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How Apple, Google, and other tech companies conspired against their own workers (www.whenrulesdontapply.com)
717 points by snowisgone 8 days ago | hide | past | web | 280 comments | favorite

Notice the difference: "Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees"

"...brought charges against the companies"

They should have been indicting both, or just the executives for their explicit role in this criminal behavior. I really detest the lack of individual accountability in all these cases when we deal with large companies. If this was a couple of small, local competitors who were the only two [whatever] in the area and they did this, I guarantee you the owners would be individually indicted.

I agree, there is far too much ability to transfer liability in the modern world which lets this sort of stuff get abstract and easier to dismiss. Companies should be held accountable to the extent their growth has encouraged bad behavior, but individuals at that company committed the behavior and, if they were instructed to do so and blindly followed then...

1. "Just following orders" isn't now and has never been a valid excuse

2. Go after the coercers or modify our understanding of liability to allow those targeted to make the argument that their superiors deserve to repay them every bit of penalty they owed.

Really, in the modern world, just sue someone and tell them they're on the hook but they'll be allowed to sue whoever is responsible for their portion of the responsibility and watch this all work itself out quickly.

Transfer of liability? There are candid emails between Steve jobs and Schmidt about the topic.

Edit: They made a minor settlement and there was a lawsuit that got a tiny amount of press.


Edit 2: there was not even a slap on the wrist legally speaking:

"The proposed settlement, which if accepted by the court will be in effect for five years, prohibits the companies from engaging in anticompetitive no solicitation agreements. "

...am I understanding it correctly that their 'punishment' was having to promise not to break the law again? But only for five years??

Yes. They'll get a "harder" slap if they do it in the next five years (if caught), but after that are free to do so with baseline "penalties" (again, if caught).

"Don't be evil"

Yeah that's ridiculous. A real penalty would be for example to not allow them to appoint new employees for 5 years.

Jobs was a liar. He also said no engineers were laid off from Pro Apps, when in fact half of Pro Apps engineers were fired at the end of the 2000s.

>> 1. "Just following orders" isn't now and has never been a valid excuse

Yes it is, see: https://definitions.uslegal.com/c/corporate-immunity/

That said..I agree with the spirit of your post. The only officers that cannot receive corporate immunity are the CEO and CFO - they can be held liable in criminal and civil litigation.

Hey, it reads "in good faith". This only works when an officer in question could not know (s)he is breaking a law. Knowingly doing illicit things is not covered, afaict.

Definitely so. "But my boss told me to kill that person, else I would lose my job :'("

As a civilian it would be hard to come up for a good faith reason why an employer could legally kill someone.

Hypothetically: A person at Apple might not know why they can't hire someone from Google. For all they know it could have been ordered over apple trying to steal Google trade secrets as part of a settlement. Lots of possible reasons why it could be legal. The employee just does not necessarily have the knowledge. So they could make a defense that assumed their employer was acting in good faith.

It's pretty much impossible to prove good faith in the instances of death, and theft. Generally, such things are reserved for governments either through war or (criminal executions) or property seizure. If your employer was the government you may be able to make a good faith defense if it was related to your job and it turns out the government was violating the law.

Also keep mind it's a defense not an immunity. Also the more severe action the harder it is for there to be a lawful reason. There are very few instances were someone could legally kill someone vs not hire someone. It's like orders of magnitude different.

Is there a law in California specifically prohibiting colluding with other employers? If there isn't, then you can't make the case they should have known they were breaking it.

Then why aren't they being held accountable? Ever? Banking scandals. This example.

Why aren't those who are tasked with enforcing the law enforcing the law?

Because they're actually tasked (implicitly or otherwise) with protecting capital. In many cases this means enforcing the law, but in cases of corporate misbehavior, usually means ignoring it.

The upward FLOW of capital.

In a frictionless system, sure. When lawyers cost so much, this kind of chain-of-lawsuits system would be a huge payout to lawyers.

It'd be nice if the people adversely affected by malfeasance got compensation, but the more important part, as far as utility goes, is that the perpetrators suffer significant penalty to disincentivize the behavior.

