10 ms·

I recall wondering at the time why, if there was such a shortage of talented developers, newly minted lawyers were still making several times as much as good pr

I recall wondering at the time why, if there was such a shortage of talented developers, newly minted lawyers were still making several times as much as good programmers. Now we know part of the reason why: Apple, Goole, Adobe and all the other big names in tech – except, apparently Facebook – were illegally colluding to pay talented devs less money. Since this was discovered, industry pay scales have gone up, while law salaries have dropped – now it's much closer. The thing that bothers me the most is that this illegal collusion suppressed wages for the entire software industry, robbing us all of money that lined the pockets of these companies. The plaintiffs in this case are by far not the only ones who were affected – Apple, Google, et al. stole tens of thousands of dollars per year from each person who was working in the software industry for the better part of a decade and the vast majority of us aren't going to get any of that back.

judk 13y ago
Huh? College hires at Google got paid same or more ($100+K plus equity) than new JD lawyers ($150k).
- StefanKarpinski 13y ago
  In 2005? And Google hires aren't really the right point of comparison – that's the very top of the tech market, which you're comparing to typical starting lawyers. New hires at top law firms did and still do make significantly more than that. A better point of comparison is the middle of each market, which is where lawyers were getting paid multiple x developers. By suppressing the top of the market, these companies were pushing the pay scale down across the entire industry, not just at the top. That's precisely what I think it's so shitty.
  - logical42 13y ago
    This is incorrect actually. Pay for lawyers forms a bimodal distribution, where graduates from the top ten law schools tend to occupy most of the high end of the distribution while everyone else tends to fall in the lower end.
    - saraid216 13y ago
      Is that still true if you address his point by checking new hires at the top ten law firms?
      - logical42 13y ago
        From my understanding the pay for newly minted law schools grads for 'big law' (i.e. Associate positions for big firms) are all approx. 160k (this includes bonus). There is one firm, as I understand it, that pays more (wachtell) which pays 160 base + 160 bonus, but on a yearly basis the number of spots for that firm is in the single digits, I think.
        lagugun 13y ago
        This is more or less accurate: almost all of the other top 10 firms pay $160k base with a $10k pro-rated bonus (http://abovethelaw.com/2013/12/breaking-cravath-announces-year-end-bonuses-let-the-2013-bonus-season-begin/ http://abovethelaw.com/2013/12/breaking-cravath-announces-ye...).
        logical42 13y ago
        Yeah, it's a bit embarrassing how well I know the numbers for this.. glad I decided against it.
        lagugun 13y ago
        Yeah, it's becoming less and less of a good tradeoff for the $200k+ cost of attendance and 3 years of opportunity cost. One funny thing about making the engineer-to-lawyer comparison regarding this salary fixing issue is that law actually has a much more obvious salary fixing problem, since almost every biglaw firm pays 160k and firms don't tend to compete for entry-level hires with compensation.
    - deleted 13y ago
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bubbleRefuge 13y ago
Now we know part of the reason why: Apple, Goole, Adobe and all the other big names in tech – except, apparently Facebook – were illegally colluding to pay talented devs less money. The other part is the hordes of H1s from Infy,WP,TCS etc that are pulling salaries down from the bottom. Perhaps an organized labor movement for software workers will come of it.
- cubancigar11 13y ago
  I think it is obvious that the wages of Infy etc. were also pulled down because of this collusion. If silicon valley moves towards a organized labor movement (that I have long held that it should), it is essential that such labor movements are formed in other countries.
doktrin 13y ago
This isn't an apples to apples comparison. Law school can require as much as $200k and 3 years of opportunity cost on top of whatever was spent on undergrad. Additionally, it's my understanding that getting a shot [1] at the big leagues in law requires a top-12 school. Are mid-tier law schools pumping out lawyers who make $150k as first year associates? I'd be surprised, but I don't have the data. [1] Even attending a top school is no guarantee. Law school is fiercely competitive, and only top-scoring students from top schools get the really lucrative & prestigious positions.
- wallflower 13y ago
  In Big Law, rankings are everything and permeate the entire profession. See "PPP" http://en.wikipedia.org/wiki/List_of_law_firms_by_profits_per_partner http://en.wikipedia.org/wiki/List_of_law_firms_by_profits_pe...
  - brianbreslin 13y ago
