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.
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.
A someone who has just applied for an H1-B with a tech start-up, it is really not that simple. Modern countries need medium- to long-term visa programs for specialised foreign workers. Whether it is always used to for that purpose I questionable. But in many cases - including mine - the jobs are very well-payed, in no way exploitative and do add real value for the American people and economy.
Many aspects of the H1-B suck. The same is true for their European and Asian counterparts. Just eliminating non-immigration visas would not solve the problem in a highly-integrated world-wide economy - it would make things worse.
> 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.
Do you trust a government minion to competently assess either A) this highly specialized person's skillset, or B) the forthrightness of the applicant company's statements?
Sometimes an emperical "good enough" on the international scale is the best you're going to get. In the case of H1B visa program, from the host country's view, lowering the bar will increase the administrative overhead in a system where one could instead apply any increase in administrative capacity toward the already largely exluded applicant pool with high caliber credentials.
Former H1B person: yes, the lock-in is silly/awful/counterproductive etc. In fact, one of the reasons I went back to Berlin.
However, only one of the reasons. I did not necessarily want to stay forever, just like I didn't want to stay forever in London (no restrictions for an EU citizen).
Also, I just don't see the wage-depression, at least not in any of the cases I am aware of (and there were quite a few at the companies I was working for in the Bay Area). I remember one smarty-pants ranting about H1B wage-depression after an otherwise fun EE380 session. I challenged him to guess my salary. He was off by a factor of three.
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.
And not for lack of trying, IBM, Google, Microsoft, and many other tech giants have subsidiaries here in Brazil for example.
Yet, everytime you hear about a brazillian that achieved something great recently, was NOT inside Brazil.
I can tell you, my personal reasons why I don't even applied to MS, IBM, etc here in Brazil: You have all problems of working in a big corporation, yet the pay is still terrible.
But I DID applied for US MS for example, because although it obviously has the same problems as working in BR MS, the pay is much, much higher (inside MS itself the US pay is about 4 times the BR pay for a entry level position).
Thus the best talent from Brazil (or India, or China) don't stay in their countries, they end leaving their countries, even if to work in companies that do exist in their countries, seeking a better life.
Now, why MS US and MS BR has so drastic pay gap? Basically, because of the things that made the US a great place to create startups in first place: much less regulation in general, much less corruption, and better infrastructure, in Brazil the mininum costs of running a company, without counting the employee wages, is so high, that not much money is left to actually pay the employees, we call this here "Brazil Cost".
Some examples: Brazil is the country in the world that is most complicated to pay the taxes, as result is the country where companies use a largest portion of their money paying accountants and tax lawyers.
Brazil has second highest taxes of the world (first place is Sweden).
Yet Brazil security, roads, etc... suck, to the point that most big companies in Brazil are concentrated in a private-built city named AlphaVille, companies and rich people living in AlphaVille built with their own private money their streets, guard stations, walls, electricity lines, etc... and pay with their own private money for cops, schools for their children, firefighters, etc... And STILL pay all the taxes normally too, as you can expect, running a business there (or living there) is crazy expensive.
Yet running our business there, is a necessity, when you have people assaulting business in São Paulo and Rio using heavy military weapons (even Bazookas were witnessed), you have no choice but to run your business in a private ran fortress, and pay everything doubled (once in form of taxes, and once in form of private contracts that actually solve your problem).
Are you sure about that? I've read studies that say that the opportunity to move overseas is quite helpful in the case of doctors because it creates incentives to get medical training, and many of the people who receive that training do not move.
Obviously it's a complex topic, but why are you so sure?
Our small company wants to hire the best candidate who happens to be a foreign citizen -- and you think we should set up a branch in said foreign country (which we could never afford) instead of securing a visa?
Why is the competition "unfair"? If it's unfair because we don't offer "social programs such as free higher education", then the solution ought to be offering those programs, not hamstringing US companies.
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.
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.
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.
"Law school can require as much as $200k and 3 years of opportunity cost on top of whatever was spent on undergrad."
You seem to be missing the economic realities at play. The cost of law school does not matter. All that matters is the supply and demand for lawyers and programmers. And if you've been keeping your ear to the ground, you may be aware that there is a significant oversupply of law grads nowadays.
There is no economic law that says that lawyers should make more money than programmers because they choose to be ripped off in pursuit of their training. If in the future, the salary of the average lawyer were to drop below that of the average programmer, Adam Smith would not bat an eye.
If law school is so expensive, it is harder to become a lawyer. If less people become lawyers, the supply decreases (resulting in the demand for the shortage of lawyers to be greater).
"There is no economic law that says that lawyers should make more money than programmers because they choose to be ripped off in pursuit of their training."
You don't NEED a degree to do programing. Arguably a computer science degree is standard but even then, you don't need 7 years of schooling. In order to be a lawyer, you need to complete law school.
At the end of the day, it's fair for a lawyer to charge more. Why? Because someone is willing to pay the premium.
Completely flawed logic, but not uncommon from an employee standpoint. Pay should be commensurate to value an employee provides to a company. This is why CEOs make 100x+ entry level positions.
From the company's perspective, whatever an individual put into their experience is almost completely inconsequential if they are doing their job. In a healthy, functional market, pay isn't about "fairness", it's about bottom-line results, and programmers and engineers make the products and services these companies use to generate revenue which in turn creates demand and subsequently the available funds for legal counsel!
>Pay should be commensurate to value an employee provides to a company.
I don't think that's how capitalism works. Your pay doesn't scale with your value, otherwise teachers and firefighters would be making bank. It's completely guided by supply and demand.
EDIT:
Let's consider that "supply and demand" has artificially increased the price of programmers above their value. It's now a losing proposition for a company to continue to employ a programmer as the company is losing money, so the demand goes down and with it the price.
Conversely let's consider that the price of a programmer is artificially lower than his value. Any new company can come along and pay a bit more (but still less than actual value, for now!) and attract the best programming talent. Other companies must keep up in order to keep the talent, so the price returns to the actual value to the company.
The gap between what people are willing to pay vs. what people are willing to sell for is often substantial. People spend a lot of time fighting over the distribution of the value in that gap between consumers and producers (see, e.g., price discrimination).
Is "in an efficient market" the economic equivalent of the programmers' "with a sufficiently smart compiler"? It seems to be used in the same manner in arguments.
You need the concept of perfect market (or other models) to reason about things. "In a perfect market, x happens. y is not in line with the perfect market, so eliminating y (c)/(sh)ould bring us closer to x".
