7 ms·

Collusion through Common Leadership [pdf]

167 points by MPLan 2y ago

MPLan 2y ago
Common leadership, via the sharing of board members, significantly increased the likelihood that tech firms would not hire each others' workers. This form of 'no-poaching' may have had much bigger impacts on wage suppression: "It is worth noting that such collusion against workers may have costs beyond just the directly impacted workers in the high-tech sector. Wages and salaries of jobs in one industry can serve as reference points when workers in other firms/industries negotiate their wages. Thus, if high-tech workers get paid less, this may impact wages of other workers, say in finance, which may then impact wages in another sector and so on. Collusion in one sector can have impacts on other industries." To read more: https://www.nominalnews.com/p/competition-no-poaching-real-page https://www.nominalnews.com/p/competition-no-poaching-real-p...
- BurningFrog 2y ago
  I really doubt that could override the fundamental supply and demand forces. If hiring a finance "worker" will make my company $500k/year I will offer him $450k regardless of what Google engineers make.
  - mitthrowaway2 2y ago
    Will you offer him $450k regardless of whether he would accept $250k because his next best alternative is offering $200k?
    - BurningFrog 2y ago
      In that case I would offer $250k, of course, but that assumes there is no other firm that can put that person to work on something equally profitable. Either way, engineer wages at Google would not be a factor.
      - wewtyflakes 2y ago
        > Either way, engineer wages at Google would not be a factor. ...for you. It would be a factor for who you are trying to hire. If who you are trying to hire sees Google engineers making $$$, but you are offering $ for job X, and they do not see it as an unbridgeable gap in their own aptitude, they could well say "I am going to instead try to be an engineer at Google so I can make $$$, instead of being offered $ doing X". This happens all the time.
      - sokoloff 2y ago
        In this example, if their alternative was a $300K/yr job at Google, that would certainly affect their willingness to accept your $250K/yr offer. If it did not at least affect that willingness, they might not be worth $250K/yr as a financial analyst.
  - roughly 2y ago
    This is absolutely not how wages are set anywhere and certainly not in tech. Workers are paid according to the prevailing wages and what they’ll accept, not according to the value they generate for the firm.
    - yieldcrv 2y ago
      and yet, they could, no matter what happens in other industries
      - hmmokidk 2y ago
        if they were paid for exactly the value they produced the firm would not profit as all the profit would be paid out to those generating it
        yieldcrv 2y ago
        oh okay, if anyone anywhere suggested otherwise in this thread I'll let them know
        pests 2y ago
        > the firm would not profit as all the profit would be paid out to those generating it Then what is the firm doing at this point?
        deathanatos 2y ago
        In theory, it could re-invest those profits into the company, in hopes of further gains down the road. (But like all things, there's a healthy balance.) In practice, I think the answer is "executive bonuses" and [short-term] "stock buybacks". (But morally I agree; there is no reason every company has to be Scrooge, and I think it's to their long-term unprofitability to be so, by effectively ensuring a lack of experience & growth within the employees generating the value in the first place.)
    - BurningFrog 2y ago
      How much value a worker generates is of course much harder to quantify in tech, vs a finance trader, but the market forces will produce a rough equivalent result over time. But to get back to the topic, tech wages are definitely not set by comparing with finance wages!
  - kelseyfrog 2y ago
    Curious, have you always been a market determinist, or did that develop in a unique way for you?
    - BurningFrog 2y ago
      I've never heard that term before, so it's hard to answer :) After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
      - kelseyfrog 2y ago
        There's not exactly a good descriptive term, but the vibe I got was beyond, "Markets are the best tool to solve exchange problems," and ventured more into "Markets are an inevitable fact of nature, provide the most utility, and efforts to intervene produce worse outcomes." Let me know if I got that wrong.
      - ceejayoz 2y ago
        > After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms. AP Physics is learning that a perfectly spherical cow does X. Common sense is realizing perfectly spherical cows don't exist, and that certain things are overly simplified or more chaotic than theorists would sometimes like to admit. See also: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus
        TeMPOraL 2y ago
        But then wisdom is recognizing it's AP Physics, not common sense, that put a cow on the Moon. There may not be perfectly spherical cows in the real world, but then real cows will also do X, to the extent their non-perfect-spheriness doesn't interfere with it. Theorists don't simplify for the sake of simplifying, they're trying to study specific components of the whole in isolation. Yes, it's important to not confuse a component for the whole thing, but then it's also important to know the most impactful components and how they behave.
- boringg 2y ago
  I mean thats a pretty big stretch. You can certainly make the argument but I believe they call it casting a wide net.
  - curiousllama 2y ago
    I mean I know a lot of people who explicitly decide between sectors early/mid career. Tech vs consulting/finance for MBAs, tech vs. HFT for SWEs, tech vs. advertising for creatives, etc etc
  - trgn 2y ago
    It's baumol's cost disaease no? rising wages in one sector, have a side-effect of bringing up wages in another.
    - boringg 2y ago
      I agree that its possible but it seems to be the authors trying to cast a wide net via hypotheticals. Its easy to say its possible - but without any evidence its heresay, and within a paper like this its about trying to show the widest and broadest potential wage suppression possible. It seems sloppy to me to be honest.
- 0xcde4c3db 2y ago
  It's been argued that similar dynamics also inflate executive pay, although I'm not well-versed enough in the overall economic policy debate to know how well-established this actually is [1]. [1] https://www.epi.org/publication/reining-in-ceo-compensation-and-curbing-the-rise-of-inequality/ https://www.epi.org/publication/reining-in-ceo-compensation-...
- roenxi 2y ago