    Are these law firms structured similar to wall street where a big portion of a partner's pay is in form of bonuses?
    - wallflower 13y ago
      Like in the largest financial firms like GS, there is a compensation committee that determines your yearly profit share. Pretty interesting reading: http://www.skadden.com/sites/default/files/ckeditor/files/How_Skadden_Does_It.pdf http://www.skadden.com/sites/default/files/ckeditor/files/Ho...
    - logical42 13y ago
      From my understanding, only if you're a partner.
    - grmarcil 13y ago
      In general, at the associate level, no. Partner level positions have varying compensation agreements, so hard to generalize there, but associates generally receive most of their compensation in salary. This is as opposed to finance, where even associate level positions will generally pay a large portion of total compensation in the form of an annual bonus, tied to the firm's performance. In a good year, these can exceed 100% of base salary after a few years of experience, but this is not the case for any non-partner lawyers I know of.
aviral 13y ago
No-Poaching Agreement, makes me think of how much poor the company laws are. Every law is aligned to keep investors money safe, I mean to say audits and audits(There is a need of audit for Employee Satisfaction). Also, there should be some laws which can make employees feel like human and not just operating cost on the balance sheet(Employee Satisfaction / Protections Laws). Laws which can keep balance between Profit a company make(Greed of Investors and Top level Executives) and Employees who help the company earn the profit(Puts his life time into that).
tdaltonc 13y ago
I'm not sure that this actually suppressed wages that much. Oligopolies only work when nearly everyone is in on it. If you have too many 'cheaters' than the cartel can't control the price. There were a lot of tech companies that weren't in on it. They were still poaching employees, and employees were leaving to do their own start-ups.
- walshemj 13y ago
  No in industrys the big players tend to set the going rate for pay increases. HR use surveys of wages to set compensation quanta and if all the big players he suppressed wages this will effect the surveys and hence every one's compensation.
  - tdaltonc 13y ago
    I think that there are other wage setting mechanisms that you're neglecting. An employer that pays above the market rate can get better talent. An employee can ask for more pay. They can leave for a job that pays more. ect.
    - walshemj 13y ago
      This is what the cartel was trying to do. And I think you misunderstand how big companys set wages - they use some very secretive "surveys" which they do not share with the employees to set the quanta for pay increases.
grmarcil 13y ago
I think it is far from apparent that these agreements suppressed developer salaries at these companies, much less across the industry as a whole. We're talking about recruiting agreements, not direct compensation collusion. I agree that the practices were unethical, illegal, and infuriating as a developer, but it is an enormous jump to claim that the actions of several Silicon Valley companies lowered industry-wide wages by tens of thousands of dollars per year.
- rapind 13y ago
  I'm sure it's not your intention, but calling them "Silicon Valley" companies seems to downplay the fact that one of them is the largest publicly traded company in the world by market cap, and another isn't too far behind. Instead if we rephrase it to "some of the largest / richest companies in the world" the jump in logic seems a little less enormous. I don't even know how to begin calculating this cost to your typical dev, so I couldn't say whether tens of thousands is or isn't in the ballpark, but I feel pretty secure in theorizing that there is an impact.
vishnugupta 13y ago
This has been the case with several industries (manufacture, service to name a couple) ever since the capital was globalized beginning from late 80's. The difference is that the collusion is a part of some trade agreement (GATT etc.,) where labor movement between nations is severely restricted or banned altogether and capital movement is encouraged in the name of liberalization! This has resulted in industries being shut down at a massive scale in US where labor costs are higher and moved to a country where labor is cheap (China, India and so on) and also less regulated ("flexible" is the word used). As a bonus companies get to flout just about every environmental regulation which are non-existent in third world countries (think Bangladesh's textile manufacturing plants producing for luxury brands). The net result of this combination of "free capital movement + restricted labor movement" is reduced wages across nations and industries. And over the time you end up having no skilled labor in a company's nation of incorporation (Apple?). The supreme irony I see here is that the advocates of "free market" for capital tend to advance amazingly absurd arguments when it comes to having a similar free market for labor. I highly recommend watching this talk by Noam Chomsky titled "Free Markets?": https://www.youtube.com/watch?v=WHj2GaPuEhY https://www.youtube.com/watch?v=WHj2GaPuEhY