If that's the criticism, it should presumably apply much more widely than just this case—why not all of civil law?

> 1. "Just following orders" isn't now and has never been a valid excuse

That's not true. Just look at Lt. William Calley.

"following orders" was specifically not an excuse, hence him being convicted.

He didn't serve additional time due to other technical issues in his prosecution.

What an awesome way to split hairs.

"Howard Callaway, Secretary of the Army, was quoted in The New York Times in 1976 as stating that Calley's sentence was reduced because Calley honestly believed that what he did was a part of his orders—a rationale that contradicts the standards set at Nuremberg and Tokyo, where following orders was not a defense for committing war crimes.[98]"

[98] Marshall, Burke; Goldstein, Joseph (2 April 1976). "Learning From My Lai: A Proposal on War Crimes". The New York Times. p. 26.

Sure sounds like an excuse to me. Now that I think about it, you're not splitting hairs, you're just flat out wrong at best.

Being genuinely coerced into an action against your will doesn't leave you ethically liable for your actions - you need to have some intent and will to carry out your actions for any culpability in a philosophical sense[1]. As an example, if you were to hand someone a gun and tell them (in a manner which they fully trusted your honesty and intent) that you would shoot them and their friend if they didn't shoot their friend then... you're on really shaky ground philosophically - dismissing any scenario escapes (shooting your captor, disarming them etc...) you're left with three basic options, shoot yourself, shoot your friend, and refuse to shoot and have both yourself and your friend be shot - in this case it is logical and it should be a guiltless action to shoot your friend and preserve your own life (but it's complicated by our value system).

So, excusing part of an action due to a coercion to follow actions is valid, but every time we talk about this scenario in the real world you're going to have more options, maybe you doubt your captor would actually shoot both of you - in that case shooting your friend is back to mostly being your decision - the issue occurs when this grey story is converted to black and white and people paint themselves falsely as being unwilling participants. In WW2 US soldiers could have refused when asked to participate in concentration camps, it would have been severely inconveniencing and that counts for something, but they chose the easy route and that is a perfectly valid guilt.

[1] There is a rather sound argument to be made that evil and culpability is a false construct and that we should refuse to punish any bad actors beyond the point of discouraging recidivism. If there is a common good that we all share as a "known truth" then deviations from that truth can be considered to be impairments about seeing the truth and comprehending it which would lead any deviations from that truth to be understood as a need to enlighten their view of the truth. It's quite an interesting philosophical path to head down.

"Just following orders" was a valid excuse until the Nuremberg trials.

"Just following orders" has been used as recently as the Obama administration as an excuse not to prosecute CIA operatives for torture, despite American law on the books that explicitly forbids using it as an excuse for torture.

Isn't the main part that they were given legal guidance that what they were doing was not legally torture though? There's a bit in another article that got posted today [0] about that.

> Guantánamo leadership wanted to understand the legal gymnastics that would be required to implement a program of their own. “Torture has been prohibited by international law, but the language of the statutes is written vaguely,”


> Bush Administration lawyers had taken the position that “enemy combatants” could be held indefinitely, without trials, and that in order for something to qualify as “torture” it “must be equivalent in intensity to the pain accompanying serious physical injury, such as organ failure, impairment of bodily function, or even death.”

[0] https://www.newyorker.com/magazine/2019/04/22/guantanamos-da...

People weren't just tortured, some were tortured to death.

The United States Senate ratified, and President Reagan signed the The U.N. Convention Against Torture, which states that “no exceptional circumstances whatsoever, whether a state of war or a threat or war, internal political instability or any other public emergency, may be invoked as a justification of torture.”

No amount of legal hand waving by the Bush administration can justify what was done.

Likewise, there is no excuse for the Obama administration refusing to prosecute the crimes that occurred.

It was rejected in 1474 - rather a long time before Nuremberg - https://en.wikipedia.org/wiki/Superior_orders#The_trial_of_P...

If read https://www.goodreads.com/book/show/789376.The_Nuremberg_Tri... I believe you will find this is not the case.

You don't think people were executed post-war for "just following orders" before the Nuremberg trials?