Replace x with "fair salaries" and "y" with "Tech companies making non-poaching agreements"
No way. A CEO is held responsible for the decisions of EVERYONE under him/her by the board. A lousy programmer will cost the company a lot less than a lousy CEO.
The CEO is essentially the face of the company when things happen (good or bad) and has huge responsibilities. Managing a company is easy from the armchair.
That's a better way to see it. It's hard to see good management and its effects, but good management really does make a major difference. But it is so hard to see, that people sometimes don't even realize they need it. But to see the ability management has to change the outcome, look at bad management: they can totally destroy a company, no matter how good the engineers are. That people can see.
A CEO of a big company like Apple or Microsoft delivers way more than 100x value of entry level eployees. A 10% improvement at the CEO position would be hugely valuable.
In theory at least, wage should reflect responsibility and liability within the company. If you go over those of the CEO, you see why they make so much more money. They should be held accountable for the wealth of the entire company.
As far as lawyers are concerned, their wages just reflect the fact that they (should) have been trained as A-list negotiators, and it is common practice for lawyers to have a fee based on a percentage of the deal they negotiated.
There is a corollary for programmers for the above: start-ups. Though not trained negotiators, skill and work ethic can get you far enough. And it is common practice to receive a percentage of the reward.
Technically, no. However, there _are_ requirements before you can take the bar exam. Unlike other states, California doesn't require that you attended an ABA-approved law school. However, instead you have to do 'Four years of study, with a minimum of 864 hours of preparation and study per year, at an unaccredited distance-learning or correspondence law school registered with the Committee;'.
So, you _do_ need to 'attend' law school, even if it's over the internet. (Unless you "study in a law office or judge’s chambers", which I guess is a type of apprenticeship.)
Actually, I wonder...I'm pretty sure the number of people who go the apprenticeship route is in the single digits (though feel free to prove me wrong). It could be a good way to set oneself apart from the pack when applying for a job. Goodness knows its a shitty job market for lawyers, and if you don't have a top tier law degree, strategically it could be a way to set yourself apart from the pack (especially at the level where you're competing against sorta middle of the road-ish ABA certified schools-like Santa Clara and USF).
The number of people who go the apprenticeship route in CA is very miniscule. There are lots of law schools that are certified by the CA Bar and not the ABA, but you'd be a fool to go to one, unless you like being an unemployable lawyer with 200K+ in debt.
> law school is so expensive, it is harder to become a lawyer. If less people become lawyers, the supply decreases (resulting in the demand for the shortage of lawyers to be greater).
Despite the expense of law school, there are about 25-35k jobs per year for 40-45k graduates per year. And maybe 5k per year of those pay the kind of salaries people think lawyers make. What keeps supply limited in law is that the growth of supply is gated by the amount of legal work in the economy. Law is unlike engineering in that nobody wants to hire fresh grads. They want the seasoned veterans who have been to trials or handled a big deal. Preferably a bunch of them. There is only so much of that work to go around, which bottlenecks the supply pipeline in the stage between fresh graduate to employable lawyer.
The moral of the story is that economic systems are more complicated than simple neoclassical tropes admit.
Actually, it does, and Adam Smith pointed this out over 200 years ago (he also noted the collusion that was typical among employers to suppress the wages of labor), noting the expense, trust, and risk assumed by would-be lawyers in determining their pay:
Education in the ingenious arts, and in the liberal professions, is still more tedious and expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and physicians, ought to be much more liberal; and it is so accordingly.... We trust our health to the physician, our fortune, and sometimes our life and reputation, to the lawyer and attorney.... Fifthly, the wages of labour in different employments vary according to the probability or improbability of success in them. The probability that any particular person shall ever be qualified for the employments to which he is educated, is very different in different occupations. In the greatest part of mechanic trades success is almost certain; but very uncertain in the liberal professions. Put your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of shoes; but send him to study the law, it as at least twenty to one if he ever makes such proficiency as will enable him to live by the business.
I think you have a bit of a misunderstanding as to what this quote is saying. It does not support your argument, and actually supports mine (which would be the same as Adam Smith's in this case).
SUPPLY SIDE: "send him to study [x], it as at least twenty to one if he ever makes such proficiency as will enable him to live by the business." He is making is quite clear that the supply of qualified [x] is low (and giving a reason as to why it is low, but as Adam Smith himself would surely admit, the laws of supply and demand do not [directly] care about the 'why').
DEMAND SIDE: There is no explicit mention of the demand for these services, but as educated readers, we are able to deduce that during the time of Adam Smith, the demand for certain [x] heavily outweighed the supply.
*[x] blocked out because its specific value is not germane to the underlying logic of the argument.
I also think you have a misunderstanding. Adam Smith is clearly explaining the reason for the more liberal wages from the perspective of the one who is to commence the study, and his likelihood of succeeding. Smith is pointing to the fact that liberal professions are inherently more difficult to master, and often provide a value that is more rare (and therefore worth more money).
You cannot turn this quote into a formula, because it's a description of how wages ought to be, and the reasons therefore. And it is completely irrelevant to discussion, as I'm sure if Smith were alive today, he would count the art of programming among the liberal professions. There is more to making a useful application than to be able to think mechanically. Because programmers create and shoemakers copy.
I wasn't addressing lawers v. programmers, but just the relationship between the cost of education and the wages expected from undertaking it.
Of course, today you could point to a plethora of professions for which a long and expensive education is required, but for which compensation lags, often painfully. Though in some cases job security may be higher.
To bolster your point and weaken this—"newly minted lawyers were still making several times as much as good programmers"—see also Paul Campos's Don't Go To Law School (Unless): A Law Professor's Inside Guide to Maximizing Opportunity and Minimizing Risk and Steven Harper's The Lawyer Bubble: A Profession in Crisis.
It is true that a tiny number of lawyers make a lot of money straight out of school, but as noted their numbers are small and their hours (and often lives) awful.
A tiny number of everything makes insanely lots of money: Developers, Lawyers, Chefs, Engineers, etc. Speaking for that tiny number, does Google, Facebook, Microsoft and Apple's top management (who are or were developers at some point) qualify as developers? If yes, then there's no comparison I guess.
That said is more than obvious that in a digital world the future belongs to developers, because the demand for them will go up, it's inevitable.
Mid-tier law schools are definitely not pumping out lawyers who make $150k as first year associates. Even coming out of a top-20 school, you have to be ~top 20% to be competitive.