- atmosx 13y ago
  Excellent points :-)
  - vishnugupta 13y ago
    Thank you :). You made the day for a noob HNer!
emcfarlane 13y ago
This is the ultimate first world problem. How were you being robbed? Someone holding a gun against your head stealing all your time? Or did you agree to a salary and are now so upset you could have been paid more. These companies make billions. They could afford to give everyone a raise. Why would they if you accept a lower salary? Why would a company try to pay you as much as possible for your work. Get over yourself. Illegally colluding. The only reason they hire people is to make money. If they think paying more for employees will raise salaries all round and cause them to loose profit, they won't do it. It was cost benefit analysis.
- rk17 13y ago
  You're making ad hominem attacks. Yes comparatively it is ridiculous to portray this as a major issue, but just because other people are less-off doesn't mean you should let yourself get screwed over. It's also worth considering that is a discussion on a tech-oriented website, so here it is important. And you're basically right, it was a cost-benefit analyses. And it was illegal to act upon it the way they did, which is the whole point.
  - walshemj 13y ago
    Absolutely if your an "engineer" on 150k pa you are still just a worker you still will face issues at work OK maybe slightly slightly different ones to say a semiskilled car worker or a Navvy might face. But those sort of jobs dont face a lot of the issues that come with professional ones - if your a docker you boss is not going to trick you out of your vested stock and cost you millions ala silver lake partners.
eatmyshorts 13y ago
This really only affects the highest end of the range of salaries. If you want to get upset, take a look at the H1B visa program. Lots of foreign workers exploited at sub-par wages, locked in to a single employer. Then, just to ensure the shortage of talented developers remains, we force the visa holders to return to their home country after 3 or 6 years. We need to eliminate the H1B visa program and expand our green card program. I want these developers to be paid a fair wage, and I want them to remain in the US after the duration of their visa. The H1B visa program only serves to depress wages, take advantage of foreign workers, and eliminate the high-tech advantage that the US has developed over decades.
- walshemj 13y ago
  Nope suppressing the high end changes the entire distribution - this is basic Technician Level Statistics. Its imposing a positive skew to the salary distribution. http://en.wikipedia.org/wiki/Skewness http://en.wikipedia.org/wiki/Skewness
- Xdes 13y ago
  Companies that want foreign talent should setup branches in the originating countries. Countries will not grow when their talent is poached. Immigrants also put local workers into unfair competition when their home countries offer social programs such as free higher education.
  - snarfy 13y ago
    Setting up shop in the originating country would make the foreign talent no longer cheap. They want their cake and they want to eat it too.
    - aetherson 13y ago
      That doesn't seem likely to be true. What makes you think it's cheaper to shepherd an employee from, say, India through an H1B process and then pay them in the Bay Area versus setting up shop in India and employing Indians there? There'd be a one-time cost to creating a campus in India, but honestly, it would be more than compensated for by the fact that they could almost certainly pay Indians in India a considerably lower wage than Indians in the Bay Area. The reason they don't make their major campuses in other countries versus the US is because they feel that they have talent that is determined to stay in the US and which will not cross-pollinate well with physically remote offices, not because they think that it is cheaper to employ foreigners in the US than it would be in their home countries.
odonnellryan 13y ago
Turns out that a lot of lawyers start off making 30K a year.
nova22033 13y ago
The non-poaching agreement didn't apply to engineering talent.
ap22213 13y ago
I agree with you, in ways, but I think that software pay and legal pay aren't quite the same. Traditionally, in the US, the law professions have restricted the entry of new lawyers into the market. This has artificially inflated prices for lawyers. They do this by folding in layers of complexity into the law, by imposing greater restrictions on the practice of law, and by imposing huge costs on participation. Also, since in the US, most legislators are also lawyers, they have innate incentive to add more and more complexity and requirements into the law. More complexity and requirements increases the demand for lawyers.
rhizome 13y ago
Also keep in mind that their shares were priced by the market partially due to apparent profit levels, which are highly dependent on the cost of labor.