In other words, do you really think such people got off easy before the Nuremberg trials? If anything, much worse has happened to them throughout history, because the kings and dictators didn't have to put them through a judicial process.

Whether or not you're punished for following orders has more to do with whether or not you're on the side that writes history than anything else.

This is an embarrassment of the victor and never celebrated - atrocious actors on the victorious side have been punished at times throughout history but I agree the bar is higher. It certainly isn't celebrated though - and informed societies can still be outraged (See Guantanamo, Abu Gharib, Yemenese drone strikes under Obama & Trump, the Bay of Pigs, Guatemala... the general familiarity of this list is a testament to the fact that the victor can be held accountable - even if individual actors are generally given more levity[1]...)

[1] _sigh_ Oliver North, honestly America... why did you never... eh.

Of course they were. The key point is the Nuremberg trials are legal trials, supposedly fair and Geneva convention friendly way to punish the loosing side one Japan escaped

And it’s still valid if you haven’t lost a war because no one can make it valid.

Part of the reason modern corporate bureaucracies are so bloated and complicated is to reduce the personal risk to executives by muddying the apparent decision-making process at the top. Executives can make it look like they're people who execute complicated processes rather than decision-makers.

They end up taking credit when things go well, and they might look bad when things go poorly, but they essentially never get held criminally liable. Nice work if you can get it.

That’s a very one dimensional view. Bureaucracy exists to standardize control and improve consistency.

Think of a group of friends who go out for dinner. When the group grows, you generally need to set rules to avoid folks stuffing on tips or itemizing their bill to save a buck.

It's a cynical view but certainly not 1-dimensional. Money for tips isn't an issue here.

In this case, the friends at the table receive their bill from the top bureaucrat rather than directly. The bureaucrat tells them what they owe. It's more than what the bill calls for, but if they don't like it, they can go to another table where there is another top bureaucrat running the same scheme (more or less).

Out of topic, but what does "stuffing on tips" mean? (not a native and google didn't help.

Sorry it was intended to be "stiffing".

Usually when a group grows to a certain size, somebody will decide that rather than chipping in $30, because they "just had a salad", they'll toss in $12.95 for the salad, skip tax and tip and disappear.

Interesting. I can understand that they don't feel obliged to pay the tip, but how do they justify not paying the tax?

It's probably a typo for "stiffing", i.e. not paying the tips at all, or paying too little.

I think how it goes is you collect the money. The other diners include tips and tend to round up. You take their tips and use it to pay your own bill. The waiter/restaurant lose their tips, your friends lose face and are tricked out of they're generosity, you get food for no money.

On a side note, he wouldn't be a friend for very long if I knew the tool didn't tip.

This is a powerful insight, thank you.

I am fascinated by the way "fitness landscapes" manifest in companies OUTSIDE the financial fitness of the company's trade. People often act like trade fitness is the only realm where we compete in capitalism, but there are so many more.

Moat fitness for a company doesn't benefit their trade at all. Customers don't benefit when you kill a competitor, but you do.

Similarly PowerPoint doesn't benefit the customer or the business. It's a tool for employee theater, using it makes employees appear less fit to be fired.

And I like your point that unaccountability fitness is also an existential competition for executives.

I wish there were a big list of these for me to ponder.

Wow...I've heard PowerPoint called many things in my 30 years in corporate trenches, but never something as poetic as "a tool for employee theater"

In my mind/experience structuring a short PowerPoint deck, the much-dreaded bullet points included, is a clarifying exercise for both presenter and audience if done right. Properly done it’s pretty much an outline for an essay.

Power Point? What have PPT ever done to you?

Difference what powerpoint allows you to do and what you can do with a static PDF on the projector. The extra that powerpoint offers you is virtually useless; a bunch of flash with little substance. Hardly any justification for its existence.

This becomes more stark when you compare powerpoint with another part of Microsoft Office: Excel. Excel is actually amazing software. Innumerable small businesses are basically run through Excel. Excel is truly user empowering software that lets lay-people exploit the power of their computer to solve real problem.