That's a fair point, but that doesn't really lessen the massive theft by the top tech companies from essentially all software engineers. Law was just a point of comparison that struck me as puzzling at the time.
That might be a fair point but a bad argument. Market salaries are notional values which stabilize at an equilibrium where companies who pay and engineers both expectations are managed. This comes from demand and supply.
High cost of law school can only impact the supply side of lawyers. One need to understand trends in both demand and supply of these professions to get the larger picture.
Law school is competitive and software is not, will not be a valid argument that can justify higher salaries of lawyers.
Did this collusion affect the wages of people with PhD or MS degrees?
Also, the opportunity cost for law students is different than it is for engineers, since you can attend law school with a degree in art history.
When I was in grad school in engineering at UC Berkeley, I saw the average salary for MS and PhD level graduates relative to law and MBA programs in various surveys. It was pretty remarkable - not even a PhD in CS matched the average salary for a JD or MBA out of Boalt and Haas, respectivel. This was just during the first dot com boom, when silicon valley companies were lobbying congress for an increase in visas due to a severe shortage of UC citizens pursuing these degrees.
I always wondered why this question so rarely came up during the debates - why do you think you should be able to hire someone who majored in physics and went to 6 years of a PhD program in EE for 2/3 of what people are paying top law grads? I remember one part of a floor debate with Feinstein and a biotech CEO - the CEO was trying to get someone with a PhD in Biology with a focus on genetics, unix ability, and programming skill - and couldn't find one in spite of offering 90K, stock options, and a "lease on a new BMW" (which makes it sound like they're giving a BMW, but really they're just letting the worker drive it, a perk probably worth about 6k a year). Feinstein replied "what was the name of your company again?" and everyone laughed. Feinstein didn't say "why do you think you can hire someone like this for 2/3 the starting salary of an art history major with a law degree that can be completed in half the time with 1/50th the attrition rate?"
I get the feeling the gap isn't as pronounced as it used ot be, but it is still a good question for framing this debate.
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.
Susman, Wachtell, Boies (and several other litigation boutiques) all have had bonuses that exceeded 100% of base salary (160k). In order to get those bonuses, however, you're probably looking at at least 2400 billable hours a year.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
I think we should stop using the word "poach" when describing these job changes. Use of this word suggests that we (technology workers) are the property of our employer, and that other employers are "stealing" that property away. I don't consider myself akin to a cow owned by my previous employer, stolen by my current one. I hope you don't either. My relationship with my employer is one of equals, freely and mutually entered into, and does not imply any ownership of my person.
Hate to be the PC police, but I personally feel offended by the use of this word, and I'm surprised that more people aren't. I'd like to propose using a more neutral phrase, like "hire away" to describe this practice, instead of "poach". I hope, upon reflection about their own role in the employer-employee relationship, others might come to this conclusion and stop using this word as well.
As an H1-B visa holder in a right to work state, my presence here is dictated by either the benevolence of my employer or by my own duplicitousness when I carefully conceal my interviews with other firms.
I think you mean "at-will employment"[1]. "right to work"[2] states limit the ability of union shops to exclude non-union workers. There really needs to be better terminology because people constantly confuse the two.
They're both propaganda labels anyway. If the words had more of a direct relationship to what they were describing, they could never be passed.
People do want the right to work, and also want to have employment at will. They are generally patriots, wish communication was more decent, and would love to be allowed to trade freely.
I don't know. I think popular opinion is against having closed shops, though perhaps not uniformly.
And at first blush, people might react negatively to at-will employment states, but the devil is in the details on proposals to replace at-will employment.
I think you are being the PC police. There is a difference.
1) Google employee applies to Facebook on their own.
2) Facebook employee tells a Facebook recruiter, who the best Google engineers are based on his experience at Google.
3) Facebook hires a popular and charismatic Google manager, and their first assignment is to bring over the best engineers in the group.
What terms do you use to describe these situations? I am happy to adopt a more PC term, but there is a difference between being "hired" and being "poached". When you are hired, you do a shit load of interviews, when you are poached, you get a bunch more money and don't have to do a bunch of interviews.
The distinction you're trying to make is not real, as these no-poaching aggrements are many times also about rejecting candidates that apply out of their own will. Sometimes this involves notifying their employer too.
Salaries in other industries have been dropping due to market forces - supply bigger than demand, etc... but the free market cuts both ways, as can be seen in the software industry and no-poaching aggreements should be illegal.
"Poaching" is offensive because it suggests that the employees are chattel and powerless to resist another company's offer.
The irony is that while "poaching" traditionally referred to illegal activities, the opposite is true in the business world: preventing the "poaching" of employees is illegal.
>What terms do you use to describe these situations?
I agree and disagree. I agree that there's something out of kilter here: Items 2 and 3 are possible breaches of the employee's non disclosure agreement with Google. And "poaching" is the widely used term for this kind of activity.
On the other hand I see nothing fundamentally wrong with getting a job and a salary bump without an interview, based on a personal recommendation, if it's information that can be freely disclosed. I got my first job out of school with only a cursory interview.
Never considered that connotation, but a good point.
Personally, I take much bigger offense at the word "resources", because it is very dehumanizing. "FTE" is another term I'm not a fan of, because it's often used with fractional numbers like "1.5 FTE", as if we can chop a person in half.
>"FTE" is another term I'm not a fan of, because it's often used with fractional numbers like "1.5 FTE", as if we can chop a person in half.
Huh. See, I actually think that employee quality of life would be much better, at least on the high end, if employers really thought that two half-time folks were worth one full-time, and you could work half-time for half-pay. I dono about you, but I can live well on half what the market would pay me. Yeah, I like having more money, but at some point? half the money for half the time starts looking pretty good, especially with marginal tax rates being what they are.
In my experience, if you want to go part-time at a high-paying job you can, but it is quite difficult. You have to prove yourself to be difficult to replace, then use the leverage that would normally get you a large raise or a promotion, and spend that leverage on going part-time. You usually also, in my experience, lose company benefits.
This is getting common in Denmark, I think due to two reasons:
1. It's very common for students to work 1 or 2 days/wk while in university, so companies (esp. tech companies) are already set up for it. This is because the way university funding is structured students have an incentive to work ~5-15 hrs/wk, but cannot work more than 15. Some stick with the same arrangement even after they graduate, working 15 hrs/wk to fund a startup, or game company, or whatever.
