ... many in the tech sector think .... "I'm not a blue collar thug... I am a Professional" .. call yourself a special interest group)
The people sitting on one side of the negotiating table have specific interests to defend. The people on the other side have a different set of interests. That is why we call it negotiation. Hopefully to arrive at an equitable position for both sides.
Did it ever occur to anyone that the dysfunction of say Congress is so that there will never be an equitable solution for both sides to a given problem?
At the heart of all dysfunctional relationships (personal, political etc) lies on thing: Chaos. This way the people in power keep the power.
$0.02 worth. Or 0.00002 BTC
I suspect that this was not overtly about wages. It was about retention. You can't just say, well they could have paid them more to retain them. As the e-mails indicate regardless of any feasible wages it would always be possible to offer higher wages to a subset of employees that could cripple the organization. That's what this was about. People are not simply interchangeable. When you hire someone it's also an investment of your core strength into them. So in the short term yes perhaps a few employees could have been enticed by higher wages but then ensuing self destructive battle would have damaged all the companies fitness, lowering everyones wages. So it's not a give this lowered wages.
This is one problem that collective bargaining does address. It tries to maximize employee wages over the long run and side effect is that trade unions also normlaize wages across all the companies. But the union is always balancing a companies ability to pay with killing the golden goose.
Some drink at the fountain of knowledge. Others just gargle.
Jail the cocksuckers.
Money and power corrupt.
Keep the Classic Slashdot.
Class Action Lawsuit.
Sue the companies that participated for lost wages. Surely some lawyer group would love to take that on commission.
They made their bed now they can lay in it.
and this stuff was going on back then. They actually told employees they were doing it at the meetings where they announced annual pay raises. My coworkers cheered while I was dumbfounded that people missed the big picture. In essence they were saying "we've fixed engineer salaries with other big employers in the area so don't bother looking to get a better deal elsewhere".
When I left HP I went to work for Fujitsu- they didn't participate in the salary fixing- and instantly got 40% pay increase and kept my vacation time.
No TRUE free market..
But now, I know the reason why I can't make more than 130k ad get fired often is because of some conspiracy. I shall start binge drinking to celebrate!
Trade associations or labor union, and an unified licensing board for software engineers and IT workers will be the way to solve these (which includes the H1-B problem). I am saying this as a CodeEval top 10-ranked user.
What do you expect from Google chrony capitlists? 'Don't do evil', ny foot.
Game theory is a much better way to think about markets than the very simplistic notion of "pure" free markets. "Pure" free market theory is analogous of doing elementary physics without taking into account friction, gravity, relativistic effects, and other important things that really matter. Sure you can gain some elementary understanding of how markets work, but you must always remember that isn't how the real world works.
Free Market rhetoric, is only espoused as a political badge so that people know you are a "true" conservative. No one really thinks that people with millions on the line won't think of a way to cheat.
For another thought experiment imagine a football game without referees, would it still resemble a football game after a few snaps, if millions of dollars were on the line?
In a well functioning government, (this would exclude the US right now), the government acts as a referee encouraging practices that help the country as a whole the most, and discouraging practices that only help a few.
And for the record Steve Jobs was doing the best thing that he could for Apple (a small group) which he was paid handsomely to do, while hurting a larger group, this is certainly something that the government should punish companies for, otherwise they will always try to do it, because share holders would require it.
...anyone care to mod up my OP now? Judging by the number of supportive and insightful replies it's garnered, I'd say my point stands as being more "insightful" than "flamebait".
I did accidentally leave out "Apple fan-boi's" though... ;)
Congratulations, you just lost. But lighten up, there, lil' buddy, it's good for corporations.
It kills me to see that each of these businesses were literally founded by techies or people very close to techies. They know the value of the tech, the techies and what the techies bring to a company. They know it first-hand because these techies made them rich. But they think they are rich enough and not getting richer fast enough. (In today's dollar-printing economy, that may well be true! They should be buying bunkers and private energy sources.) But they are, alas, too expensive because other big tech companies might want too buy them and we can't have that. So it's class warfare then is it? C-levels and serfs are we?
