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It is a mistake to view the settlement through the lens of "$X paid per person." These companies colluded to depress the wages of an entire industry. "50,000"

It is a mistake to view the settlement through the lens of "$X paid per person." These companies colluded to depress the wages of an entire industry. "50,000" people were not effected. "64,000" people were not effected. Those numbers are just the work forces of the companies involved in the lawsuit. The entire greater Bay area technology job sector, one of the highest paid jobs in America, in the region of its highest concentration, was artificially depressed. These companies put a ceiling on what a given job was worth. If you work in Silicon valley in technology, you were effected. The ability to moved to another company and get paid what you are worth was effected. The shear scope and damage these companies did is almost beyond belief. We are not talking hundreds of millions of dollars. We are talking Billions and Billions. The ripple effects are even crazier. How many new technology companies did not get created because people's depressed salaries reduced how much they could save to bootstrap something new? How much did technology workers not spend into the service industry or the larger economy, because they were underpaid? This is a staggeringly insidious act with wide reaching repercussions beyond Adobe poaching some PhDs from Google, or vice versa.

ElijahLynn 12y ago
Another great contribution to society by Steve Jobs.
- billyhoffman 12y ago
  I know this is kind of a throw away poke at Steve Jobs, but its very believable as well. In fact, the selfishness that Jobs displayed repeatedly in his life helps you understand how this whole thing happened. I can totally see Steve Jobs says "damn it, I'm trying to make cool stuff and these 2-3 other companies get stealing my guys. Stop doing that so we can go back to making awesome stuff!" But that's the problem and my broader point. These companies acted to reduce churn of top talent and possibly secondarily to save some cash. I can see this seeming like a good idea. But the broader ramifications of their actions are insane.
  - sophacles 12y ago
    They could have equally reduced churn by offering better compensation packages... and letting the market forces do what market forces do. Particularly from such a libertarian, "the market solves everything" set of people. (not a position on libertarianism itself, just pointing out the irony in big name capitalists acting against the market).
frostmatthew 12y ago
> How many new technology companies did not get created because people's depressed salaries reduced how much they could save to bootstrap something new? I agree with everything else you're saying except this. Higher wages could also cause less people to consider founding a startup. True, higher pay would allow people to save more and thus making it financially easier - but it also would mean a higher opportunity cost [for the same risk], making it psychologically more difficult.
- billyhoffman 12y ago
  Good point. There also is the case that a lower salary might make the person more likely to try side products to supplement income. Perhaps my original thought here was a reach.
- mfisher87 12y ago
  We're talking about physical barriers to entry. Without the money, you can't start the business. If you have the finance, but with a higher opportunity cost, you are still able.
rayiner 12y ago
> "64,000" people were not effected. Those numbers are just the work forces of the companies involved in the lawsuit. But the class is defined as just the employees of these companies from 2005-09. This has two implications: 1) the proof issue is much easier--you don't have to get into a calculation of economic damages for the sector as a whole; 2) the settlement release theoretically doesn't preclude people who weren't employees of these companies from bringing a different lawsuit based on the indirect injury. Don't underestimate the significance of (1). You're talking about a battle of economic expert witnesses, where your burden will be to prove that the defendants' conduct actually suppressed salaries during a time period when engineering salaries were skyrocketing. Whether or not that theory of the case is true, I don't know if its winnable. Also, using 64,000 employees as the denominator is a bit misleading. Some people might have gotten a lot more money over the time period by taking an offer that was prohibited by a no-poaching agreement. But other members of the class may not have gotten those calls anyway, and so weren't harmed. EDIT: 'gojomo and 'harryh hit the nail on the head. The theory is certainly plausible, proving it is very ambitious.
- billyhoffman 12y ago
  I agree with everything you said, and it makes sense for a trial. But people shouldn't think the only people affected were those that had a strong case in court. This salary fixing scandal is black spot on how American companies treat workers. (It's not "hire Pinkertons to shoot strikers" bad [1] or "pay employees in our own private currency that only we accept" bad [2], but its pretty damn bad.) [1] http://en.wikipedia.org/wiki/Homestead_Strike http://en.wikipedia.org/wiki/Homestead_Strike [2] http://en.wikipedia.org/wiki/Company_scrip http://en.wikipedia.org/wiki/Company_scrip
