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Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. I

Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. If that's the case, then it would not have saved money, rather, it would have had the effect of simply shifting the money from going to existing Google/Apple/etc employees to applicants from smaller firms. That is, it changed the distribution of spending, and probably in a more egalitarian way, distributing the spending over a larger pool, instead of simply fighting over, and raising the wages, of the small group of superstars at the big companies. These companies are spending on R&D and increasing the percentage year over year, they are also spending huge sums of acqui-hires, and hiring faster than the local communities, or their own office space, can handle. You could argue that excessive salaries are actually bad for allocation. Wall Street has infamously brained drained tons of the best and brightest to figure out how to gain small efficiencies in stock trading. What discoveries might have occurred had string theorists not left to go optimize portfolios? One thing I wouldn't call engineers is cheap. You're talking about people making upwards of $150-200k in salary, and probably up to half-million when total compensation is considered. I paid more in taxes last year than my mother earned in several years of working as a cashier. And that's pretty sad. I grew up poor so I have a different perspective on this, but I see a lot of #zeroethWorldProblems whining going on in the valley while the world around them is falling apart. It's useful to have some perspective, and honestly, if these companies are to be fined and sanctioned, I'd rather the money go to poor people, instead of lawyers and techies who need to increase the bid on their studio apartment.

gojomo 13y ago
Not sure that the effects you theorize are true, but they're definitely possible, in the dynamic ways these shifting strategies affect real employment/resource decisions... as opposed to the simplistic "salary fixing" [sic] spin from some of the coverage. To an extent, existing employees with stock-based compensation, and also seeking "purpose/control/mastery" satisfaction at work, share their employers'/stockholders' interests in quelling rampant mercenary turnover and salary-over-all bidding wars. Another second-order beneficiary of any attempted employment cartelization could have been the startup ecosystem. As a founder or very-early employee, you "eat what you kill" rather than any industry-average salary. And, the pool of willing founders could have been expanded by missing/lower recruiting from the giants.
Curmudgel 13y ago
>Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. I don't think the evidence supports this theory. If the illegal agreements had artificially raised salaries then you would expect salaries to remain the same or even decrease after the DOJ stepped in. Instead, according to the WSJ, Google gave a 10% pay increase to all of its employees six weeks after the hiring collusion ended. http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pay-hike-and-antitrust-law/ http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pa...
- judk 13y ago
  "All those employees" including almost all of whom were (as a fraction of population) junior/mid engineers who were never covered by the anti-recruiting agreement.
  - djb_hackernews 13y ago
    Show me the HR person who was willing to test the waters of who and who wasn't covered by the agreement.
jaimeyap 13y ago
Thank you for pointing out how ridiculous it sounds for people in a field that is as highly paying as ours is, to be complaining about wage suppression. I think a lot of people have gotten pretty out of touch with reality. Anyways... even if one were so inclined to not share my perspective on this point (that our earnings as an industry are great), you would still need to acknowledge the possibility that this "agreement" might have actually freed up salaries for the wider job pool, instead of coalescing into singularities around a handful of rockstars.
- wavefunction 13y ago
  Would you then support compensation controls on executives? The system should be equitable from top to bottom.
  - jaimeyap 13y ago
    That question is a bit of a loaded one. There were no explicit compensation controls in place here. The top engineers at these companies are millionaires. Good engineers, as cromwellian points out, make easily in excess of 200K (sometimes a lot more) with total compensation. This is about a no-cold-call agreement for employees, with a possible extended no-poaching agreement. This certainly already applied to executives, not just engineers. More-over, it is open to debate whether this actually had a negative effect on the industry as a whole. It might actually have given startups the opportunity to hire decent talent, and may have deflected hiring spending to engineers not already at Google/Apple/etc... I'm not trying to justify the backroom, in-the-shadows type of dealings that went on here. That certainly came across as a little slimy. I am purely making a commentary on the perception that this somehow had a material effect in depressing the tech industry, engineering wages and/or quality of life.
efuquen 13y ago
