8 ms·

The same thing is happening with salaries. Most HR departments set salaries based on "market reference points" derived from data from salary survey companies li

The same thing is happening with salaries. Most HR departments set salaries based on "market reference points" derived from data from salary survey companies like erieri.com. But the HR depts also send their salary data to the salary survey companies (that is how they get a lot of their data). The result is all the companies in an industry are basically pooling their salary decisions and then carefully sticking close to what the others are paying. If the companies did this directly, it would 100% be wage-fixing. But somehow laundering it through an intermediate makes it legal.

pevey 4y ago
> But somehow laundering it through an intermediate makes it legal. It probably is illegal. This case with rents will be very interesting to watch. In the insurance industry, a special law (McCarran-Ferguson Act) had to be passed to allow companies to pool loss data to set rates. Otherwise, it was seen as an anti-trust violation. The law was passed because the public interest in making sure insurance companies are solvent and can pay claims outweighed the anti-trust issue. I think these tools are on very shaky legal ground.
preston4tw 4y ago
IANAL but wouldn't a judge look at that and just say it's wage fixing with extra steps?
- landemva 4y ago
  State attorney general could get it to a court and stopped, but apartment renters aren't in the political class so not a priority.
- dendrite9 4y ago
  CaaS, Collusion as a Service? This certainly seems like one of those cases worth watching.
  - Red_Leaves_Flyy 4y ago
    I think you mean Crime as a Service. Uber, Google, Amazon, eBay, PayPal, Instagram, TikTok, Facebook, Telegram, Reddit, etc all profit from crime. Companies facilitating collusion with a wink and a nod are the next logical progression of legitimizing white collar criminals. Police and prosecutors have spent ages chasing their tails with a self reinforcing drug war while mr burns types have been building infrastructure to brazenly fleece the public in broad daylight for decades. It’s time for major investment in dismantling white collar crimes outfits, like apartment price fixing, realtor corruption, wage fixing, wage theft, and the obscene culture of flouting workplace safety standards in virtually every industry.
CPLX 4y ago
There’s no reason to just assume that it’s legal.
mikkergp 4y ago
> Most HR departments set salaries based on "market reference points" derived from data from salary survey companies like erieri.com. But the HR depts also send their salary data to the salary survey companies (that is how they get a lot of their data). I'm trying to think through this and wondering how companies should set salaries. I mean, I get your point about wage fixing, but I get my information about how much to ask for from shared storage that try to determine "market reference points". Is the idea that it should somehow be done in a vacuum? Seems like a chicken and the egg problem. "Wage fixing occurs when companies in the same industry conspire or agree to suppress employee earnings below the the market rate." According to "https://www.nka.com/practice-areas/employee-rights/wage-fixing.html https://www.nka.com/practice-areas/employee-rights/wage-fixi...". So, as long as they are at market rate and not below market rate, it's not wage fixing? On the flip side it could be that the shared nature of the information makes it easier for companies to compete with eachother on salaries and raises rates.
- ghaff 4y ago
  Of course, companies very properly do competitive pricing research all the time with pricing that is public or quasi-public. And their general pricing strategy and what the competition is selling for is absolutely taken into account. It's just in this case salary info is (mostly) not public in the US.
- tooltower 4y ago
  Yet when I'm working in a company, asking for my colleagues' salary is taboo. Either make everyone's salaries public, or ban employers from using full-market surveys. If I have to guess at the market rate from a few samples, employers need to as well. This level of information asymmetry (in the US at least) is bs.
  - tqi 4y ago
    Cultural taboos are hard to overcome, but taboo or not, you absolutely have the right to discuss wages. If a company is telling you to keep your wages secret they're breaking the law: https://www.nlrb.gov/about-nlrb/rights-we-protect/your-rights/your-rights-to-discuss-wages https://www.nlrb.gov/about-nlrb/rights-we-protect/your-right...
tqi 4y ago
Isn't that because wage-fixing requires collusion? ie in a world where salary bands were required to be publicly available, company A and company B independently deciding they want to stick to around the median would not be collusion/wage-fixing. Under the same conditions, if company A reached out to company B and said "lets set salaries at the median" that would be wage-fixing. How they came to know what that median value is is irrelevant.
- behringer 4y ago
  That's it exactly. I asked my company recently if they are trying to get ahead of the going rates in order to acquire and keep talent. The answer was no but it's hard for me to call this collusion when they're using data even consumers may get access to (although certainly debatable as to the accuracy compared to big business.)
- CPLX 4y ago
  What’s the definition of collusion? If everyone brings their salary info to a secret meeting and writes it in a chalkboard and then uses that chalkboard to set their salaries it’s obviously collusion, and cases like that have plenty of legal precedent. If instead of walking the numbers over to the secret lair the communicate via an API and the chalkboard is a digital database and GUI has anything substantive changed? And your premise is ridiculous. Of course how they came to know each other’s salary info isn’t irrelevant, it’s the collusion part. There’s a long long history of this kind of stuff with prices that are completely public. There’s a Matt Damon movie about it. It’s not some novel concept it’s a time honored way to break the law.