gojomo 12y ago
What is your evidence that the entire "sector" was depressed? Hand-waving about "Billions and Billions" doesn't count. During the entire period of the "non-poaching" agreement, many other non-cartel bidders for tech talent were vigorously operating in the same market. If talent outside the cartel was underpriced, others would pay its full value. Also during this whole period, industry salaries soared, and the number of opportunities at smaller companies (non-cartel bidders) multiplied. Unless you spent time as a long-tenured employee at one of the specific cartel companies, their non-poaching agreements likely did not affect your compensation level. And, to the extent cartel employees realized they could make more in the (large and growing!) non-cartel world of startups and smaller firms, they could (and did!) leave quite often. If you've worked with ex-Apple, ex-Google, ex-Intel, ex-Adobe, etc people, your projects' success and resulting total compensation levels may actually have been higher because of the stinginess of the cartel.
- billyhoffman 12y ago
  If some of the biggest employers in the bay area artificially cap the salaries of their workers, of course it will effect how other companies price their openings. Three Hypothetical, but perfectly plausible conversations (no one would ever negotiate like this, but ignore that, these are inner motives/dialogs to some extent) Company: "And what were you thinking for starting salary?" Interviewer: "I'm at Apple now, I make X. I'd like 1.15X" Company: "Done! I was going to pay you 1.5X but whatever" or Interviewer: "My asking pricing is X" Company: "Well, I know DevOps people working at Google make .75X, so we will offer you 0.95X" or even more likely: Slightly drunk friend #1: "I really hate my job, and I'm only making X. Am I underpaid?" Slightly drunk friend who works at Adobe: "Nah man, I only make X if we hit our bonus numbers! At least its a stable job with benfits, unlike all these startups that flame out." Friend #1: "Yeah, I guess you're right."
  - gojomo 12y ago
    I see, you have no evidence for sweeping claims of "Billions and Billions". You only have some 'just-so' stories and intuitions. But in each of your cases, a person checking compensation at just a few non-cartel places would do just fine. So, if the cartel employees and their friends in your conversations stay slightly-drunk/stupid/lazy, they'll keep working at rates lower than are available to them. Meanwhile, anyone shopping around gets paid a competitive rate, unaffected by the non-poaching agreements. I can believe there's some localized harm there, especially for long-tenured people at the cartel companies, but any damage is self-limiting. It's not massive on an "entire greater Bay area technology job sector" basis. Also note, these cartel companies were also constantly hiring from non-cartel sources, and there was no coordinated "cap" or "ceiling" on such offers. They had to win such employees in unrestricted competition versus both cartel and non-cartel companies – and they often did! Since employees talk (as in your examples), even long-tenured in-cartel employees would then get info about fully competitive compensation offers, and up their expectations for the next compensation-review. So again, any damage from non-poaching collusion faces practical checks on its magnitude. If you're an Apple/Google/etc employee who wishes you'd been cross-recruited with a big compensation offer, you have a right to be angry. (But, you're still probably not that angry, given how well things have been going for top employees at those places in the relevant era!) But if you've been employed elsewhere, your anger is misplaced. The non-poaching agreements didn't hurt you... and maybe even helped for the reasons I gave above.
harryh 12y ago
What evidence do you have that "The entire greater Bay area technology job sector" experienced depressed salaries as a result of what these companies did?
ElComradio 12y ago
AFAIK the companies involved agreed to not solicit each other's employees. While somewhat shady, it's not on the same level as an agreement to cap wages. Basically the damages are covering the crime of not affirmatively using your recruiters to go after people. The "solution" sounds preposterous- You are forced to attempt to poach another company's employees, without regard to any other aspect of the business, such as maintaining good relationships with your suppliers or partners.
- billyhoffman 12y ago