Regardless of what the ultimate consequences would have been of any price fixing scheme, do you or don't you believe it is wrong? You can argue all day about the hypotheticals of how much or how little this all actually affected wages, but if you believe in principle that some general free market mechanism should be the determining factor in private sector wages, then you should disagree with what happened. Even if in the end it's a fight between the merely wealthy (which, btw, I don't think every engineer at Google/Apple/etc are making those top wages, at least not based off median numbers I've seen) with the super wealthy you still had an unfair practice that skewed what should have been market wages and put more money into the pockets of the super wealthy. I think it's acceptable to say that this scheme was bad and wrong and also to acknowledge that there are more significant and severe wealth and wage problems in this country for a large group of people outside engineering, law, medicine, etc. and those problems need to be addressed. I don't like the attitude of saying hey, the engineers are doing pretty good guys, it's ok if the even richer take money from them they should have rightfully earned. That won't solve any problems, least of all the more severe wage discrepancies or plight of the poor.
- cromwellian 13y ago
  Well, I don't consider not cold-calling as a price fixing scheme. As long as normal hiring process continues, all you're doing is shifting recruiting from a smaller pool of highly compensated engineers, to a large pool of less compensated engineers. It would only be price fixing if there was an industry wide agreement to put a cap on engineer salaries. Rather instead, what you have is an agreement to shop in one market exchange instead of another. I mean, what do you think is better for both engineers in general, as well as the companies: Trading a small set of engineers back and forth with ever more escalating compensation in a bidding war, or, hiring from a large, general pool of applicants? One way leads to disruption, mono-culture, and somewhat unfair bias towards those not on the roster already of the big companies. If anything, not cold calling should increase diversity as well. This scheme only seems slimy to me, because any agreement between companies in secret, seems slimy. But I am really not seeing it as a price fixing scheme, and I find it hard to get myself motivated to Occupy Mountain View protesting. This reminds me of several years ago when Google switched the Holiday gift from giving $1000 tax free cash in an envelope, to giving a free device (phone/tablet/etc). Some people were irritated by it and complained, but I found the complaints to be a solo on the world's tiniest violin. Seriously, there are people starving on Christmas, unable to even buy their children toys or clothes, and people earning in the top 1%-10% are annoyed that instead of $1000 cash, they get a $500 device for free. It's an even more absurd version of Louis C.K.'s "everything is awesome and no one is happy."
arg01 13y ago
If you poach an engineer from another company that means the other company must replace that engineer or be less productive. This company would then be the one to hire the outside engineer at the improved salary. i.e. If Google wants another engineer it can hire from outside or it poaches Facebook's(or another's in that club). In the second case Facebook (now needing an engineer) will then either poach from Google(or another in that club) or hire an outside engineer. The only way an outside engineer isn't hired is if Facebook/Google decide that an extra engineer is not worth the new higher salary (or the expected lower worth of them since they constantly jump ship). Even if the pool is smaller than the current pool of engineers at the big companies it would still arguably be a "fairer" distribution of wealth because the profits are more evenly spread through the successful companies. It would also mean that as the larger companies produce less (fewer engineers to make things) there are more engineers that could be working on competing/niche products that are currently worked on by the larger companies.
- cromwellian 13y ago
  I doubt it, often headcount back-fill puts in a more junior person. So post poaching, you might see the company hire a replacement outside engineer at lower salary than the person he replaced. Also, again, this is only about no-cold-calling. If someone truly thought they were hot stuff, and wanted to cash in, all they need do is threaten to quit, seek out an offer themselves, and they could gain your "fairer" distribution. In fact, it was not at all uncommon to people to threaten to leave and get big counter-offers to stay in recent years, especially higher level employees.
  - arg01 13y ago
    I can't speak to how the demographics of the back-fill would turn out, though I'd agree what you say seems likely. However I will say that that Junior engineer is also likely getting a pay rise from his old job (or perhaps just entered the work force). As to your second point regarding the cold calls if the cold calls do not have some benefit for the one called then it wouldn't matter if other companies were making them (as why would the employee leave). The fact that these companies colluded to avoid them speaks to the fact that threatening to quit vs being poached does not have the same benefit for the employees(or that not all employees have the tendency to act as mercenarily as perhaps they should).
rk17 13y ago
About your two first paragraphs: Over time that market-mechanic would also have as an effect that all engineers have capped wages, because the cause for wage increases - negotiations - would significantly decline; Everybody, almost by definition, accepts the same wage-ranges. It also introduces systemic risk for engineers, because then the wages could only go down over time. Because any attempt to look for a wage increase would be stopped short by the don't-share-employees-agreement. I also want to note that the companies in the best position to offer you a wage increase are the top-tech companies like Google and Apple. And yes, compared to other people engineers have little reason to complain. But I still think this incident is a valid reason for complaint.