  - tqi 4y ago
    I can't tell if you're agreeing or disagreeing with me. My point is that sharing salary band info is orthogonal to wage fixing (which you seem to agree with) > If everyone brings their salary info to a secret meeting and writes it in a chalkboard and then uses that chalkboard to set their salaries it’s obviously collusion, and cases like that have plenty of legal precedent. The how of "set their salaries" is the difference between wage fixing or not. ie a company sharing / receiving of salary info (aka getting market reference points) and deciding that it wants to be at the Nth percentile is not wage-fixing. Wage-fixing would be if that company got together with another company (or companies) and agreed to stay at the Nth percentile.
mdasen 4y ago
I would say that it's not just that they send their salary/rent data and know salary/rent data from others. I think the fact that the price is determined by an algorithm is a key component. To greater and lesser extents, we know what rents are and we know what salaries are. Companies and landlords might have slightly better or more complete information, but it's not like we're totally clueless. A key point of the RealPage algorithm isn't "this is what rent is in your area." The key point is "this is how much you can charge before you start losing renters to other landlords." The problem is when RealPage becomes a market mover - a company that has so much market influence that it doesn't just participate in the market, but exerts control over the market. If every landlord used RealPage and every landlord obeyed RealPage's suggested pricing, it wouldn't be about telling landlords the market price or even predicting how much they could charge before losing renters to other landlords. It would be about predicting how much they could charge before people exited the housing market (eg. by moving away form the city). Of course, if you're doing that in all the cities, then there isn't even other cities that people can move to. Let's say that RealPage is a simple ML program or even a genetic algorithm. It makes some random moves and starts learning "if I do X with rent, Y happens." "Y" might be the landlord losing 1% of their tenants, but with rents going up 10% they're making more money than they're losing. That's "fine" for some definition of fine that accepts money-maximizing capitalist competition as fine (I'm not really interested in debating the housing market in this comment). Now, the issue is that RealPage's algorithm will quickly learn that it can raise rents much higher if it controls the market in a city or neighborhood. If they tell one landlord raises rent by 30%, that landlord is likely going to lose most of their tenants to other landlords. If they tell every landlord to raise rent by 30%, then tenants are no longer in a competitive market where they can rent from someone else. Essentially, the landlords have formed a cartel. Housing activists don't object to open data about what rents are. In fact, housing activists generally support requiring landlords to register rents with the city. Labor activists don't object to open salary data. In fact, labor activists want open salary data because we know that leads to more negotiating power for workers. The issue with RealPage isn't just that it's supplying and collecting data. It's that it is setting prices that, in some markets, a majority of landlords are following. That means that it's no longer a competitive market and (intentionally or not) they've formed a cartel where the algorithm is basically learning that it has the pricing power of a cartel. It's one thing to say "a software engineer at level X makes $Y-Z." It's another thing if 75% of the companies hiring software engineers used the same SalaryAlgorithm which told them "you can lower your engineer salaries by 15% (because we're telling everyone to lower salaries by 15% and we control 75% of the market)." There's actually been a lot of research more recently on monopsony and oligopsony (https://en.wikipedia.org/wiki/Monopsony https://en.wikipedia.org/wiki/Monopsony). Basically, it's the opposite side of monopoly and oligopoly. With a monopoly, you have one company selling something. With monopsony, you have one company buying something. Often this can be companies hiring people (buying labor) and having an impact on wages. If there's only one company hiring software engineers, they're going to control the wages for software engineers. If there's thousands of companies hiring software engineers, they don't have much control - unless they all agree to use the same algorithm for setting salaries and that algorithm quickly learns that it has monopsony power. I think a key part of an algorithm like RealPage's effectiveness can be that it can achieve monopoly/oligopoly power and then learn how much it can charge based on that power - rather than learning how much it can charge based on market rates in a competitive market where landlords aren't colluding (even if the collusion is unintentional). I'm not even suggesting that RealPage's intent was to form a cartel, but if their algorithm is even the tiniest bit smart, it's going to learn pretty quickly that it can rase rents higher when it has monopoly/oligopoly power.
FireBeyond 4y ago
Yeah, one of the kickers for me was this comment: "users of the software are encouraged to have daily calls with the company on pricing, and are strongly discouraged from deviating from the recommended pricing". If this is just a tool, as the authors claim, to help estimate best prices, then it's just an estimate. But "strongly discouraging" any deviation from the model sounds very much like "because this number is what everyone else is relying on, too".