  And I'd say it is probably worse for society & small shareholders than it is for workers. These board-members aren't particularly skilled and companies mostly just fall into success by accident. Having a small set of board members everywhere is basically corruption and is surely funnelling money away from businesses into the hands of a small politically connected group of people. That being said, the best response would be to make it easier for workers to split off and spin up new businesses (ideally co-op style, we really should be experimenting with communal ownership styles now that communication tech is so much better). There isn't a mechanism to stop small politically connected groups conspiring with each other, that is just how power works. It isn't feasible to out-law the politically connected.
  - sokoloff 2y ago
    What did you have in mind to make it easier? It’s already not hard for workers to split off and form a new company with whatever ownership structure they want. What’s somewhat harder is to find a way to cover your bills until the company is able to pay your salary, assuming you aren’t willing to sell part of the company in exchange for that funding. (I’m not giving you money in exchange for nothing; I’m probably not lending you money to immediately spend on salaries without collateral that will be worth something if you fail, and if you have that collateral, you could already use it to raise funds.) Unless you’re proposing some government scheme to give money for no security, I’m not sure of the form of making it easier that wouldn’t be immediately gamed.
    - hkt 2y ago
      Investing in cooperatives isn't all that new, some sites (https://www.ethex.org.uk/ https://www.ethex.org.uk/) have a fairly long history in it. Cooperative financing options are generally debt instruments, or forms of shares which are a kind of like bonds that also confer membership and a vote. The difficulty really is in organising people into a functional company and acquiring customers ASAP. The coordination costs are high and the prospect remains risky, so very few people do this. Probably the best option for more cooperatives is to legislate the idea of a hostile takeover by employees into existence, such that a majority of employees can vote to take over a company if they can finance it's purchase. As you might imagine, certain quarters would respond badly to this.
- hammock 2y ago
  >Common leadership, via the sharing of board members We used to call this “interlocking directorates” and it’s a fundamental pillar of antitrust law. Why are we using a new term?
lupire 2y ago
This is talking about High-Tech Employee Antitrust Litigation form the aughts. https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust... Also, in retrospect, this timing was funny. https://www.apple.com/newsroom/2009/08/03Dr-Eric-Schmidt-Resigns-from-Apples-Board-of-Directors/ https://www.apple.com/newsroom/2009/08/03Dr-Eric-Schmidt-Res...
josefritzishere 2y ago
Marx predicted this. But he usually does.
- Etheryte 2y ago
  Marx also predicted many things that turned out to be completely false. It's easy to make a convincing sounding argument after the fact if you only cherry pick the bits that support your view.
  - reillys 2y ago
    Give examples of things he got dead wrong?
    - __turbobrew__ 2y ago
      That communism is compatible with human nature.
      - freen 2y ago
        Tell that to monks. Or, your atomic family. Or heck, the bulk of the Neolithic.
        bigfishrunning 2y ago
        All of which are small groups that rely on a ton of interpersonal trust. Large groups that lack interpersonal trust (like nations) tend to fail under communism.
        freen 2y ago
        Catal Huyuk, Mohenjo- Daro, Harappa, Tripolye-Curcuteni, Norte-Chico, Hopewell, Ain Ghazal. Populations from hundreds of thousands to tens of thousands of people, over the course of millennia, in effectively completely egalitarian, likely communal societies. And those are just the ones we’ve found. Indus River Valley civilization may have been as many as 5 million people, no rulers, no social hierarchy, uniform housing, no monumental/elite structures or housing, no evidence of centralized power or government, standard weights and measures, collective infrastructure projects, etc etc. It lasted roughly 1400 years. So… no, you don’t actually need a small groups. You actually only really need it to be completely socially unacceptable for some to live in excess while others suffer. In the entirety of human history, the only mechanism by which the human condition as a whole is improved is by applying a portion of the private surplus towards the public good. How much is a question of the moral character of the civilization in question. In the 50’s, in the US, if you made over $200k (~$2.2million in 2025 dollars) you paid over 90% of every dollar earned above $200k in taxes. The top corporate tax rate was 52%.
SteveVeilStream 2y ago
One of the pieces of advice I would give to someone early in your career is to find a trusted seasoned executive who can share a perspective that I have never seen captured well in writing. Typical actual comp structures for a number of career paths. Board dynamics. The true sources of negotiating power. The types of restrictive terms included in exec and board contracts. etc.
fluorinerocket 2y ago
One of the companies I worked at had the no poach list on the company open confluence for anyone to see if they looked
realityfactchex 2y ago
As an extension: an opposite of "collusion through common leadership" might be "collusion enabled by common exclusion"; in other words, blacklisting. The inverse of a "no-poach list" would be a "no-hire list". In the past, blacklisting (now should be called denylisting) was a real labor issue. People who stood up for workers rights (think: coal-mining towns in the late 1wr800s) or had unpopular political views (think: Hollywood in the early cold war) were, so the story goes, put on shared lists and denied work. But the effect would be similar. Enabled beneficial collective action for the executive class, through a concerted and curated collection of who can participates in working together. Does tech do this, too? If so, it could explain the need to import labor, and reflect or contribute to an artificial inability to find high-tech labor domestically? That is-- some of the collusion enabled by "common leadership" might not be possible with a workforce having full agency--but, with the risk of blacklisting, basically, there is potentially another side to the collective action of the executive minority. Of course, blacklisting might be illegal, so, hard to learn about, but so might be some other other forms of collusion, which the paper talks about? I am not a lawyer, just wondering if this is part of a bigger workforce pattern, reaching further to the lower rungs of the ladder, too, even if in the inverse form (exclusion, not inclusion). Links: - https://firstamendment.mtsu.edu/article/blacklists/ - https://pen.org/censored-free-speech-hollywood/