2. Since benefits (healthcare/childcare/etc.) are provided directly by the state, not tied to your employment, part-time vs. full-time doesn't matter from that perspective.
> Yeah, I like having more money, but at some point? half the money for half the time starts looking pretty good, especially with marginal tax rates being what they are.
Not only that there's nothing to stop you spending that newly-freed time on your own choice of work, assuming you have a sensible contract with your employer. 20 hours/week is a bit too much for me to fill without some direction!
That's just petty semantics - people use those words all the time even about themselves, in reference to the work provided by the person, not the person him/herself.
The word has not evolved past the negative connotations. Poach implies that someone is being wronged, but you being offered a higher salary for your skills is not wrong.
Everything you said is true and yet does not imply the parent's conclusion. You're making the point that poaching someone is not unethical despite the word's tone, while the parent is claiming that using the word "poach" makes someone sound like property. You're conflating those two claims.
I've always thought "poaching" referred to actions of the potential employer. It doesn't really say anything to me about the employee. That aside, the connotation depends on whether your the poacher or the one being preyed upon.
A poacher (in the employer sense) wouldn't really consider their actions evil - just necessary to get the best employees.
The companies being preyed upon would obviously view the poacher as, at best, a bounder and a cad of the lowest kind.
I can understand moderating terminology when we're referring to humans (or not, wild game poachers are evil people) but this term is being used in reference to corporations, which need not be spared harsh terminology to preserve a sense of well-being.
Despite the best efforts of lawyers everywhere, I believe that a corporation, while composed of people, is just a thing, akin to a table or a vase, though maybe not as corporeal.
The worst thing about this oligopoly/cartel is that during the period they were refusing to poach, they accrued billions cash reserves while spending only a little on R&D (which I assume is mostly engineering salaries).
Even after the class action lawsuit is settled, it's likely the penalty won't be anywhere near the amount of profit that was illegally captured.
Furthermore, think about what these companies would have chosen to work on had engineers been more expensive. Would we have seen more useful products coming out of the valley if staff allocations had worked out differently?
When people are cheap, throwing them into doomed ventures like Google Buzz or Apple's awful Samba clone isn't nearly so devastating to whatever middle manager chain dreamed them up.
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.
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.
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."
I can understand this stance, but I'd point out the section that makes the issue cross the line of "appropriate collusion" (god that's a terrible phrase) for me, that being the "We do not hire from these people even if approached in the normal application process" groupings
Focusing recruiting, sure. But pre-filtering on the basis of factors "not relevant" to the person performing the job starts to get into a very grey territory in terms of discrimination. (I realize on the surface this seems silly since where you are working is totally relevant to a new job, but not in the context in which it was being utilized.) I really don't intend to draw a strawman with this, but that I see a big difference between their limiting their effort, and their prohibiting your effort.
I find it interesting that had they framed the 'do not hire' rules under the concept of avoiding lawsuits due to trade secrets, then there would be zero 'evil' in the whole thing (Not that I think it was evil in any case).
On top of that, unless I missed something, the documents I've read excluded engineers, the ones getting their jimmies ruffled, from the 'do not hire' list and simply had them on a 'no cold call' list. It was management and sales that were under some 'do not hire' list, right?
In this whole thing, the only part that I find morally/legally suspect is the agreement to not hire certain categories of employees from certain companies. Everything else is just a bunch of hand waving from highly paid people that want to be paid even more. And even that, had it been worded slightly different, would be arguably legal.
And that's exactly what I'm getting at. Once you establish that there has been a breach of law, you _have_ to take the context/wording into account, which is highly "slimy" on its own merit, as the grandparent post puts it, and turns what might otherwise be a "don't word your hiring practices in such a way or collude them between companies" reprimand into a "you're clearly doing really underhanded things, and are even _self effacing_ about this" (citing the "let's not put on paper something we could get sued over" memos)
I (as an engineer) have my "jimmies rustled" because this sets a really worrying precedent for the behaviors of these companies I do/might work for, and is frankly the sort of behavior that makes me have implicitly low trust for people with this sort of power, which is an unfortunate state of things. (I'd really like to be able to trust people, I promise...)
> 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.
I know it isn't a popular view, but I see nothing morally wrong with two companies agreeing not to hire each other's employees. I see no rights being violated. Apple employees have no right to be hired by Google, and vice versa - therefore Google and Apple not hiring the other company's workers does not constitute a violations of rights.
Nor do I think it violates any free market ideas, at least not mine. What Google and Apple essentially are doing is disadvantaging themselves compared to their competitors. Any company that does not enter into a no-poach agreement is at a competitive advantage compared to all the companies who do. Let's say Samsung is not in this agreement, the result is that Samsung can hire both Google and Apple employees, while neither Apple nor Google have this privilege. The talent pool for Samsung would be greater than that of both Google and Apple, and it will be at a better position to hire the people with the qualifications they need.
Now, if Steve Jobs start making threatening calls to Samsung's CEOs, then we would have something that would constitute criminal activity. That is not acceptable. Steve Jobs cold-calling Brin/Page/Schmidt (can't remember who it was), and telling them in an agitated manner not to hire his employees is also on the verge of being criminal, at least if threats were involved. But my impression is that Jobs knew at least Schmidt fairly well privately, which makes it another matter than cold-calling some CEO at some company you've never heard of, and shouting at them not to hire your employees.
>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.
"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.
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.
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.
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.
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).
"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."
You could raise salary of your existing engineers to match the market. "Poaching" is possible only because finding job elsewhere is often only way how to get raise, no matter how much they learned since they started working with you.
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.
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.
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.
I'm not sure that the oligopoly really captured that much money. 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.
I don't mind a no-cold-call/no-active-solicitation agreement between companies. (That is, even if it is illegal, I don't think it should be illegal.)
I especially don't mind it if, as the great-grandparent suggests, the existence of other non-cartel competitors meant it had no effect on salaries.
Even if it did have indirect effects on salary levels, such conventions might also plausibly help prevent certain kinds of ruinous/negative-sum-for-all competition, that rewards a few rapid job-switchers, but at the expense of the industry, region, or majority of employees.
I would mind a "don't-hire-if-they-apply" agreement. That'd be an abusive oligopsony conspiracy in restraint of employees' ability to seek out new arrangements.
That is incorrect. This article specifically mentions engineers on the Safari team.