Well, I guess so. How the tech industry got by without unions and crap this far, I have to wonder. And I don't mean just labor unions but technology standards unions. Right now, we pretend that ISO standardization means something but Microsoft proved they can buy anything didn't they? We need something these companies can't buy -- something sworn not to let the things which have been happening to happen. And seriously? The "certification" game has gone on long enough. Most hiring people have wised up to it already. Certs are nothing more than brand endorsement that people pay a lot of money for. Disgusting.
Non-compete agreements? Hrm...
...is a bit farther south.
Wasn't there a Dilbert episode about that.
I used to make 100,000 in the Valley. Now I make 2,000. Thanks Steve Jobs...for nothing!
Should be sent to prison for this
Really, these people are living up to the worst reputations of capitalism.
Collusion between competitors ruins the game.
If they're going to do that, then we as consumers might as well start colluding.
Or do we need to start unionizing the programmers? I mean... it sounds drastic but this is a serious issue.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
n/t
So they're not only price fixing their products, now they're price fixing their employees
Steve Jobs was not interested in some grand scheme to shave a few % off the salaries of engineers; he was interested in not having projects disrupted by staff turnover.
An alternative to illegal collusion would be paying them more money to stay around. Give them a contract that says stick around for X years and you'll get big fat bonus Y. It worked for Henry Ford. It's called a free market, which CEO's seem to be all in favor of when it's lining their pockets, but not so much when it's lining somebody else's pockets.
Did they specifically threaten, or not allow, engineers to apply and get jobs at the other places?
Not actively recruiting from each other, and not being allowed to hire someone that is/was working for the other are 2 different things.
In my mind, this is pretty clear, but if the lines were blurred at all, certainly these people need to be stopped.
A free market by Libertarian definition cannot exist. When men get power, they abuse it. regulation is the only way to get a free market that starts, runs, and remains fair to all players.
By fair I do not mean "Microsoft is a miltinational company, so Bob's OS startup gets a multinational baseline to work from"
it means, no matter how well Bob does for himself, Microsoft cannot step in and squash him just because they do not want a competitor. Or collude with all the big boys to deny him resources, all the things that happen every single time regulation is slacked on an industry. And, as in this case, is done anyway in spite of the law. At least with the law in place you have recourse.
If it is not illegal you cannot sue to get the proof to expose it, can you?
Man owns 50.00000001% of the shares.
Man decided to commit a crime in the name of the company. No vote taken, no point. his vote is sufficient to enact it. The rest of the shareholders know nothing of it.
Alternately, Board members own 50.00001% cumulatively. If they agree, the vote never goes beyond the board.
The colluding companies hold about 90% of the jobs in this type for their region, and a majorly significant portion of them nation wide. Salaries are calculated on averages. Working together, they keep the "spikes" from other companies' hires from throwing off the industry average. So nothing looks to hinky on the surface.
These companies collectively off-shored $400B in profits last year. they can afford another $10k a year for their engineers.
I am an experienced bullshitter! Where do I send my resume?
in 01, we had a small drive at HP to unionize after the Wicked Witch of the West started playing fuck fuck games with our pay.
Ho.
Ly.
Shit.
Upper management lost their ever loving minds. you'd have thought we had taken their children hostage. They released the pay freeze, reinstated bonuses... then shut down the entire division and outsourced it to Costa Rica.
Why does everyone believe this? First of all, running power cables and water lines isn't particularly expensive. Secondly, people could own the lines going to their house, and simply pay for the power or water separately to allow for multiple providers. The idea that this couldn't be a competitive market is simply a myth peddled by proponents of big government and government sponsored monopolies.
When the vast majority of the jobs are in collusion to keep the salary down, what will happen to the average salary that the rest of the companies calculate their pay scale off of?
I will give you a hint: go back to the 4th grade.
The article and correspondence states "even if they came to us" they were off limits.