167 points by MPLan 2y ago

Common leadership, via the sharing of board members, significantly increased the likelihood that tech firms would not hire each others' workers. This form of 'no-poaching' may have had much bigger impacts on wage suppression: "It is worth noting that such collusion against workers may have costs beyond just the directly impacted workers in the high-tech sector. Wages and salaries of jobs in one industry can serve as reference points when workers in other firms/industries negotiate their wages. Thus, if high-tech workers get paid less, this may impact wages of other workers, say in finance, which may then impact wages in another sector and so on. Collusion in one sector can have impacts on other industries." To read more: https://www.nominalnews.com/p/competition-no-poaching-real-page https://www.nominalnews.com/p/competition-no-poaching-real-p...

BurningFrog 2y ago
I really doubt that could override the fundamental supply and demand forces. If hiring a finance "worker" will make my company $500k/year I will offer him $450k regardless of what Google engineers make.
- mitthrowaway2 2y ago
  Will you offer him $450k regardless of whether he would accept $250k because his next best alternative is offering $200k?
  - BurningFrog 2y ago
    In that case I would offer $250k, of course, but that assumes there is no other firm that can put that person to work on something equally profitable. Either way, engineer wages at Google would not be a factor.
    - wewtyflakes 2y ago
      > Either way, engineer wages at Google would not be a factor. ...for you. It would be a factor for who you are trying to hire. If who you are trying to hire sees Google engineers making $$$, but you are offering $ for job X, and they do not see it as an unbridgeable gap in their own aptitude, they could well say "I am going to instead try to be an engineer at Google so I can make $$$, instead of being offered $ doing X". This happens all the time.
    - sokoloff 2y ago
      In this example, if their alternative was a $300K/yr job at Google, that would certainly affect their willingness to accept your $250K/yr offer. If it did not at least affect that willingness, they might not be worth $250K/yr as a financial analyst.
- roughly 2y ago
  This is absolutely not how wages are set anywhere and certainly not in tech. Workers are paid according to the prevailing wages and what they’ll accept, not according to the value they generate for the firm.
  - yieldcrv 2y ago
    and yet, they could, no matter what happens in other industries
    - hmmokidk 2y ago
      if they were paid for exactly the value they produced the firm would not profit as all the profit would be paid out to those generating it
      - yieldcrv 2y ago
        oh okay, if anyone anywhere suggested otherwise in this thread I'll let them know
      - pests 2y ago
        > the firm would not profit as all the profit would be paid out to those generating it Then what is the firm doing at this point?
        deathanatos 2y ago
        In theory, it could re-invest those profits into the company, in hopes of further gains down the road. (But like all things, there's a healthy balance.) In practice, I think the answer is "executive bonuses" and [short-term] "stock buybacks". (But morally I agree; there is no reason every company has to be Scrooge, and I think it's to their long-term unprofitability to be so, by effectively ensuring a lack of experience & growth within the employees generating the value in the first place.)
  - BurningFrog 2y ago
    How much value a worker generates is of course much harder to quantify in tech, vs a finance trader, but the market forces will produce a rough equivalent result over time. But to get back to the topic, tech wages are definitely not set by comparing with finance wages!
- kelseyfrog 2y ago
  Curious, have you always been a market determinist, or did that develop in a unique way for you?
  - BurningFrog 2y ago
    I've never heard that term before, so it's hard to answer :) After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
    - kelseyfrog 2y ago
      There's not exactly a good descriptive term, but the vibe I got was beyond, "Markets are the best tool to solve exchange problems," and ventured more into "Markets are an inevitable fact of nature, provide the most utility, and efforts to intervene produce worse outcomes." Let me know if I got that wrong.
    - ceejayoz 2y ago
