March 24, 2014

The Class War in Silicon Valley

Mark Ames writes in PandoDaily:
Revealed: Apple and Google’s wage-fixing cartel involved dozens more companies, over one million employees

The prime mover according to a trove of Google emails appears to have been the late St. Steve of Apple, but the number of firms that got hands-off treatment from recruiters was absurdly large, such as Nike and JCrew (common board members). I particularly liked this email from Eric Schmidt of Google:
“I would prefer that Omid do it verbally since I don’t want to create a paper trail over which we can be sued later? Not sure about this.. thanks Eric”
      
Here's another one:
From: Eric Schmidt
Sent: Wednesday, September 7, 2005 10:52 PM
Subject: Phone call from Meg Whitman 
DO NOT FORWARD 
Meg called to talk about our hiring practices. Here is what she said: 
1. Google is the talk of the valley because we are driving up salaries across the board. People are just waiting for us to fall and get back at us for our “unfair” practices now. 
2. Our recruiting practices are “zero sum” and it appears that somewhere in Google we are targeting EBay to “hurt them” and its the reputation that we are doing this against Yahoo, EBay and MSFT (I denied this.)

If you don't have a job offer from another company, it's hard to get a double digit raise. You'll keep puttering along getting 3% raises year after year unless you have an offer from another firm. So this kind of cheating has sizable impact on the lifetime earnings of employees.
 

36 comments:

Shouting Thomas said...

Brings to mind the old adage:

How much money can you spend?

Given the vast fortunes of the executives who carried out this conspiracy, why would they even consider illegally suppressing the salaries of working people?

Hard to understand the motive. Testosterone?

Of course, I'm a prole, and I've always been satisfied getting alone on my adequate but not extravagant techie income.

Appears even the employment and temp agencies were involved. Wonder how the retired techie throws in with the lawsuit?

Ray said...

I worked for a large auditing firm for a decade (now called the Big4). I was not contacted by a Big4 competitor even once. Lesser firms, via recruiters, contacted me almost daily. The others did not.

gucci mane said...

Just find out that noncompete agreements are mostly illegal in CA. That's part of the story, I think.

Anonymous said...

How much money can you spend?

Not sure it's the money. It just may be all about control. These guys seem to have the mentality of medieval warlords. And Mr. Jobs was famously a control freak, as those around him have attested.

Fraggins said...

If you look at the documents, this was entirely about the poaching of managers by google, not an attempt to hold down the salaries of lower-level engineers and coders at large. That is, this is not part of the same effort that we see in wage killing advocacy for more H1-Bs. It's more about preventing the disruption-by-poaching and the purchase of organizational knowledge/trade secrets through poaching of managers than it is wages if you read between the lines. For example, one of the e-mails points to Google poaching a key employee high up in Safari development at Apple in anticipation of releasing Chrome. Google basically voluntarily stopped these sorts of practices after other major silicon valley firms realized what was going on and were preparing to call them on it en masse. When all the other major players are against you, you become vulnerable to monopoly challenges like 90s Microsoft. This is the last thing google, still essentially a monopoly, wanted.

J Liu said...

O this is just more of a sign of our tech lords getting cocky. As someone who's family was rooted in the telecom boom in Texas, suppressing wages is a little "nicer" than some of the blacklisting that goes on.

Anonymous said...

if people want to do something about this then labor scarcity has to come back.

Anonymous said...

Held dogs under water, drowned them.


All human traits are heritable.

"Culture." HA.

Anonymous said...

This covers just Silicon Valley and the other major tech and internet companies. Similar wage fixing schemes surely existed for controlling techie salaries in the finance/banking/insurance industries.

For years H1-B/Visa expert and Open Borders opponent Professor Norm Matloff has talked about meeting IT HR managers on planes all telling him how they are just coming back from a conference with other hiring officers and how they all agreed that it was impossible to find qualified workers.
Norm Matloff would tell them that obviously if it truly impossible for find quality workers the alternative would be to attempt to hire them away from the very competitors they had just been "conferencing" with the enticement of higher wages and better working conditions.

Anonymous said...

Somebody please cross post this over at SLASHDOT. Can't stand to visit that hopelessly clueless site. Or should I say "False Flag" operation.

For years people would complain that obvious collusion and wage fixing were going on in the tech industry in addition to the open borders flooding of the labor market.

The typical response would be some Ayn Rand worshiping compulsive masturbator, or more likely some Cultural Marxist with a PHD in deconstructing White Privilege. posing as one, telling you that if you were only technically expert in 5-6 computer languages, 3-4 databases and 2-3 operating systems and willing to work 60 hour weeks and to relocate anywhere in the country every six months you too would be worthy of having a job just like them.

irishman said...

Gotta love that free-market-Capitalism don't you?

Maximo Macaroni said...

The laws that prevent companies from agreeing with one another on personnel policies remind me of the idiotic law that prevents US companies from paying bribes overseas. It's almost like someone is trying really hard to make sure US companies cannot prosper. The nanny state wants to expand its power. Ridiculous.

David said...

Hard to understand the motive. Testosterone?