pevey 4y ago

> But somehow laundering it through an intermediate makes it legal. It probably is illegal. This case with rents will be very interesting to watch. In the insurance industry, a special law (McCarran-Ferguson Act) had to be passed to allow companies to pool loss data to set rates. Otherwise, it was seen as an anti-trust violation. The law was passed because the public interest in making sure insurance companies are solvent and can pay claims outweighed the anti-trust issue. I think these tools are on very shaky legal ground.

preston4tw 4y ago

IANAL but wouldn't a judge look at that and just say it's wage fixing with extra steps?

landemva 4y ago
State attorney general could get it to a court and stopped, but apartment renters aren't in the political class so not a priority.
dendrite9 4y ago
CaaS, Collusion as a Service? This certainly seems like one of those cases worth watching.
- Red_Leaves_Flyy 4y ago
  I think you mean Crime as a Service. Uber, Google, Amazon, eBay, PayPal, Instagram, TikTok, Facebook, Telegram, Reddit, etc all profit from crime. Companies facilitating collusion with a wink and a nod are the next logical progression of legitimizing white collar criminals. Police and prosecutors have spent ages chasing their tails with a self reinforcing drug war while mr burns types have been building infrastructure to brazenly fleece the public in broad daylight for decades. It’s time for major investment in dismantling white collar crimes outfits, like apartment price fixing, realtor corruption, wage fixing, wage theft, and the obscene culture of flouting workplace safety standards in virtually every industry.

CPLX 4y ago

There’s no reason to just assume that it’s legal.

mikkergp 4y ago

> Most HR departments set salaries based on "market reference points" derived from data from salary survey companies like erieri.com. But the HR depts also send their salary data to the salary survey companies (that is how they get a lot of their data). I'm trying to think through this and wondering how companies should set salaries. I mean, I get your point about wage fixing, but I get my information about how much to ask for from shared storage that try to determine "market reference points". Is the idea that it should somehow be done in a vacuum? Seems like a chicken and the egg problem. "Wage fixing occurs when companies in the same industry conspire or agree to suppress employee earnings below the the market rate." According to "https://www.nka.com/practice-areas/employee-rights/wage-fixing.html https://www.nka.com/practice-areas/employee-rights/wage-fixi...". So, as long as they are at market rate and not below market rate, it's not wage fixing? On the flip side it could be that the shared nature of the information makes it easier for companies to compete with eachother on salaries and raises rates.

ghaff 4y ago
Of course, companies very properly do competitive pricing research all the time with pricing that is public or quasi-public. And their general pricing strategy and what the competition is selling for is absolutely taken into account. It's just in this case salary info is (mostly) not public in the US.
tooltower 4y ago
Yet when I'm working in a company, asking for my colleagues' salary is taboo. Either make everyone's salaries public, or ban employers from using full-market surveys. If I have to guess at the market rate from a few samples, employers need to as well. This level of information asymmetry (in the US at least) is bs.
- tqi 4y ago
  Cultural taboos are hard to overcome, but taboo or not, you absolutely have the right to discuss wages. If a company is telling you to keep your wages secret they're breaking the law: https://www.nlrb.gov/about-nlrb/rights-we-protect/your-rights/your-rights-to-discuss-wages https://www.nlrb.gov/about-nlrb/rights-we-protect/your-right...

tqi 4y ago

Isn't that because wage-fixing requires collusion? ie in a world where salary bands were required to be publicly available, company A and company B independently deciding they want to stick to around the median would not be collusion/wage-fixing. Under the same conditions, if company A reached out to company B and said "lets set salaries at the median" that would be wage-fixing. How they came to know what that median value is is irrelevant.