judk 13y ago

Huh? College hires at Google got paid same or more ($100+K plus equity) than new JD lawyers ($150k).

StefanKarpinski 13y ago
In 2005? And Google hires aren't really the right point of comparison – that's the very top of the tech market, which you're comparing to typical starting lawyers. New hires at top law firms did and still do make significantly more than that. A better point of comparison is the middle of each market, which is where lawyers were getting paid multiple x developers. By suppressing the top of the market, these companies were pushing the pay scale down across the entire industry, not just at the top. That's precisely what I think it's so shitty.
- logical42 13y ago
  This is incorrect actually. Pay for lawyers forms a bimodal distribution, where graduates from the top ten law schools tend to occupy most of the high end of the distribution while everyone else tends to fall in the lower end.
  - saraid216 13y ago
    Is that still true if you address his point by checking new hires at the top ten law firms?
    - logical42 13y ago
      From my understanding the pay for newly minted law schools grads for 'big law' (i.e. Associate positions for big firms) are all approx. 160k (this includes bonus). There is one firm, as I understand it, that pays more (wachtell) which pays 160 base + 160 bonus, but on a yearly basis the number of spots for that firm is in the single digits, I think.
      - lagugun 13y ago
        This is more or less accurate: almost all of the other top 10 firms pay $160k base with a $10k pro-rated bonus (http://abovethelaw.com/2013/12/breaking-cravath-announces-year-end-bonuses-let-the-2013-bonus-season-begin/ http://abovethelaw.com/2013/12/breaking-cravath-announces-ye...).
        logical42 13y ago
        Yeah, it's a bit embarrassing how well I know the numbers for this.. glad I decided against it.
        lagugun 13y ago
        Yeah, it's becoming less and less of a good tradeoff for the $200k+ cost of attendance and 3 years of opportunity cost. One funny thing about making the engineer-to-lawyer comparison regarding this salary fixing issue is that law actually has a much more obvious salary fixing problem, since almost every biglaw firm pays 160k and firms don't tend to compete for entry-level hires with compensation.
  - deleted 13y ago
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- deleted 13y ago
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bubbleRefuge 13y ago

Now we know part of the reason why: Apple, Goole, Adobe and all the other big names in tech – except, apparently Facebook – were illegally colluding to pay talented devs less money. The other part is the hordes of H1s from Infy,WP,TCS etc that are pulling salaries down from the bottom. Perhaps an organized labor movement for software workers will come of it.

cubancigar11 13y ago
I think it is obvious that the wages of Infy etc. were also pulled down because of this collusion. If silicon valley moves towards a organized labor movement (that I have long held that it should), it is essential that such labor movements are formed in other countries.

doktrin 13y ago

This isn't an apples to apples comparison. Law school can require as much as $200k and 3 years of opportunity cost on top of whatever was spent on undergrad. Additionally, it's my understanding that getting a shot [1] at the big leagues in law requires a top-12 school. Are mid-tier law schools pumping out lawyers who make $150k as first year associates? I'd be surprised, but I don't have the data. [1] Even attending a top school is no guarantee. Law school is fiercely competitive, and only top-scoring students from top schools get the really lucrative & prestigious positions.