Just capitalist principle. On principle, you keep costs down. After this principle has helped you to succeed, it's hard to do an about-face and drop it even when its application appears to have become absurd. The machine rolls on, and it will be fed. There's nothing necessarily personally sinister about this, unless it runs up against the law and cover-ups begin.

Senior Oracle DBA said...

Not even 3% (I know from experience), more like 2%.

Anonymous said...

Silicon Valley has morphed from the middle class, Congregationalist culture led by unassuming guys like Bob Noyce, who was about as charismatic as your mailman, to more of a boss man slave-driving culture that wants young, naive, easily controlled and dominated fresh meat around:

"The Brutal Ageism of Tech Years of experience, plenty of talent, completely obsolete
"

http://www.newrepublic.com/article/117088/silicons-valleys-brutal-ageism

"Silicon Valley has become one of the most ageist places in America. Tech luminaries who otherwise pride themselves on their dedication to meritocracy don’t think twice about deriding the not-actually-old. “Young people are just smarter,” Facebook CEO Mark Zuckerberg told an audience at Stanford back in 2007. As I write, the website of ServiceNow, a large Santa Clara–based I.T. services company, features the following advisory in large letters atop its “careers” page: “We Want People Who Have Their Best Work Ahead of Them, Not Behind Them.”

And that’s just what gets said in public. An engineer in his forties recently told me about meeting a tech CEO who was trying to acquire his company. “You must be the token graybeard,” said the CEO, who was in his late twenties or early thirties. “I looked at him and said, ‘No, I’m the token grown-up.’ ”

In talking to dozens of people around Silicon Valley over the past eight months—engineers, entrepreneurs, moneymen, uncomfortably inquisitive cosmetic surgeons—I got the distinct sense that it’s better to be perceived as naïve and immature than to have voted in the 1980s."

Anonymous said...

Yahoo CEO Marissa Meyer has been frequently lionized in the media for being a female CEO, especially one in the supposedly sexist industry of tech. But there is reason to believe that Yahoo has lost significant value during her tenure and that Yahoo may be worth less than nothing:

"Is Yahoo’s Business Worth Less Than Nothing?"

http://www.bloombergview.com/articles/2014-03-17/is-yahoo-s-business-worth-less-than-nothing

"Yahoo! Inc.’s market value has doubled since Marissa Mayer took over as chief executive officer, which you might think would be cause for celebration. But more than all of those gains can be attributed to the gangbuster growth of Alibaba Group Holding Ltd. and Yahoo Japan Corp., two thriving companies that are part-owned by Yahoo. In other words, the implied market value of the rest of Yahoo has collapsed during Mayer’s tenure, and might even be negative....."

BurplesonAFB said...

It's not because they want to make more money themselves, it's because it's an easy way to manage expenses and keep earnings growing (beats trying to out innovate everybody in the world) Also, if they fail to make their forecasted earnings they get hassled by the shareholders and board. That harms their self esteem and Meg, Larry & Sergey's self esteem is the most important thing about them.

Anonymous said...

I find it hard to believe that these guys would collude to depress wages. Don't they have lawyers.

Plus, that is what recruiters are for. Jesus, they gotta do something to justify their fees.

And if they want to keep senior employees, there is aways golden handcuffs. A well structured incentive can make it enormously expensive to poach an employee.

I guess these guys never worked in regular businesses.

sunbeam said...

Anonymous wrote:

"I find it hard to believe that these guys would collude to depress wages. Don't they have lawyers."

I dunno. Sometimes I wonder exactly how smart some of these guys are.

The concepts seem so obvious. Tell me what exactly is the difference between Craigslist and Ebay, besides a lot of hardware and bells and whistles?

There's not much of a conceptual difference.

And if you look at the background of a lot of them, ... well it wouldn't surprise me a bit if they never even thought to worry about being accused of collusion.

After all, everything has gone their way so far, right?

Be interesting to see what happens with this. Lot of money floating around there. Anecdotally I've heard of court cases being won with less.

Bet the campaign contributions go into overdrive.

countenance said...

Proof that a real free market needs a central state powerful and credible enough and with enough legislative authority to bust cartels and prosecute collusion. The natural habit of humanity is not to seek perfect competition, but to tribe-collude-cartel-conspire-prospire up for protection.

Dave Pinsen said...

The venture capitalist Fred Wilson blogged about this today: Ageism.

Anonymous said...

I.once chatted up a senior HR guy in NJs Arthur Andersen office. He said.all "big six " (early 90s) had gentleman's agreement to not poach other big six's talent. It still goes on. I know EY brings over temps from Asia for their tax busy season.

Eric Rasmusen said...

This sounds like blatant violation of hte Sherman Act. It's amazing that the Justice Dept. settlement didn't require any fines or jail time, as it woudl have it if it were, say, highway contractors doing this. All it required was the the companies stop their illegal collusion. Was this settlement a reward for 2008 Obama campaign support from Silicon Valley ?

Tom-in-VA said...

Oddly, not much about this in the mainstream US press.

Anonymous said...

Was this settlement a reward for 2008 Obama campaign support from Silicon Valley ?

Why is that sentence constructed as though it were a question?

Anonymous said...