So applying does you no good. bear in mind, the employees do not know of the collusion or who is playing. So those applications are rejected more often than not simply based on the no hire rules.
they will be paid billions by the government to reward their unethical behaviors?
man, I need to figure out how to get in on this before it goes down!
These companies choose to live in an area where it costs $250k/yr to live at the same level of comfort that $70k a year nets you elsewhere.
they are trying to avoid the consequences of that choice at the cost of the employees.
All that money they hid offshore- they are loaning it back to themselves to pay it to shareholders as bonds. guess what's deductible, as opposed to profit payouts....
A big enough circle has no outside....
look at the names involved. Where are you going to go as a software engineer? Bob and Frank's BBQ and operating systems?
there is a big difference between "should" and "will" go to jail.
How much are they paying you folks these days?
It's actually interesting to look at the examples you listed because I think both end up getting paid higher than they deserve even based on ROI. Peyton Manning might be a rare exception... He really does make a team that much better. But I would argue that most quarterbacks are only as good as their (far less extravagantly paid) offensive linemen. CEOs make both smart and dumb decisions that affect everyone no doubt, but ultimately their results (to which their pay doesn't even seem tied, given the ridiculous golden parachutes for failure, etc) are largely determined by the minions toiling away below them that determine the quality of the products or services they sell.
Somebody should mod that post up just for the arguments it mentions. I always had my doubts about Jobs's angelicness, but it's all clarified up now.
Follow the link in the linked article and at the end, there's an actual example..
Facebook was NOT part of the anti-recruit agreement club. They were hiring people away from google. The google management was all in a dither because of internal equity problems (if you give all the "Software Developer 2" folks in the XYZ group a raise to keep them from bolting, then all the SD2 in ABC and DEF groups will expect that same raise). And google couldn't do an across the board, because their handshake deal with Apple and Intel and Intuit, etc. said "keep the pay scales comparable for a given position description".
Google finally broke with the "Big Bang" where they gave everyone 10% and $1000 cash. And Apple complained mightily, but folllowed suit, and everyone's pay went up.
And you can bet that "lean-in" Sheryl is going to be an unhappy camper when she has to start bumping pay to retain facebookers who are bolting back to Google and Apple and Intel. Or, more likely the zuck will have a handshake agreement with the others and all will return to the stable wages of history.
Steve Jobs screwing over someone...film at 11!
The first dozen comments focus on terminology and semantics, rather than the true issue, which is that there is direct evidence that people in the software/IT field are being undervalued. The fact that we do not, as a profession, coordinate to ensure fair compensation is one of the reasons we are taken advantage of, relative to the value we produce. Do doctors allow themselves to be outsourced/underpaid/treated with contempt by the business world, in exchange for a foozball table and the right to wear flip flops and a ratty t-shirt to work? No, they stood up for themselves, organized barriers for entry, established a code of ethics to abide by, and demanded they be paid what they are worth - which is why a surgeon can look forward to wage increases throughout middle age, while a developer caps off at 150k and then sees their wages decline as they get older. Get it together, people.
conspiracy among the CEOs of Apple, Google, Intel, Adobe, Intuit, and Pixar
But .. where is Microsoft? Out of the picture - or geographical issue?
Slashdot, fix the reply notifications... You won't get away with it...
... is a myth. What One calls the "free market" Another calls "over-regulated" and Another calls "under-regulated". The is no objective definition of the "free market".
... And break them anyway to attract top talent. So, these agreements don't last long.
yep.. "here's what the market rates are" presented as if it was a statistical analysis, but in actuality a bargaining chip.
And then post justified by saying "well, the DCAA (Defense Department auditors) only let us charge prevailing market rates for labor", which is technically true, but what the auditors are really looking for is things like the Owner's nephew making 250k/yr as an executive trainee (in 1980), and bumping up the base for the G&A and profit.
Let's kill ourselves! Yeah, that'll solve it!
-- end sarcasm --
There's a basic flaw somewhere in human nature that rears its ugly head whenever an opportunity seems to arise; it's the "let's form an ugly mob and use thug tactics....for GOOD!". It simply does not work that way.