gojomo 13y ago

Not sure that the effects you theorize are true, but they're definitely possible, in the dynamic ways these shifting strategies affect real employment/resource decisions... as opposed to the simplistic "salary fixing" [sic] spin from some of the coverage. To an extent, existing employees with stock-based compensation, and also seeking "purpose/control/mastery" satisfaction at work, share their employers'/stockholders' interests in quelling rampant mercenary turnover and salary-over-all bidding wars. Another second-order beneficiary of any attempted employment cartelization could have been the startup ecosystem. As a founder or very-early employee, you "eat what you kill" rather than any industry-average salary. And, the pool of willing founders could have been expanded by missing/lower recruiting from the giants.

Curmudgel 13y ago

>Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. I don't think the evidence supports this theory. If the illegal agreements had artificially raised salaries then you would expect salaries to remain the same or even decrease after the DOJ stepped in. Instead, according to the WSJ, Google gave a 10% pay increase to all of its employees six weeks after the hiring collusion ended. http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pay-hike-and-antitrust-law/ http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pa...

judk 13y ago
"All those employees" including almost all of whom were (as a fraction of population) junior/mid engineers who were never covered by the anti-recruiting agreement.
- djb_hackernews 13y ago
  Show me the HR person who was willing to test the waters of who and who wasn't covered by the agreement.

jaimeyap 13y ago

Thank you for pointing out how ridiculous it sounds for people in a field that is as highly paying as ours is, to be complaining about wage suppression. I think a lot of people have gotten pretty out of touch with reality. Anyways... even if one were so inclined to not share my perspective on this point (that our earnings as an industry are great), you would still need to acknowledge the possibility that this "agreement" might have actually freed up salaries for the wider job pool, instead of coalescing into singularities around a handful of rockstars.

wavefunction 13y ago
Would you then support compensation controls on executives? The system should be equitable from top to bottom.
- jaimeyap 13y ago
  That question is a bit of a loaded one. There were no explicit compensation controls in place here. The top engineers at these companies are millionaires. Good engineers, as cromwellian points out, make easily in excess of 200K (sometimes a lot more) with total compensation. This is about a no-cold-call agreement for employees, with a possible extended no-poaching agreement. This certainly already applied to executives, not just engineers. More-over, it is open to debate whether this actually had a negative effect on the industry as a whole. It might actually have given startups the opportunity to hire decent talent, and may have deflected hiring spending to engineers not already at Google/Apple/etc... I'm not trying to justify the backroom, in-the-shadows type of dealings that went on here. That certainly came across as a little slimy. I am purely making a commentary on the perception that this somehow had a material effect in depressing the tech industry, engineering wages and/or quality of life.

efuquen 13y ago

Regardless of what the ultimate consequences would have been of any price fixing scheme, do you or don't you believe it is wrong? You can argue all day about the hypotheticals of how much or how little this all actually affected wages, but if you believe in principle that some general free market mechanism should be the determining factor in private sector wages, then you should disagree with what happened. Even if in the end it's a fight between the merely wealthy (which, btw, I don't think every engineer at Google/Apple/etc are making those top wages, at least not based off median numbers I've seen) with the super wealthy you still had an unfair practice that skewed what should have been market wages and put more money into the pockets of the super wealthy. I think it's acceptable to say that this scheme was bad and wrong and also to acknowledge that there are more significant and severe wealth and wage problems in this country for a large group of people outside engineering, law, medicine, etc. and those problems need to be addressed. I don't like the attitude of saying hey, the engineers are doing pretty good guys, it's ok if the even richer take money from them they should have rightfully earned. That won't solve any problems, least of all the more severe wage discrepancies or plight of the poor.