The article has one major flaw: every time a tech CEO whose company is caught up in the suit is named, they should include his/her net worth and salary. Readers should be told how much these billionaires bitching about labor costs are worth, and how much *they* are being paid. We should also be told how much they spend lobbying Congress to fight the supposed high-tech labor shortage.

Boko Fittleworth said...

I talked to a banker friend about billionaire tech lords keeping wages low and asked the question, "How many billions do these guys need?" He pointed out that it's not a one-to-one correspondence: A dollar less for you is a dollar more for me. The net worth of these guys is tied up in their companies stock. Keeping wages low affects the earnings per share multiple, which is tied to stock price. My friend said there is (c.) a ten X multiplier in this math. So a dollar less for you is ten dollars for me, and a dollar more for you is ten dollars less for me.

I obviously don't have a full grasp on this, but I think some very smart money (and IP) sharpies latched on to the tech sharpies. I bet the financial and legal advisers don't have the same problems getting a fair day's wage out of the tech moguls.

Some of the tech billionaires just got in on the ground floor in the right place at the right time. I think the lawyers and finance guys were a little more proactive in creating their opportunities.

Anonymous said...

http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/2014_03_21/caredit.a1400074

"Retraining existing workers produces "less value" for employers than hiring guest workers from abroad, a high-tech industry representative said during a 19 March media conference call.

[...]

"Corley and Slaughter's answers typify the attitude described in Peter Cappelli's important 2012 book Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It. As we reported when it was published, Cappelli faults companies' rigid hiring practices and failure to provide adequate training for creating the false perception of a skills shortage. Training of employees used to be widespread in industry, Cappelli told Science Careers then, but many companies have stopped doing it altogether.

[...]

"It is up to those lawmakers and policymakers—and to anyone who cares about America's scientific, technical, and economic future—to consider whether such policies are consistent with the broader interests of society. It is no longer a question of whether we should allow skilled foreign workers to displace skilled Americans. The basic question now is whether we can abide a system in which our top companies view knowledge workers as disposable, no matter where they're from."

Anonymous said...

For years H1-B/Visa expert and Open Borders opponent Professor Norm Matloff has talked about meeting IT HR managers on planes all telling him how they are just coming back from a conference with other hiring officers and how they all agreed that it was impossible to find qualified workers.
Norm Matloff would tell them that obviously if it truly impossible for find quality workers the alternative would be to attempt to hire them away from the very competitors they had just been "conferencing" with the enticement of higher wages and better working conditions.

The problem is the folks against illegal immigration sometimes think its fine with high H1B Vistas. The big hero of the Tea Party Ted Cruz support H1B more than any other politician.

Anonymous said...

I talked to a banker friend about billionaire tech lords keeping wages low and asked the question, "How many billions do these guys need?" He pointed out that it's not a one-to-one correspondence: A dollar less for you is a dollar more for me. The net worth of these guys is tied up in their companies stock. Keeping wages low affects the earnings per share multiple, which is tied to stock price. My friend said there is (c.) a ten X multiplier in this math. So a dollar less for you is ten dollars for me, and a dollar more for you is ten dollars less for me.

Status is a zero-sum game. By definition.

Anthony said...

It's just Apple and Google (and other Friends of Obama) doing their part to reduce income inequality.

Anonymous said...

I've learned a lot about the priorities of the US media from reading this blog.

The tech business is glamorized, criminal wrongdoing is ignored or treated with kid gloves. The oil and gas business on the other hand...

notsaying said...

I'd like to kick these lying cheaters out the company.

I hope the big programmers' suit coming up in the spring makes people realize what these people really are and how they operate.

The worship has to stop. I say, let the big fines, even bigger awards to the workers and the jail time begin.



Whiskey said...

Jessie Jackson is shaking down Silicon Valkey demanding Apple, Facebook, Twitter etc. Hire lots more Blacks IIRC, he's demanded they hire to the pointwhere half their workforce is Black.

Can you imagine Facebook with half the coders and execs Black?

Anonymous said...

Microsoft minted a few thousand millionaires back in the late 80s and early 90s via stock options, back before the explosion of H-1B workers. That was when a million dollars was still a lot of money, and when Gates himself was still only worth a few billion.

Post-H1B you don't hear nearly as much about stock option-millionaires coming out of companies like Google, Facebook, and Twitter. It would seem they've been able to avoid the bidding war that killed Microsoft and made Bill Gates a pauper.

If Mark Fuckerberg couldn't use H-1B and didn't collude with Apple, etc. to avoid bidding wars for employees, he might only be worth $24 billion instead of $30 billion. Wouldn't that be a shame? He wouldn't be able to spend as much money manipulating our government.

Semi-employed White Guy said...

Blogger Whiskey said...

Jessie Jackson is shaking down Silicon Valkey demanding Apple, Facebook, Twitter etc. Hire lots more Blacks IIRC, he's demanded they hire to the pointwhere half their workforce is Black.

Can you imagine Facebook with half the coders and execs Black?


Actually Facebook would be a damned fine place to put the affirmative action hires. We should put lots of mestizos there too, since Zuckercunt seems to be in love them so much.