Admittedly more tenuous, but other emails mention HR staffers being fired for cause due to contacting employees from another firm in the cartel. This would send a fairly extreme message to other recruiters about where to direct efforts.
In my own experience, I never heard from Google while at Apple. 6 months after moving into finance, three recruiters from Google contacted me independently of each other. Ironically, the only reason I went into finance at the time was because I needed to move to NYC and Google wouldn't speak to me.
And what happens next is precisely what is supposed to happen when companies don’t collude to defraud their employees of fair-market wages: Google coughed up more money to improve its retention.
I'm not so sure that they're clueless. Even if they lose the lawsuit and pay whatever fines they're slapped with, they might still come out on top, with all the revenues they squeezed out of their workforce during the collusion.
When you're an executive, you have many problems. It's pretty common to deal with the immediate one and create a whole host of other ones. One could argue that that's how it should be, because otherwise you're irresponsibly avoiding what you should be doing.
Here's what's saddest to me about this. There isn't really a labor shortage. These companies colluded for years on salary and poaching to make it possible to selectively hire from choice schools and people with a certain "pedigree" -- which artificially limited the pool of people they felt were "acceptable"...which drove up the salary of people from this pool which of course caused them to want to collude to keep wages down. This is why discriminatory hiring practices are bad for everybody.
Now years later Google, using the power of massive data, has figured out that it didn't really matter all that much that they were hiring from this artificially limited pool. Which means it didn't matter all that much to start with for any of these companies.
If they hadn't colluded on pay and poaching, but stayed selective, they would have been eventually forced to either reach outside this selective pool and end the "shortage" or suck up the higher wages.
Basically the market would have resolved the issue of higher wages for them.
What was that motto? Don't be... ending? Don't be evasive? ... Don't be Evan? No, sorry, it's gone. Can't have been important anyway, or someone would have remembered it.
I think it was "Let's choose three words that people will beat us over the head with until the end of time every time we so much as throw a gum wrapper on the ground"
I don't care if the company's slogan is "HAIL SATAN, EVIL ROCKS AND CUTE ANIMALS SUCK" -- if they're doing something illegal, they deserve to be beaten over the head.
Well, I believe this sort of agreement violates the law and workers' rights. Perhaps people do expect too much of them because of that slogan, but we can condemn any company for illegal, anti-competitive behavior.
Of course Facebook refused! They were hiring many more employees than Google was as a percentage of the starting employee base because of the insane growth they were undergoing. They were building a business, they had to keep poaching.
I don't think Facebook should get much credit for not participating, when they couldn't have.
Also, from a more game theoretical approach, they were a free rider on the collusion - they could have outed the collusion if they were that benevolent, since they clearly knew what was happening. Why didn't they publicize the blatantly wrong agreements at the time?
The fact that it was in Facebook's interest to do the right thing doesn't change the fact that when it came to it, they did the right thing and Google, for all their "don't be evil" talk, did the wrong thing. That's what really matters in the end.
And I don't particularly like having to say this, because I've been a Google fan ever since I switched to their search engine from AltaVista, whereas I think the world would be a better place if Facebook shut down their servers and deleted their database tomorrow. But yes, damn it, Facebook does deserve credit here.
They would deserve credit if they acted against their best interests by making it known what was going on at the time, but they knew they were benefiting from lower than otherwise salaries due to the collusion.
It’s worth noting that Facebook was hotter than the sun back in 2008, so for it to continue to recruit from other firms could could have been a reflection of its market position; if you are doing the poaching, why would you disarm?
Facebook was much smaller then, and likely had a lot more to gain from poaching than they had to lose.
Sheryl Sandberg only spoke for herself. She did not mention her knowledge of what other people in Facebook did. She only said that she, personally, didn't agree to the agreement on behalf of the company. She did not say that Facebook didn't have an agreement, only that she did not ever agree to one.
This is an important fact when looking at the evidence. She is only going to say enough of what she needs to say in terms of the lawsuit. The burden of proof of the law suit has to prove that Facebook had one - she could only speak about her own involvement. There was nothing about the other people at the top of the company - and in Law - nothing equals nothing.
Abstract away from the people. At the time, it was simply not in Facebooks best interest to enter into such an agreement - at their ridiculous growth, they got lots of money and needed to put it into top talent, which means they need to aggressively recruit. If you then enter into an agreement not to recruit from many top companies in the valley - that hurts your chances.
It's not that Facebook is the only ethical company in this, it is just that at the time there was no upside for them in it.
To be fair, Sandberg saying "we didn't do this" about an illegal thing doesn't necessarily mean that they didn't do this. Also, why would a company much smaller than the others agree to this?
Losing a talented employee can hurt regardless of the size of the company that snaps them up. A larger company will often have more resources with which to compete in the job market. A smaller company might (illegally) join such an agreement for the same reason that a weaker nation might sign a defensive pact with a stronger one.
Right, but as a Googler who went to FB, movement was much more common one way than the other. Also, I can say for a fact that Facebook recruiters were using Google org charts to reach out to people, so that's probably why they didn't agree to this, not because they're super awesome nice people.
In late 2008, Facebook seemed to ramping up hiring (and recruiting aggressively, with good reason, from Google). Any "truce" would have been severely one-sided for Facebook.
I'm sure they weren't worried about bleeding employees to Google if they said no, especially when you remember $GOOG was near a 3-year low and FB growth was exploding..
The most offensive thing about these stories is that those same people who conspire to drive down employee salaries then go to their executive compensation committees where they conspire to drive up executive salaries.
I remember my friend At Google telling me that he just got a big raise and that the raises were happening across the company. I wondered what cause googled to do this, but quickly assumed it was because Facebook was sucking talent away from google. At the time googlers were paid less than other companies too.
Facebook might look good in this instance but remember they were growing really fast at this time so it would have seriously hurt them to agree to any hiring pacts.
It's not really like they had a choice -- they needed to have access to large pools of existing work forces, and agreeing to no-poaching would prevent that.
I'm no fan of Facebook, but in the absence of evidence that they acted tactically, it would seem fair to give them credit for understanding that participating in a cartel is both stupid and unethical.
I would err on the side of caution and look at their previous behaviour as a predictor of future behaviour, which leads me to it being more from the side of necessity than anything ethics wise. You know the story of how Facebook was started yes?
Yeah, it was merely because they were on the sink side of a serious flow. If it was in the other direction they, being a corporation, could easily have been all over an agreement like that.