behringer 4y ago
That's it exactly. I asked my company recently if they are trying to get ahead of the going rates in order to acquire and keep talent. The answer was no but it's hard for me to call this collusion when they're using data even consumers may get access to (although certainly debatable as to the accuracy compared to big business.)
CPLX 4y ago
What’s the definition of collusion? If everyone brings their salary info to a secret meeting and writes it in a chalkboard and then uses that chalkboard to set their salaries it’s obviously collusion, and cases like that have plenty of legal precedent. If instead of walking the numbers over to the secret lair the communicate via an API and the chalkboard is a digital database and GUI has anything substantive changed? And your premise is ridiculous. Of course how they came to know each other’s salary info isn’t irrelevant, it’s the collusion part. There’s a long long history of this kind of stuff with prices that are completely public. There’s a Matt Damon movie about it. It’s not some novel concept it’s a time honored way to break the law.
- tqi 4y ago
  I can't tell if you're agreeing or disagreeing with me. My point is that sharing salary band info is orthogonal to wage fixing (which you seem to agree with) > If everyone brings their salary info to a secret meeting and writes it in a chalkboard and then uses that chalkboard to set their salaries it’s obviously collusion, and cases like that have plenty of legal precedent. The how of "set their salaries" is the difference between wage fixing or not. ie a company sharing / receiving of salary info (aka getting market reference points) and deciding that it wants to be at the Nth percentile is not wage-fixing. Wage-fixing would be if that company got together with another company (or companies) and agreed to stay at the Nth percentile.

mdasen 4y ago

I would say that it's not just that they send their salary/rent data and know salary/rent data from others. I think the fact that the price is determined by an algorithm is a key component. To greater and lesser extents, we know what rents are and we know what salaries are. Companies and landlords might have slightly better or more complete information, but it's not like we're totally clueless. A key point of the RealPage algorithm isn't "this is what rent is in your area." The key point is "this is how much you can charge before you start losing renters to other landlords." The problem is when RealPage becomes a market mover - a company that has so much market influence that it doesn't just participate in the market, but exerts control over the market. If every landlord used RealPage and every landlord obeyed RealPage's suggested pricing, it wouldn't be about telling landlords the market price or even predicting how much they could charge before losing renters to other landlords. It would be about predicting how much they could charge before people exited the housing market (eg. by moving away form the city). Of course, if you're doing that in all the cities, then there isn't even other cities that people can move to. Let's say that RealPage is a simple ML program or even a genetic algorithm. It makes some random moves and starts learning "if I do X with rent, Y happens." "Y" might be the landlord losing 1% of their tenants, but with rents going up 10% they're making more money than they're losing. That's "fine" for some definition of fine that accepts money-maximizing capitalist competition as fine (I'm not really interested in debating the housing market in this comment). Now, the issue is that RealPage's algorithm will quickly learn that it can raise rents much higher if it controls the market in a city or neighborhood. If they tell one landlord raises rent by 30%, that landlord is likely going to lose most of their tenants to other landlords. If they tell every landlord to raise rent by 30%, then tenants are no longer in a competitive market where they can rent from someone else. Essentially, the landlords have formed a cartel. Housing activists don't object to open data about what rents are. In fact, housing activists generally support requiring landlords to register rents with the city. Labor activists don't object to open salary data. In fact, labor activists want open salary data because we know that leads to more negotiating power for workers. The issue with RealPage isn't just that it's supplying and collecting data. It's that it is setting prices that, in some markets, a majority of landlords are following. That means that it's no longer a competitive market and (intentionally or not) they've formed a cartel where the algorithm is basically learning that it has the pricing power of a cartel. It's one thing to say "a software engineer at level X makes $Y-Z." It's another thing if 75% of the companies hiring software engineers used the same SalaryAlgorithm which told them "you can lower your engineer salaries by 15% (because we're telling everyone to lower salaries by 15% and we control 75% of the market)." There's actually been a lot of research more recently on monopsony and oligopsony (https://en.wikipedia.org/wiki/Monopsony https://en.wikipedia.org/wiki/Monopsony). Basically, it's the opposite side of monopoly and oligopoly. With a monopoly, you have one company selling something. With monopsony, you have one company buying something. Often this can be companies hiring people (buying labor) and having an impact on wages. If there's only one company hiring software engineers, they're going to control the wages for software engineers. If there's thousands of companies hiring software engineers, they don't have much control - unless they all agree to use the same algorithm for setting salaries and that algorithm quickly learns that it has monopsony power. I think a key part of an algorithm like RealPage's effectiveness can be that it can achieve monopoly/oligopoly power and then learn how much it can charge based on that power - rather than learning how much it can charge based on market rates in a competitive market where landlords aren't colluding (even if the collusion is unintentional). I'm not even suggesting that RealPage's intent was to form a cartel, but if their algorithm is even the tiniest bit smart, it's going to learn pretty quickly that it can rase rents higher when it has monopoly/oligopoly power.

FireBeyond 4y ago

Yeah, one of the kickers for me was this comment: "users of the software are encouraged to have daily calls with the company on pricing, and are strongly discouraged from deviating from the recommended pricing". If this is just a tool, as the authors claim, to help estimate best prices, then it's just an estimate. But "strongly discouraging" any deviation from the model sounds very much like "because this number is what everyone else is relying on, too".