      > After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms. AP Physics is learning that a perfectly spherical cow does X. Common sense is realizing perfectly spherical cows don't exist, and that certain things are overly simplified or more chaotic than theorists would sometimes like to admit. See also: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus
      - TeMPOraL 2y ago
        But then wisdom is recognizing it's AP Physics, not common sense, that put a cow on the Moon. There may not be perfectly spherical cows in the real world, but then real cows will also do X, to the extent their non-perfect-spheriness doesn't interfere with it. Theorists don't simplify for the sake of simplifying, they're trying to study specific components of the whole in isolation. Yes, it's important to not confuse a component for the whole thing, but then it's also important to know the most impactful components and how they behave.
boringg 2y ago
I mean thats a pretty big stretch. You can certainly make the argument but I believe they call it casting a wide net.
- curiousllama 2y ago
  I mean I know a lot of people who explicitly decide between sectors early/mid career. Tech vs consulting/finance for MBAs, tech vs. HFT for SWEs, tech vs. advertising for creatives, etc etc
- trgn 2y ago
  It's baumol's cost disaease no? rising wages in one sector, have a side-effect of bringing up wages in another.
  - boringg 2y ago
    I agree that its possible but it seems to be the authors trying to cast a wide net via hypotheticals. Its easy to say its possible - but without any evidence its heresay, and within a paper like this its about trying to show the widest and broadest potential wage suppression possible. It seems sloppy to me to be honest.
0xcde4c3db 2y ago
It's been argued that similar dynamics also inflate executive pay, although I'm not well-versed enough in the overall economic policy debate to know how well-established this actually is [1]. [1] https://www.epi.org/publication/reining-in-ceo-compensation-and-curbing-the-rise-of-inequality/ https://www.epi.org/publication/reining-in-ceo-compensation-...
roenxi 2y ago
And I'd say it is probably worse for society & small shareholders than it is for workers. These board-members aren't particularly skilled and companies mostly just fall into success by accident. Having a small set of board members everywhere is basically corruption and is surely funnelling money away from businesses into the hands of a small politically connected group of people. That being said, the best response would be to make it easier for workers to split off and spin up new businesses (ideally co-op style, we really should be experimenting with communal ownership styles now that communication tech is so much better). There isn't a mechanism to stop small politically connected groups conspiring with each other, that is just how power works. It isn't feasible to out-law the politically connected.
- sokoloff 2y ago
  What did you have in mind to make it easier? It’s already not hard for workers to split off and form a new company with whatever ownership structure they want. What’s somewhat harder is to find a way to cover your bills until the company is able to pay your salary, assuming you aren’t willing to sell part of the company in exchange for that funding. (I’m not giving you money in exchange for nothing; I’m probably not lending you money to immediately spend on salaries without collateral that will be worth something if you fail, and if you have that collateral, you could already use it to raise funds.) Unless you’re proposing some government scheme to give money for no security, I’m not sure of the form of making it easier that wouldn’t be immediately gamed.
  - hkt 2y ago
    Investing in cooperatives isn't all that new, some sites (https://www.ethex.org.uk/ https://www.ethex.org.uk/) have a fairly long history in it. Cooperative financing options are generally debt instruments, or forms of shares which are a kind of like bonds that also confer membership and a vote. The difficulty really is in organising people into a functional company and acquiring customers ASAP. The coordination costs are high and the prospect remains risky, so very few people do this. Probably the best option for more cooperatives is to legislate the idea of a hostile takeover by employees into existence, such that a majority of employees can vote to take over a company if they can finance it's purchase. As you might imagine, certain quarters would respond badly to this.
hammock 2y ago
>Common leadership, via the sharing of board members We used to call this “interlocking directorates” and it’s a fundamental pillar of antitrust law. Why are we using a new term?