Was Apple under Jobs the most explicit threat and perhaps that was likely more intimidating for Google than Facebook? I remember reading Jobs threatening some tit-for-tat?
This is pretty common in startups: it's considered bad form to poach employees from companies that have common investors, and board members of those companies.
Sometimes, however, recruiters may not necessarily know and reach out to candidates and violate this unwritten rule.
Also depending on the case, boardmembers/investors may look the other way.
Good question. Think of it as a "gentlepersons" agreement not to actively poach someone from another startup with common investors. Similar to how investors generally don't invest in competitors to their portfolio companies (but it does happen-- See KPCB investing in both INRIX and Waze).
It was more of a guideline, rather than a hard fast rule.
This agreement didn't prevent people from recruiting friends, or from people actively looking to join another company.
Also, if the person is/was unhappy at one startup, the investors would prefer they join another portfolio company rather than not.
>The pervasive attempt by large tech companies to suppress wages by diminishing their employees’ rights to choose where they work is not merely selfish in the extreme, but is counter to the very market principles that made these companies so successful to begin with.
The "free market" system is just an illusion. When you are on the side of those with the lowest power (e.g. the workforce), the system does not work.
So much about the notion, that the "free market" system will correct itself.
Platforms are getting a little bit like mini kingdoms these days, feudal in nature, from the castles of the Altos.
5-10 years before we have a moat around a campus, a technological one though that blocks all non-essential communication while you are Under the Dome, then, apartments, pretty soon "bring out your dead" (https://www.youtube.com/watch?v=grbSQ6O6kbs).
There's a flip side to this no poaching agreement, evidenced by Facebook's position:
Is there a benefit to this agreement depressing wages in that, for startups, obtaining competent developers was cheaper than it would have been otherwise?
How did people come to the conclusion that these companies had the agreement to reduce wages?
It seems like they had this agreement - only because they hated their employees being poached on.
It's not price fixing.
It's self preservation.
Sure it had a side effect of keeping wages low - but that was not their goal. None of them are short on money.
I'm not saying what they did was right - but lets not frame it in a context that makes it look like they did this to not let employees have more money.
When in reality - they did it to stop others from stealing their employees.
You can't "steal" employees. They're people, not property. They have agency. These agreements exist solely to limit the opportunities of the people who work for these companies. At the bare minimum they should have been public, so people who decided to take a job at one of the companies knew they'd be restricted in their ability to find work elsewhere.
You say 'reducing wages' as though it's a side effect, but in reality it and preventing poaching are one and the same. If companies wanted to keep their emploeyees from being poached, they could pay them more and offer them better conditions. They could have conversations with employees about what it would take to keep them with the company. By having anti-poaching agreements, they avoid having to do that.
Email from Schmidt asking his people at Google to stop poaching: "Google is the talk of the valley because we are driving up salaries across the board."
TBH that's surprisingly low. I know engineers making this in Phoenix at mid-size companies and even more in specific industries like financials. Cost of living is much lower than many of Google's offices here. These folks are good engineers, but probably couldn't pass the kernel/syscall level questions people have shared from Google SRE interviews.
The whole culture of those colluding companies seems pretty feudal - "you should feel honored to be a member in our court"
I think it's exactly that - there is a lot of real or manufactured kudos in working for the Big G. Geeks wanted to work for them. They approached Google. Google didn't have to try.
That, and it's a fun exciting place for young people, the bikes, free food etc.
Half is taxes and the other half of that is rent for a 1 room apartment. NYC ain't cheap. I have no idea why there are software engineering offices in this city.
Tell me about it. Front office technology at one of the larger banks here in NYC -- the only reason we still have jobs is because the desk needs someone in technology to yell at when things go wrong.
Your taxes and living observation gels pretty well with my ongoing experience in the city :(
Yet another reason for every semi-talented programmer to become a consultant. They rob you of less money that way.
I'm certainly going to write to my MP about this. I think you should too. In fact I think every programmer out there should be involved in bringing a class action case against them.
"You can’t just free market part of the time. Good on Facebook for not being party to the shenanigans."
I'm always fascinated by what people don't understand about free markets. The author appears to think "free market" means lots of government enforced market controls (which would be an obvious contradiction in terms).
In an actual free market, it's not illegal to collude to suppress wages, just like it's not illegal for employees to form unions, leave for other better jobs, or start their own companies to compete and pay superior wages to steal talent.
In intentionally overly simplified terms, "free market" means a lack of, or severe limitation of, government controls. How is it possible the author doesn't know that?
Because you are (your words) using 'intentionally over-simplified terms.' A free market is not simply one without government controls, it's one without government controls or other de facto authority, such as price-setting monopolies.
Excessive government regulation means a less free market. Similarly, excessive monopoly control or cartel-like behaviour means a less free market. These are similar forces; the market loses freedom because one group has excessive control of it.
So, paradoxically, government regulation can result in a freer market - it's more complex than you are claiming.
I disagree. Monopolies can only exist in free markets when force is applied, eg by a corporation hiring thugs or militia to restrain the free market, and the government fails to stop that use of force.
The only way a corporation can acquire de facto authority in a free market is with violence (in which case they become a competitor with the government as it regards rule of law). There is no other way they can literally hold back competitors.
Good luck starting a union if all the union organizers are fired as soon as management finds out they're unionizing. Good luck starting new companies without any access to capital. Good luck finding a new job in a labor market like today's.
(If you want to see how easy it is to "start a union," there are plenty of active campaigns by unions to unionize various companies: Starbucks and Jimmy Johns are the ones that come most quickly to mind. The people running those campaigns would appreciate your help, and you'd learn a valuable lesson about labor politics.)
Good luck starting new companies? Why yes indeed in fact. I'm very well versed on the history of the free market in America for example, circa 19th and early 20th century. There was no problem in starting companies - in fact it was a boom time for entrepreneurialism - despite the extremely low level of regulation.
If there was a market opportunity to make money, capital was available. For every juggernaut there were numerous others that wanted to chop that juggernaut down to size. JP Morgan, Rockefeller, Carnegie, they all had countless large enemies willing to finance competitors.
Why should it be easy in a free market to start a union inside of a company? Free markets don't guarantee you have a right to a job or a right to start a union at a company. In a case where the employees don't own the company, assuming they're strictly labor, they agree to work there and get paid for it, or they can quit. That's a free market for labor. You also don't have to work at a company to attempt to organize its labor in a free market.