To get tech workers to unionize, you'd have to do what unions try to do everywhere... get laws passed to REQUIRE people to join and pay dues. Then, anybody who won't join gets used and abused by the unions (for the GOOD of all, of course). The the unions defend even the worst members when they do bad things (like abuse the public, show up for work drunk, do incompetent work, etc) and demand that the best member cannot be compensated more than the worst member etc. As a result, productivity plummets and employers seek other options. Before long, the jobs are driven-out to places where unions are not required and not in power, and the companies in the unionized areas can no longer pay promised salaries and benefits so they go belly-up and need bailouts. This is how Detroit 1950 became Detroit 2014.
It always seems wise, to people who do not understand history and economics, to deal with any corporate abuse by calling for a mob (a union), but that's a solution that (like "bloodletting" is to medical practice) is a step backwards into the primitive and self-desturctive. IF this has actually happened (as I believe it has), the proper response is [a] in the courts (where it currently is) and [b] in your shopping/web habits. If you cannot get people to stop buying Apple products and stop using Google (both actions easily done, and not immoral) then how do you imagine you'll get people to go on strike and slash tires and beat "scabs" with baseball bats? hhhmmmmmmm???
The truly hilarious bit of all this is, of course, that these are all left-leaning companies run by left-wing execs (who all PROVE how GOOD they are by backing things like open borders, abortion, gay marriage, and left-wing politicians) and loved by left-wing consumers.... and the've been fattening themselves with the money they didn't have to pay their workers because they were engaged in illegal, immoral, unethical behaviour. Ah, "social justice" at its FINEST....
Just as I will oppose any lefty who tries to control MY guns (using the violence perpetrated by some drug-addled lefty with a gun as a pretense), I will also oppose any lefty who tries to force me into a union (using the employee abuse by a bunch of lefty employers as a pretense)
Stop using Google, and GET OFF OF FACEBOOK
If you keep SUPPORTING the companies who are pushing to demolish your wages, then you are the dummy. The founder of Facebook is one of the biggest pushers of the effort to eliminate all limits on H1B visas. These high-tech firms have been telling congress that there are no Americans willing and able to work in high tech fields. They'll keep pushing that message and they think they are going to succeed in getting congress and Obama to do this for them by the end of the year. What are YOU (all of you Slashdot readers) DOING? ANYTHING real? Lemme guess.... tweeting (sigh)
Then we must currently live in anarchy because it's still about having bigger bombs, biceps, knives and guns.
Indeed...viewed internationally, we live in an anarchy of nation-states.
The U.N. has no real enforcement powers...the General Assembly is little more than a forum for expressing hatred.
"Once we've identified and embraced our sickness, we'll have strength...and that's when we get dangerous." - John Waters
When men get power, they abuse it.
That's strange...whenever I get power, I just end up with current and voltage. I must be doing something wrong.
"Once we've identified and embraced our sickness, we'll have strength...and that's when we get dangerous." - John Waters
in dilbert the animated series, the assistant.
extremely left wing, pro big government. (Really I say that because I knew a fellow student in college who said they were an anarchist. Oddly enough there was no big government policy that they weren't totally for. For those that don't know anarchy literally means no rulers so this was a case of them not quite understanding what anarchy is supposed to be about.)
Did you know 80 to 90% of the moderators on slashdot wouldn't recognize a troll even if one dragged them under a bridge.
https://en.m.wikipedia.org/wik...
Casteism
Globalization is Zero-Sum.
Amend your Constitution accordingly. https://www.constituteproject....
Otherwise your future generations will regret. https://en.m.wikipedia.org/wik...
Casteism
This is result of the FED's Phoney Money printing since 1972 accelerating exponentially since. Get rid of the FED!
It also creates a fire at will mentality. Companies no longer employee people. Rather, they contract thanks to the H1B flow. So if I want to change languages, I simply fire all and hire new. The H1B creates an artificial pool of employees that let's a complany have zero obligation to its workers.