  "the companies involved agreed to not solicit each other's employees. While somewhat shady, it's not on the same level as an agreement to cap wages." It was more than an agreement not to solicit each others employees, it was an agreement not to hire each others employees. [1]. "Alan, We’d strongly prefer that you not hire these guys. Steve" [2] These companies created an agreement which prevented people from getting paid their market rate. John Siracusa does an excellent job discussing this at length on ATP [3] [1]- http://pando.com/2014/03/22/revealed-apple-and-googles-wage-fixing-cartel-involved-dozens-more-companies-over-one-million-employees/ http://pando.com/2014/03/22/revealed-apple-and-googles-wage-... [2]- http://pando.com/2014/03/27/how-steve-jobs-forced-google-to-cancel-its-plan-to-open-a-paris-office/ http://pando.com/2014/03/27/how-steve-jobs-forced-google-to-... [3]- http://atp.fm/episodes/59-the-little-puck-that-could http://atp.fm/episodes/59-the-little-puck-that-could and http://atp.fm/episodes/76 http://atp.fm/episodes/76
- brandonmenc 12y ago
  The solution is not: "you're forced to poach" - the solution is: "you're not allowed to collude."
bradleyjg 12y ago
I agree that there were larger, diffuse consequences for a great many people, but the mass tort system isn't really designed to remedy that kind of thing. The most appropriate mechanism for that is government action. There was such an investigation, and it did find wrongdoing, but the ultimate response was so feeble as to be meaningless. The DOJ sued the tech companies under the Sherman Antitrust act which reads in part: Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. After filing suit, the government settled the case in exchange for a promise not to violate the law for five years. Given that they were already obligated to follow the law, and not just for five years, one wonders what the point was.
- sitkack 12y ago
  > but the mass tort system isn't really designed to remedy that kind of thing. I'd say prison could be a great remedy for that sort of thing.
  - pjungwir 12y ago
    I was very disappointed not to see prison sentences for executives and other fiduciaries in the 2008 financial scandals. Weren't those used in the 80s S&L crisis? I understand that large corporate penalties can hurt society or innocent employees, but we can still deter bad behavior if we hold individuals accountable. Of course the rich will always be more likely to evade justice, but I feel like 2008 was more blatant than usual and sent a strong message that if you're rich you can act with impunity.
    - anigbrowl 12y ago
      So am I, but look at the vitriolic 'class warfare' narrative that opponents of the administration have been carrying on for the last 6 years. Every time the government makes a bank pay out money to settle accusations of financial asset misrepresentation (eg some of the shenanigans around mortgage-backed securities), the Wall Street Journal and its ilk wax wroth about 'government shakedowns' and so forth. So imagine the response if the DoJ launched criminal prosecutions of big bank CEOs in addition to fraudsters like Bernie Madoff - there would be cries about a communist takeover and what-all else. It's also true that the regulatory environment was sufficiently lax, and the chain of responsibility sufficiently convoluted, that it would have been hard to make any such prosecutions stick. Financial crime is generally slow to come to trial anyway because it's so hard to prove intent beyond a reasonable doubt, and so hard to pin it on any individual in a sufficiently large organization. As well as (possibly) leading to political upheaval and (definitely) causing a major chilling effect on business activity in the middle of the worst financial crisis in almost everyone's living memory, it would have been ethically, legally, and strategically problematic to bring charges that would not be easily provable at trial. If the CEO of (imaginary) MegaBank had been put on trial and the case collapsed, it would have poised every other prosecution for 20 years. That's not rational, but at the national level prosecutions have a big political dimension, there's just no getting away from it. My read is that the administration opted to go the route of administrative penalties with the twin goals of maintaining relative stability in the financial industry and getting Dodd-Frank passed on congress to provide much stronger regulatory options for the longer term. It's not an emotionally satisfying strategy, but a pragmatic one taken in the interests of continuity. I would have preferred a top-to-bottom shakeout of the financial industry, and maybe a change in the economic and social order that would result, but the problem with revolutionary changes is that once begun it's hard to stop them turning. Look at the French revolution; half the instigators ended up on the guillotine themselves and 10 years after France had got rid of a king they ended up with an emperor.
nicolethenerd 12y ago
Technically, nobody was "effected". They were, however, "affected" http://grammar.yourdictionary.com/style-and-usage/affect-effect-grammar.html http://grammar.yourdictionary.com/style-and-usage/affect-eff... Also, http://www.gingersoftware.com/english-online/spelling-book/confusing-words/shear-sheer http://www.gingersoftware.com/english-online/spelling-book/c...
- Terr_ 12y ago
  Yeah, I was able to hold out for the first two or three times, but by #5....
deleted 12y ago
[deleted]