(also I should note, my intentions aren't to have a debate on the pros and cons of free market economics, but rather to describe what a free market for labor actually is)
Could this have more to do with the fact that PHP/Javascript is the primary language used at Facebook whereas it is pretty much language-spaghetti at Google? Perhaps Zuckerberg figured that his technical culture didn't leave much for Google to poach yet he wanted to soak up some talent from the likes of Google. I kid, I kid!
You all keep trashing companies for no-poaching agreements because it lowers your wages. Let's look at this from perspective of employer.
There are costs associated with obtaining well performing employee:
* Hiring: people spend their hours filtering prospective employees. Usually HR does that, but bigger companies have separate hiring department. Expensive.
* Idling: newly recruited employee rarely has intimate knowledge of all technologies, systems used inside a company and surely has no idea how they are tied together. This takes some months to grasp. Recruits often wreak havoc and as a result produce very little net worth. And you greedy recruits want your 6 figure salary for your havoc.
* Training: employees are trained. Be it actual courses, conferences or just unsuccessful internal startup its still training. And having a team work on a doomed to be killed project for a year is again expensive.
In order to compensate for these no-worth-generating expenses employers are left with 2 choices: lower the salary or invent a way to keep the employee. Lower salaries are usually not an option because, well, who you will hire then in the first place when rivals often much better packages? Companies are left with an option to try and keep the employees.
In intimate atmosphere of Silicon Valey it is hard to keep employee salaries/benefits and skills a secret, therefore it is much easier and cheaper to contact employee of a rivaling company and offer a better mutually agreed package. You either agree not to poach and let prospective employees go through your normal hiring process or chain employees with timed contracts.
So just think that no-poaching agreements might be the thing keeping your salaries that high.
Even without facebook, there would likely have been another mega-successful startup springing up and ruining the hiring collusion. As long as incumbents can't create a regulatory or legal moat (e.g. patents), I don't think these kinds of salary depressing tactics will work for more than a few years at a time.
When I talk to other developers about this stuff and H1B exploitation, we all seem categorically not in favor of collusion. These companies were started by software developers. What the hell happens in the process of running a company where you justify this kind of morality shift?
Looks like Facebook identified a market inefficiency, and chose to bet on their ability to attract/acquire/retain talent over taking the defensive stance that Google and Apple did. Bravo to Facebook.
If all he wanted to do was keep programmers' salaries down, he could just as easily open offices in India and China and employ people over there and pay them even less than he would have to pay them if they immigrated to the US. And as a large company that's an advantage Facebook has and their prospective competitors lack. I'm sorry you feel insecure that more immigration might threaten your ability to single-handedly earn three times as much as the median American family, but literally every other human being other than native-born American programmers is better off with this kind of immigration reform.
That would mean Facebook would get the same quality of engineers in India vs. grad students from India that are studying in US. Frankly, this is far from the case. In fact, most grad students from India studying in the US are by far of a higher quality than just a regular engineer in India.
From what you've written, you're equating engineers as commodities (as in they are no different from each other), which is quite insulting to the actual engineers here from India and China. They are just better and Facebook knows this. They want the better quality and they are willing to pay more (than those in India) for it, but they won't go so far as to greatly inflate the salary of the entire software engineering occupation in America.
"Most grad students from India studying in the US are by far of a higher quality" --- This is completely wrong. The one who go to study abroad are definitely are the TOP 10% at all in terms are talent and quality. It is only that their parents were able to send them to additional tuitions (private coach session apart from school time) and was educated and have money send them. I myself know at least 100s students who are far better than those who go to college in USA or other countries. Please note that exceptions are the one who go to Stanford, Berkley and few top notch ones but even they only get students who have money not the one who have passed excellent scores.
My point is that, for Facebook's interests alone, they would rather hire the same engineer in India than in the US because after they move to the US you have to pay them more than if they stayed in India. The effect of immigration reform is that more engineers will move to the US, which is against Facebook's interests.
The companies paying low wages to H1Bs are outsourcing companies like Wipro and CTS who bring over employees from countries like India. I can tell you for certain that all my friends working in tech are making 120k+ from the big guys and many of us are Indians straight out of a Masters program.
Programming is not like being a cash register attendant at the supermarket (no offense to these workers intended).
For programmers, getting into the workflow of a company, their existing codebase, becoming efficient, it may take months.
Shipping a product may (and typically does) take over a year. The lifetime of a product may be over a decade.
And if a developer quits mid-way through a project, they may derail the entire project, while someone else has to spend the time, step into their shoes and continue their work.
I honestly can't imagine the morality of someone who would just abandon their project, their baby, so to speak, and go work somewhere else at the first call from another company offering more money. Did they take the first job out of desperation? We're talking top-of-the-top companies here. I doubt so.
Poaching employees like this is also very unfair to every company spending a lot of resources to find the right employees, to build the right teams from other channels, only to have the competition cold call them and take them away after the former company has done the hard work.
There's also the problem of trade secrets. An employee who has spent some time at, say, Apple, learns a lot about their product plans, processes, methods, and so on. Getting those employees means that one way or another you get access to these carefully kept trade secrets implicitly, if not explicitly.
Keeping wages down is bad, but employees who keep shifting jobs, leaving a trail of destruction behind them is also bad.
How do we resolve both sides of the issue so everyone is happy?
Yeah, same thing, sure. You realize that for 90% people, even most at the hot companies, a job is above all something they do because they want or need the money, right? And there is such a thing as joining a company and realizing that thery weren't what you expected.
People leaving companies not only is a reality, it's something that can be expected. They can leave for a better option, but it's also possible that they have some kind of accident that either incapacitates or kills them. Completely undesirable, sure, but it does happen, so not even the most faithful employee is guaranteed to stay indefinitely in the company. Companies know that, and this is why things like the "bus factor" are taken into account. A project can't rest on one single person's shoulders, and almost everyone is more or less replaceable. Stop the emotional blackmail rubbish, please. I'm tired of hearing that companies are not charities and they're in mainly for the money, so why would then be wrong for a person to maximize their income? And that's without starting to consider the many, many reasons to change job, including, by the way, working on a more interesting project.
And if a company doesn't want their employees to voluntarily leave, they just need to work on employee retention as much as they do in hiring. It seems that a lot of companies understood this as "prevent them to find better jobs" instead of "make better jobs for them", and, well, many of us don't consider this acceptable, nor justifiable.
> Yeah, same thing, sure. You realize that for 90% people, even most at the hot companies, a job is above all something they do because they want or need the money, right?