wallflower 13y ago
In Big Law, rankings are everything and permeate the entire profession. See "PPP" http://en.wikipedia.org/wiki/List_of_law_firms_by_profits_per_partner http://en.wikipedia.org/wiki/List_of_law_firms_by_profits_pe...
- brianbreslin 13y ago
  Are these law firms structured similar to wall street where a big portion of a partner's pay is in form of bonuses?
  - wallflower 13y ago
    Like in the largest financial firms like GS, there is a compensation committee that determines your yearly profit share. Pretty interesting reading: http://www.skadden.com/sites/default/files/ckeditor/files/How_Skadden_Does_It.pdf http://www.skadden.com/sites/default/files/ckeditor/files/Ho...
  - logical42 13y ago
    From my understanding, only if you're a partner.
  - grmarcil 13y ago
    In general, at the associate level, no. Partner level positions have varying compensation agreements, so hard to generalize there, but associates generally receive most of their compensation in salary. This is as opposed to finance, where even associate level positions will generally pay a large portion of total compensation in the form of an annual bonus, tied to the firm's performance. In a good year, these can exceed 100% of base salary after a few years of experience, but this is not the case for any non-partner lawyers I know of.

aviral 13y ago

No-Poaching Agreement, makes me think of how much poor the company laws are. Every law is aligned to keep investors money safe, I mean to say audits and audits(There is a need of audit for Employee Satisfaction). Also, there should be some laws which can make employees feel like human and not just operating cost on the balance sheet(Employee Satisfaction / Protections Laws). Laws which can keep balance between Profit a company make(Greed of Investors and Top level Executives) and Employees who help the company earn the profit(Puts his life time into that).

tdaltonc 13y ago

I'm not sure that this actually suppressed wages that much. Oligopolies only work when nearly everyone is in on it. If you have too many 'cheaters' than the cartel can't control the price. There were a lot of tech companies that weren't in on it. They were still poaching employees, and employees were leaving to do their own start-ups.

walshemj 13y ago
No in industrys the big players tend to set the going rate for pay increases. HR use surveys of wages to set compensation quanta and if all the big players he suppressed wages this will effect the surveys and hence every one's compensation.
- tdaltonc 13y ago
  I think that there are other wage setting mechanisms that you're neglecting. An employer that pays above the market rate can get better talent. An employee can ask for more pay. They can leave for a job that pays more. ect.
  - walshemj 13y ago
    This is what the cartel was trying to do. And I think you misunderstand how big companys set wages - they use some very secretive "surveys" which they do not share with the employees to set the quanta for pay increases.

grmarcil 13y ago

I think it is far from apparent that these agreements suppressed developer salaries at these companies, much less across the industry as a whole. We're talking about recruiting agreements, not direct compensation collusion. I agree that the practices were unethical, illegal, and infuriating as a developer, but it is an enormous jump to claim that the actions of several Silicon Valley companies lowered industry-wide wages by tens of thousands of dollars per year.

rapind 13y ago
I'm sure it's not your intention, but calling them "Silicon Valley" companies seems to downplay the fact that one of them is the largest publicly traded company in the world by market cap, and another isn't too far behind. Instead if we rephrase it to "some of the largest / richest companies in the world" the jump in logic seems a little less enormous. I don't even know how to begin calculating this cost to your typical dev, so I couldn't say whether tens of thousands is or isn't in the ballpark, but I feel pretty secure in theorizing that there is an impact.

vishnugupta 13y ago

This has been the case with several industries (manufacture, service to name a couple) ever since the capital was globalized beginning from late 80's. The difference is that the collusion is a part of some trade agreement (GATT etc.,) where labor movement between nations is severely restricted or banned altogether and capital movement is encouraged in the name of liberalization! This has resulted in industries being shut down at a massive scale in US where labor costs are higher and moved to a country where labor is cheap (China, India and so on) and also less regulated ("flexible" is the word used). As a bonus companies get to flout just about every environmental regulation which are non-existent in third world countries (think Bangladesh's textile manufacturing plants producing for luxury brands). The net result of this combination of "free capital movement + restricted labor movement" is reduced wages across nations and industries. And over the time you end up having no skilled labor in a company's nation of incorporation (Apple?). The supreme irony I see here is that the advocates of "free market" for capital tend to advance amazingly absurd arguments when it comes to having a similar free market for labor. I highly recommend watching this talk by Noam Chomsky titled "Free Markets?": https://www.youtube.com/watch?v=WHj2GaPuEhY https://www.youtube.com/watch?v=WHj2GaPuEhY

atmosx 13y ago
Excellent points :-)
- vishnugupta 13y ago
  Thank you :). You made the day for a noob HNer!