cromwellian 13y ago
Well, I don't consider not cold-calling as a price fixing scheme. As long as normal hiring process continues, all you're doing is shifting recruiting from a smaller pool of highly compensated engineers, to a large pool of less compensated engineers. It would only be price fixing if there was an industry wide agreement to put a cap on engineer salaries. Rather instead, what you have is an agreement to shop in one market exchange instead of another. I mean, what do you think is better for both engineers in general, as well as the companies: Trading a small set of engineers back and forth with ever more escalating compensation in a bidding war, or, hiring from a large, general pool of applicants? One way leads to disruption, mono-culture, and somewhat unfair bias towards those not on the roster already of the big companies. If anything, not cold calling should increase diversity as well. This scheme only seems slimy to me, because any agreement between companies in secret, seems slimy. But I am really not seeing it as a price fixing scheme, and I find it hard to get myself motivated to Occupy Mountain View protesting. This reminds me of several years ago when Google switched the Holiday gift from giving $1000 tax free cash in an envelope, to giving a free device (phone/tablet/etc). Some people were irritated by it and complained, but I found the complaints to be a solo on the world's tiniest violin. Seriously, there are people starving on Christmas, unable to even buy their children toys or clothes, and people earning in the top 1%-10% are annoyed that instead of $1000 cash, they get a $500 device for free. It's an even more absurd version of Louis C.K.'s "everything is awesome and no one is happy."

arg01 13y ago

If you poach an engineer from another company that means the other company must replace that engineer or be less productive. This company would then be the one to hire the outside engineer at the improved salary. i.e. If Google wants another engineer it can hire from outside or it poaches Facebook's(or another's in that club). In the second case Facebook (now needing an engineer) will then either poach from Google(or another in that club) or hire an outside engineer. The only way an outside engineer isn't hired is if Facebook/Google decide that an extra engineer is not worth the new higher salary (or the expected lower worth of them since they constantly jump ship). Even if the pool is smaller than the current pool of engineers at the big companies it would still arguably be a "fairer" distribution of wealth because the profits are more evenly spread through the successful companies. It would also mean that as the larger companies produce less (fewer engineers to make things) there are more engineers that could be working on competing/niche products that are currently worked on by the larger companies.

cromwellian 13y ago
I doubt it, often headcount back-fill puts in a more junior person. So post poaching, you might see the company hire a replacement outside engineer at lower salary than the person he replaced. Also, again, this is only about no-cold-calling. If someone truly thought they were hot stuff, and wanted to cash in, all they need do is threaten to quit, seek out an offer themselves, and they could gain your "fairer" distribution. In fact, it was not at all uncommon to people to threaten to leave and get big counter-offers to stay in recent years, especially higher level employees.
- arg01 13y ago
  I can't speak to how the demographics of the back-fill would turn out, though I'd agree what you say seems likely. However I will say that that Junior engineer is also likely getting a pay rise from his old job (or perhaps just entered the work force). As to your second point regarding the cold calls if the cold calls do not have some benefit for the one called then it wouldn't matter if other companies were making them (as why would the employee leave). The fact that these companies colluded to avoid them speaks to the fact that threatening to quit vs being poached does not have the same benefit for the employees(or that not all employees have the tendency to act as mercenarily as perhaps they should).

rk17 13y ago

About your two first paragraphs: Over time that market-mechanic would also have as an effect that all engineers have capped wages, because the cause for wage increases - negotiations - would significantly decline; Everybody, almost by definition, accepts the same wage-ranges. It also introduces systemic risk for engineers, because then the wages could only go down over time. Because any attempt to look for a wage increase would be stopped short by the don't-share-employees-agreement. I also want to note that the companies in the best position to offer you a wage increase are the top-tech companies like Google and Apple. And yes, compared to other people engineers have little reason to complain. But I still think this incident is a valid reason for complaint.