I realize it, and that's extremely sad, because it doesn't have to be that way.
You're concerned that people can be immoral because their economic decisions are harmful to corporations? You're worried about whether both sides are "happy" when one side is a corporation incapable of experiencing feelings? I think you've lost track of what's important.
Your argument isn't just about cold-calling; you seem to be saying it's "immoral" to consider switching jobs at all. But you are not in moral debt to your employer. It is entirely reasonable to want a higher salary, and we shouldn't cry for the corporations that have to pay it.
Switching jobs comes at a cost to the person, too. It involves breaking professional connections and quite possibly relocating. It seems considerably more disruptive to the life of the person who's switching jobs than to the company who has to train someone else, so they're probably doing it for a good reason.
Your life is more than your work. Your project is not your "baby". You might have a baby that's your baby.
I'm not sure what it means to take a job "out of desperation" if it doesn't apply to basically everyone. Most people work because they need money. If these people didn't need money, they wouldn't work for Apple or Google. Maybe they'd start an unprofitable lifestyle business doing what they love. Maybe they'd do something very fulfilling and very unprofitable, like teaching.
There is so much more that you can aspire to than advancing Google's bottom line. If your goals align with Google's, it's entirely because of the paycheck.
> If these people didn't need money, they wouldn't work for Apple or Google.
That’s definitely not true[1] for many of the engineers that I know at these companies. There are lots of extremely valuable and interesting engineering projects that are only possible to tackle in the context of a large corporation (or agency) with billion-dollar budgets and the scale and influence that brings.
[1] How do I know? Because they don’t need the money; they’ve seen enough RSUs in their careers that they could easily “do what they loved” if it were anything other than what they’re doing now. Also, because they tell me as much.
> You're concerned that people can be immoral because their economic decisions are harmful to corporations? You're worried about whether both sides are "happy" when one side is a corporation incapable of experiencing feelings? I think you've lost track of what's important.
I feel like your mind is playing a trick on you. Corporations don't exist as a standalone entity. They're an aggregate entity - one that's made of people.
It's not corporations vs. people. It's people trying to be happy working with other people who also are trying to be happy. We're all trying to work together and build something that's bigger than any of us.
A corporation can't "feel", but it also can't "think", or "decide". The people in it feel, think and decide.
When people "harm the corporation", they hurt other people whose hard work gets diminished in the process.
Maybe you think management is "incapable of feeling", well, then sure, you better leave that company. But I'm insulted by the implication that's the rule, rather than the exception.
And also I'm insulted by the implication these companies are in it just for the money. While Google and Apple, the two biggest companies mired in this scandal are led by people with widely different world views, do you honestly think they're in it just for the money?
Maybe you're letting your cynicism inform your opinions too much, or maybe you're working for a company that really is focused just on money. But don't speak for everyone.
If you're not personifying corporations, I just don't understand who's supposed to be "unhappy" when a worker gets a raise.
The person in payroll? It doesn't actually make them unhappy to put higher numbers on a check.
Someone in management who sets budgets? Working with economic constraints is their job. People I know in this role are happy when they're able to give raises, because their employees are happy.
The shareholders? Cry me a goddamn river.
Of course there are people who are passionate about their work at large corporations, but you can't tell me that the large corporation is what they would choose if they could do anything they wanted with their life and money was no object.
> I honestly can't imagine the morality of someone who would just abandon their project, their baby, so to speak, and go work somewhere else at the first call from another company offering more money.
Employees (most of the time) don't own the work that they produce for the company, and they themselves are not property of the company. Unless they are contractually obligated to stay at a company for a certain amount of time, there is no reason for them to work for less than they are worth and reject an offer that would make them happier.
Employees have good reasons for switching jobs. If they feel dedicated to their current job then they always have the option to stay.
>Poaching employees like this is also very unfair to every company...
Employees are human beings, not chattel. You started off by doubting the morality of people who switch jobs, but now you make it seem as the are powerless to choose where they work and must always leave for a company that offers more money.
>spending a lot of resources to find the right employees, to build the right teams from other channels, only to have the competition cold call them and take them away after the former company has done the hard work.
Not every employee will switch jobs because he or she received a better offer. And if finding another employee is so costly, then matching the new offer would probably save them money.
>There's also the problem of trade secrets. An employee who has spent some time at, say, Apple, learns a lot about their product plans, processes, methods, and so on. Getting those employees means that one way or another you get access to these carefully kept trade secrets implicitly, if not explicitly.
That's what the legal system is for.
> Keeping wages down is bad, but employees who keep shifting jobs, leaving a trail of destruction behind them is also bad.How do we resolve both sides of the issue so everyone is happy?
The standard argument is that people shift jobs so much because it's the most reliable way to get a large pay raise. If companies stopped making it necessary to hop jobs in order to make closer to what you're worth, then it might help retention.
"Keeping wages down is bad, but employees who keep shifting jobs, leaving a trail of destruction behind them is also bad", Why? when a company can show million reasons to shutdown or decide not to do a project and all that. Also note that the "My Project is my baby" is pretty foolish. Company will go behind the money and you got to do the samething. I am not saying that go behind the money or don't have passion. But work for what you like and not for the company. I personally worked in a place were (manufacturing) people were (All workers ~200 of them were under age of 23) thinking the company is them and them is the company and has put countless hours to make it first high performance work system based company, taught to us by this person Deen[0]. The owner decided to sell company to the local country competitor and employees begged to sell the company to them at same price but they would not. So moral is that love your job not your company. The best way to solve the is where is everyone is happy is profit sharing so people will stick to the company till product makes money gets stabilized so you don't depend on couple of people for whole product.
I'm gonna assume that we're mainly talking about working in California here. Isn't that an at-will state? If an employee can be fired at any time, for any reason (maybe also illegal ones, as long as they are not obvious about it), why shouldn't they have all the mobility that they can get? There needs to be some level of symmetry here. If you have employees that can leave at the drop of the hat, and employees that can fire at the drop of the hat, both have the capacity of misusing it. Corporations could lose a lot of money in training and process secrets, but the employee has a lot less security (sure they might be very sought after workers, but let's not throw principles on the bonfire because of that).
Both sides should certainly strive to be ethical. But no one should be loyal to anyone and just expect that they will hold up that code of honor when they have no obligation to. When we're talking about necessarily more impersonal billion dollar corporations, that is especially true.