emcfarlane 13y ago

This is the ultimate first world problem. How were you being robbed? Someone holding a gun against your head stealing all your time? Or did you agree to a salary and are now so upset you could have been paid more. These companies make billions. They could afford to give everyone a raise. Why would they if you accept a lower salary? Why would a company try to pay you as much as possible for your work. Get over yourself. Illegally colluding. The only reason they hire people is to make money. If they think paying more for employees will raise salaries all round and cause them to loose profit, they won't do it. It was cost benefit analysis.

rk17 13y ago
You're making ad hominem attacks. Yes comparatively it is ridiculous to portray this as a major issue, but just because other people are less-off doesn't mean you should let yourself get screwed over. It's also worth considering that is a discussion on a tech-oriented website, so here it is important. And you're basically right, it was a cost-benefit analyses. And it was illegal to act upon it the way they did, which is the whole point.
- walshemj 13y ago
  Absolutely if your an "engineer" on 150k pa you are still just a worker you still will face issues at work OK maybe slightly slightly different ones to say a semiskilled car worker or a Navvy might face. But those sort of jobs dont face a lot of the issues that come with professional ones - if your a docker you boss is not going to trick you out of your vested stock and cost you millions ala silver lake partners.

eatmyshorts 13y ago

This really only affects the highest end of the range of salaries. If you want to get upset, take a look at the H1B visa program. Lots of foreign workers exploited at sub-par wages, locked in to a single employer. Then, just to ensure the shortage of talented developers remains, we force the visa holders to return to their home country after 3 or 6 years. We need to eliminate the H1B visa program and expand our green card program. I want these developers to be paid a fair wage, and I want them to remain in the US after the duration of their visa. The H1B visa program only serves to depress wages, take advantage of foreign workers, and eliminate the high-tech advantage that the US has developed over decades.

walshemj 13y ago
Nope suppressing the high end changes the entire distribution - this is basic Technician Level Statistics. Its imposing a positive skew to the salary distribution. http://en.wikipedia.org/wiki/Skewness http://en.wikipedia.org/wiki/Skewness
Xdes 13y ago
Companies that want foreign talent should setup branches in the originating countries. Countries will not grow when their talent is poached. Immigrants also put local workers into unfair competition when their home countries offer social programs such as free higher education.
- snarfy 13y ago
  Setting up shop in the originating country would make the foreign talent no longer cheap. They want their cake and they want to eat it too.
  - aetherson 13y ago
    That doesn't seem likely to be true. What makes you think it's cheaper to shepherd an employee from, say, India through an H1B process and then pay them in the Bay Area versus setting up shop in India and employing Indians there? There'd be a one-time cost to creating a campus in India, but honestly, it would be more than compensated for by the fact that they could almost certainly pay Indians in India a considerably lower wage than Indians in the Bay Area. The reason they don't make their major campuses in other countries versus the US is because they feel that they have talent that is determined to stay in the US and which will not cross-pollinate well with physically remote offices, not because they think that it is cheaper to employ foreigners in the US than it would be in their home countries.

odonnellryan 13y ago

Turns out that a lot of lawyers start off making 30K a year.

nova22033 13y ago

The non-poaching agreement didn't apply to engineering talent.

ap22213 13y ago

I agree with you, in ways, but I think that software pay and legal pay aren't quite the same. Traditionally, in the US, the law professions have restricted the entry of new lawyers into the market. This has artificially inflated prices for lawyers. They do this by folding in layers of complexity into the law, by imposing greater restrictions on the practice of law, and by imposing huge costs on participation. Also, since in the US, most legislators are also lawyers, they have innate incentive to add more and more complexity and requirements into the law. More complexity and requirements increases the demand for lawyers.

rhizome 13y ago

Also keep in mind that their shares were priced by the market partially due to apparent profit levels, which are highly dependent on the cost of labor.