ElijahLynn 12y ago

Another great contribution to society by Steve Jobs.

billyhoffman 12y ago
I know this is kind of a throw away poke at Steve Jobs, but its very believable as well. In fact, the selfishness that Jobs displayed repeatedly in his life helps you understand how this whole thing happened. I can totally see Steve Jobs says "damn it, I'm trying to make cool stuff and these 2-3 other companies get stealing my guys. Stop doing that so we can go back to making awesome stuff!" But that's the problem and my broader point. These companies acted to reduce churn of top talent and possibly secondarily to save some cash. I can see this seeming like a good idea. But the broader ramifications of their actions are insane.
- sophacles 12y ago
  They could have equally reduced churn by offering better compensation packages... and letting the market forces do what market forces do. Particularly from such a libertarian, "the market solves everything" set of people. (not a position on libertarianism itself, just pointing out the irony in big name capitalists acting against the market).

frostmatthew 12y ago

> How many new technology companies did not get created because people's depressed salaries reduced how much they could save to bootstrap something new? I agree with everything else you're saying except this. Higher wages could also cause less people to consider founding a startup. True, higher pay would allow people to save more and thus making it financially easier - but it also would mean a higher opportunity cost [for the same risk], making it psychologically more difficult.

billyhoffman 12y ago
Good point. There also is the case that a lower salary might make the person more likely to try side products to supplement income. Perhaps my original thought here was a reach.
mfisher87 12y ago
We're talking about physical barriers to entry. Without the money, you can't start the business. If you have the finance, but with a higher opportunity cost, you are still able.

rayiner 12y ago

> "64,000" people were not effected. Those numbers are just the work forces of the companies involved in the lawsuit. But the class is defined as just the employees of these companies from 2005-09. This has two implications: 1) the proof issue is much easier--you don't have to get into a calculation of economic damages for the sector as a whole; 2) the settlement release theoretically doesn't preclude people who weren't employees of these companies from bringing a different lawsuit based on the indirect injury. Don't underestimate the significance of (1). You're talking about a battle of economic expert witnesses, where your burden will be to prove that the defendants' conduct actually suppressed salaries during a time period when engineering salaries were skyrocketing. Whether or not that theory of the case is true, I don't know if its winnable. Also, using 64,000 employees as the denominator is a bit misleading. Some people might have gotten a lot more money over the time period by taking an offer that was prohibited by a no-poaching agreement. But other members of the class may not have gotten those calls anyway, and so weren't harmed. EDIT: 'gojomo and 'harryh hit the nail on the head. The theory is certainly plausible, proving it is very ambitious.

billyhoffman 12y ago
I agree with everything you said, and it makes sense for a trial. But people shouldn't think the only people affected were those that had a strong case in court. This salary fixing scandal is black spot on how American companies treat workers. (It's not "hire Pinkertons to shoot strikers" bad [1] or "pay employees in our own private currency that only we accept" bad [2], but its pretty damn bad.) [1] http://en.wikipedia.org/wiki/Homestead_Strike http://en.wikipedia.org/wiki/Homestead_Strike [2] http://en.wikipedia.org/wiki/Company_scrip http://en.wikipedia.org/wiki/Company_scrip

gojomo 12y ago

What is your evidence that the entire "sector" was depressed? Hand-waving about "Billions and Billions" doesn't count. During the entire period of the "non-poaching" agreement, many other non-cartel bidders for tech talent were vigorously operating in the same market. If talent outside the cartel was underpriced, others would pay its full value. Also during this whole period, industry salaries soared, and the number of opportunities at smaller companies (non-cartel bidders) multiplied. Unless you spent time as a long-tenured employee at one of the specific cartel companies, their non-poaching agreements likely did not affect your compensation level. And, to the extent cartel employees realized they could make more in the (large and growing!) non-cartel world of startups and smaller firms, they could (and did!) leave quite often. If you've worked with ex-Apple, ex-Google, ex-Intel, ex-Adobe, etc people, your projects' success and resulting total compensation levels may actually have been higher because of the stinginess of the cartel.