lupire 2y ago

This is talking about High-Tech Employee Antitrust Litigation form the aughts. https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust... Also, in retrospect, this timing was funny. https://www.apple.com/newsroom/2009/08/03Dr-Eric-Schmidt-Resigns-from-Apples-Board-of-Directors/ https://www.apple.com/newsroom/2009/08/03Dr-Eric-Schmidt-Res...

josefritzishere 2y ago

Marx predicted this. But he usually does.

Etheryte 2y ago
Marx also predicted many things that turned out to be completely false. It's easy to make a convincing sounding argument after the fact if you only cherry pick the bits that support your view.
- reillys 2y ago
  Give examples of things he got dead wrong?
  - __turbobrew__ 2y ago
    That communism is compatible with human nature.
    - freen 2y ago
      Tell that to monks. Or, your atomic family. Or heck, the bulk of the Neolithic.
      - bigfishrunning 2y ago
        All of which are small groups that rely on a ton of interpersonal trust. Large groups that lack interpersonal trust (like nations) tend to fail under communism.
        freen 2y ago
        Catal Huyuk, Mohenjo- Daro, Harappa, Tripolye-Curcuteni, Norte-Chico, Hopewell, Ain Ghazal. Populations from hundreds of thousands to tens of thousands of people, over the course of millennia, in effectively completely egalitarian, likely communal societies. And those are just the ones we’ve found. Indus River Valley civilization may have been as many as 5 million people, no rulers, no social hierarchy, uniform housing, no monumental/elite structures or housing, no evidence of centralized power or government, standard weights and measures, collective infrastructure projects, etc etc. It lasted roughly 1400 years. So… no, you don’t actually need a small groups. You actually only really need it to be completely socially unacceptable for some to live in excess while others suffer. In the entirety of human history, the only mechanism by which the human condition as a whole is improved is by applying a portion of the private surplus towards the public good. How much is a question of the moral character of the civilization in question. In the 50’s, in the US, if you made over $200k (~$2.2million in 2025 dollars) you paid over 90% of every dollar earned above $200k in taxes. The top corporate tax rate was 52%.

SteveVeilStream 2y ago

One of the pieces of advice I would give to someone early in your career is to find a trusted seasoned executive who can share a perspective that I have never seen captured well in writing. Typical actual comp structures for a number of career paths. Board dynamics. The true sources of negotiating power. The types of restrictive terms included in exec and board contracts. etc.

fluorinerocket 2y ago

One of the companies I worked at had the no poach list on the company open confluence for anyone to see if they looked

realityfactchex 2y ago

As an extension: an opposite of "collusion through common leadership" might be "collusion enabled by common exclusion"; in other words, blacklisting. The inverse of a "no-poach list" would be a "no-hire list". In the past, blacklisting (now should be called denylisting) was a real labor issue. People who stood up for workers rights (think: coal-mining towns in the late 1wr800s) or had unpopular political views (think: Hollywood in the early cold war) were, so the story goes, put on shared lists and denied work. But the effect would be similar. Enabled beneficial collective action for the executive class, through a concerted and curated collection of who can participates in working together. Does tech do this, too? If so, it could explain the need to import labor, and reflect or contribute to an artificial inability to find high-tech labor domestically? That is-- some of the collusion enabled by "common leadership" might not be possible with a workforce having full agency--but, with the risk of blacklisting, basically, there is potentially another side to the collective action of the executive minority. Of course, blacklisting might be illegal, so, hard to learn about, but so might be some other other forms of collusion, which the paper talks about? I am not a lawyer, just wondering if this is part of a bigger workforce pattern, reaching further to the lower rungs of the ladder, too, even if in the inverse form (exclusion, not inclusion). Links: - https://firstamendment.mtsu.edu/article/blacklists/ - https://pen.org/censored-free-speech-hollywood/