billyhoffman 12y ago
If some of the biggest employers in the bay area artificially cap the salaries of their workers, of course it will effect how other companies price their openings. Three Hypothetical, but perfectly plausible conversations (no one would ever negotiate like this, but ignore that, these are inner motives/dialogs to some extent) Company: "And what were you thinking for starting salary?" Interviewer: "I'm at Apple now, I make X. I'd like 1.15X" Company: "Done! I was going to pay you 1.5X but whatever" or Interviewer: "My asking pricing is X" Company: "Well, I know DevOps people working at Google make .75X, so we will offer you 0.95X" or even more likely: Slightly drunk friend #1: "I really hate my job, and I'm only making X. Am I underpaid?" Slightly drunk friend who works at Adobe: "Nah man, I only make X if we hit our bonus numbers! At least its a stable job with benfits, unlike all these startups that flame out." Friend #1: "Yeah, I guess you're right."
- gojomo 12y ago
  I see, you have no evidence for sweeping claims of "Billions and Billions". You only have some 'just-so' stories and intuitions. But in each of your cases, a person checking compensation at just a few non-cartel places would do just fine. So, if the cartel employees and their friends in your conversations stay slightly-drunk/stupid/lazy, they'll keep working at rates lower than are available to them. Meanwhile, anyone shopping around gets paid a competitive rate, unaffected by the non-poaching agreements. I can believe there's some localized harm there, especially for long-tenured people at the cartel companies, but any damage is self-limiting. It's not massive on an "entire greater Bay area technology job sector" basis. Also note, these cartel companies were also constantly hiring from non-cartel sources, and there was no coordinated "cap" or "ceiling" on such offers. They had to win such employees in unrestricted competition versus both cartel and non-cartel companies – and they often did! Since employees talk (as in your examples), even long-tenured in-cartel employees would then get info about fully competitive compensation offers, and up their expectations for the next compensation-review. So again, any damage from non-poaching collusion faces practical checks on its magnitude. If you're an Apple/Google/etc employee who wishes you'd been cross-recruited with a big compensation offer, you have a right to be angry. (But, you're still probably not that angry, given how well things have been going for top employees at those places in the relevant era!) But if you've been employed elsewhere, your anger is misplaced. The non-poaching agreements didn't hurt you... and maybe even helped for the reasons I gave above.

harryh 12y ago

What evidence do you have that "The entire greater Bay area technology job sector" experienced depressed salaries as a result of what these companies did?

ElComradio 12y ago

AFAIK the companies involved agreed to not solicit each other's employees. While somewhat shady, it's not on the same level as an agreement to cap wages. Basically the damages are covering the crime of not affirmatively using your recruiters to go after people. The "solution" sounds preposterous- You are forced to attempt to poach another company's employees, without regard to any other aspect of the business, such as maintaining good relationships with your suppliers or partners.

billyhoffman 12y ago
"the companies involved agreed to not solicit each other's employees. While somewhat shady, it's not on the same level as an agreement to cap wages." It was more than an agreement not to solicit each others employees, it was an agreement not to hire each others employees. [1]. "Alan, We’d strongly prefer that you not hire these guys. Steve" [2] These companies created an agreement which prevented people from getting paid their market rate. John Siracusa does an excellent job discussing this at length on ATP [3] [1]- http://pando.com/2014/03/22/revealed-apple-and-googles-wage-fixing-cartel-involved-dozens-more-companies-over-one-million-employees/ http://pando.com/2014/03/22/revealed-apple-and-googles-wage-... [2]- http://pando.com/2014/03/27/how-steve-jobs-forced-google-to-cancel-its-plan-to-open-a-paris-office/ http://pando.com/2014/03/27/how-steve-jobs-forced-google-to-... [3]- http://atp.fm/episodes/59-the-little-puck-that-could http://atp.fm/episodes/59-the-little-puck-that-could and http://atp.fm/episodes/76 http://atp.fm/episodes/76
brandonmenc 12y ago
The solution is not: "you're forced to poach" - the solution is: "you're not allowed to collude."

bradleyjg 12y ago

I agree that there were larger, diffuse consequences for a great many people, but the mass tort system isn't really designed to remedy that kind of thing. The most appropriate mechanism for that is government action. There was such an investigation, and it did find wrongdoing, but the ultimate response was so feeble as to be meaningless. The DOJ sued the tech companies under the Sherman Antitrust act which reads in part: Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. After filing suit, the government settled the case in exchange for a promise not to violate the law for five years. Given that they were already obligated to follow the law, and not just for five years, one wonders what the point was.

sitkack 12y ago
> but the mass tort system isn't really designed to remedy that kind of thing. I'd say prison could be a great remedy for that sort of thing.
- pjungwir 12y ago
  I was very disappointed not to see prison sentences for executives and other fiduciaries in the 2008 financial scandals. Weren't those used in the 80s S&L crisis? I understand that large corporate penalties can hurt society or innocent employees, but we can still deter bad behavior if we hold individuals accountable. Of course the rich will always be more likely to evade justice, but I feel like 2008 was more blatant than usual and sent a strong message that if you're rich you can act with impunity.
  - anigbrowl 12y ago
    So am I, but look at the vitriolic 'class warfare' narrative that opponents of the administration have been carrying on for the last 6 years. Every time the government makes a bank pay out money to settle accusations of financial asset misrepresentation (eg some of the shenanigans around mortgage-backed securities), the Wall Street Journal and its ilk wax wroth about 'government shakedowns' and so forth. So imagine the response if the DoJ launched criminal prosecutions of big bank CEOs in addition to fraudsters like Bernie Madoff - there would be cries about a communist takeover and what-all else. It's also true that the regulatory environment was sufficiently lax, and the chain of responsibility sufficiently convoluted, that it would have been hard to make any such prosecutions stick. Financial crime is generally slow to come to trial anyway because it's so hard to prove intent beyond a reasonable doubt, and so hard to pin it on any individual in a sufficiently large organization. As well as (possibly) leading to political upheaval and (definitely) causing a major chilling effect on business activity in the middle of the worst financial crisis in almost everyone's living memory, it would have been ethically, legally, and strategically problematic to bring charges that would not be easily provable at trial. If the CEO of (imaginary) MegaBank had been put on trial and the case collapsed, it would have poised every other prosecution for 20 years. That's not rational, but at the national level prosecutions have a big political dimension, there's just no getting away from it. My read is that the administration opted to go the route of administrative penalties with the twin goals of maintaining relative stability in the financial industry and getting Dodd-Frank passed on congress to provide much stronger regulatory options for the longer term. It's not an emotionally satisfying strategy, but a pragmatic one taken in the interests of continuity. I would have preferred a top-to-bottom shakeout of the financial industry, and maybe a change in the economic and social order that would result, but the problem with revolutionary changes is that once begun it's hard to stop them turning. Look at the French revolution; half the instigators ended up on the guillotine themselves and 10 years after France had got rid of a king they ended up with an emperor.

nicolethenerd 12y ago

Technically, nobody was "effected". They were, however, "affected" http://grammar.yourdictionary.com/style-and-usage/affect-effect-grammar.html http://grammar.yourdictionary.com/style-and-usage/affect-eff... Also, http://www.gingersoftware.com/english-online/spelling-book/confusing-words/shear-sheer http://www.gingersoftware.com/english-online/spelling-book/c...

Terr_ 12y ago
Yeah, I was able to hold out for the first two or three times, but by #5....

deleted 12y ago

[deleted]