Compared to Excel, powerpoint is just sad. In theory it keeps people in the audience of any presentation awake, but in reality it fails at even that. Excel empowers users to solve problems, while powerpoint is little more than an emotional crutch for people who are nervous in front of crowds.

Excel is amazing software. It can do so many things.

The problem with PP is not PP, but that most people do not know how to give a presentation.

No offense to PowerPoint fans! I've observed people making pointless presentations to shore up their brand as employees, not to facilitate trade.

It has other uses but... Have you not seen what I describe? That would be a useful data point for me if true.

Not really but I guess that's dependent on company culture. You work at a stack rank place?

Where I work Power Point is mainly used to make presentations that are easy to read on a projector screen (as it should be used).

On many places it seems to be used as a general document writer application ... so what we emotionaly associate with Power Point might differ alot.

I've seen it a couple different ways. When a supervisor asks a subordinate to produce a powerpoint that the supervisor will edit/present to higher-ups, it generally looks as you describe. When a team leader produces a set of slides for their team, it's not so transparently theatric.

This is an important point, and I couldn't agree more.

This idea overwhelms me when I read the newest filings and indictments of pharmaceutical companies in the opioid crisis. A corporation, fundamentally, cannot "learn lessons" like people do. It is a collection of incentives, with men inside directed or manipulated by those incentives. If gently nudging 47,000 people a year to kill themselves with overdoses would create more revenue for the corporation, after lawsuit settlements, than not, they would likely do it all over again. Even if you change the men making the decisions - "Finding more moral men" is not a plan.

Executives must have skin in the game, because the possible upside to their career at the highest levels of American business are too great to hope they'll take a moral stand. The potential upside for Richard Sackler, and John Kapoor, and Steve Jobs is so high (Massive bonuses, stock prices), and the potential downside so low (They are fired, with a generous golden parachute), they are willing to take the chance they'll get away with it. The most likely outcome is that attorneys will get rich, and nothing much else.

The only solution to †his type of white collar crime and leadership malfeasance is to make executives, the individual human beings, feel a tinge of reptilian fear in their gut that they may go to prison and the livelihood of their families could be put in danger.

> A corporation ... is a collection of incentives, with men inside directed or manipulated by those incentives ... "Finding more moral men" is not a plan.

I couldn't agree more, and that analysis applies to all systems of human interaction, not just corporations. I wish people would use that framework to understand everything, specifically government.

While I agree, in our current political climate it’s not going to happen.

In the interim I would be willing to settle on significant punitive damages. Eg. Make getting caught very expensive and those corporate nudges will start nudging in the directions of protecting employees, consumers, etc.

It should also be down to the individual level so that people down the the chain of command won't have the incentive to protect the executive in fear of losing their jobs.

also, take a page from our transit providers: "if you see something, say something." and be proactive about it. don't wait till it's too late.

if we're all whistleblowers, people high up the chain will fear having the whistle blown on them. don't just leak illegal things, leak immoral things.

grassroots transparency. do it anonymously if you have to. hold your bosses accountable.

I would agree with both.

But bringing charges against a company is important. Boards of directors are supposed to, well, direct the executives, not look the other way while they break the law and abuse their employees.

The way to encourage this is to hit the company, hard, right in the wallet.

It has been shown repeatedly that boards won't do much and repeated fines are more and more just another cost of business. Either the fines need to be raised to a level where the company loses profit for one or more years or we need to go after individuals.

Don’t bother to fine them. They’ll just use that to punish employees and shareholders. Make the executives liable.

Agree about the executives but if the shareholders and employees feel enough pain they may actually do something. Right now the "punishment" doesn't cause anybody enough pain.

Shareholder pain will be slightly lower dividend or stock price. Employee pain will be unemployment. And I think that is what drives most of these low level fines. Regulators recognize the company wouldn't suffer in the short term from large fines.

Shareholder can, and do, sue for damages from fines as the result of poor decisions by executives and the board.

Interesting -- are there some good examples of that happening?

Oh I definitely agree. Both should ideally be charged because these people were acting on behalf of the company and were in management positions, which makes the company legally liable for their actions.

But if I only get to choose one to charge, I go the individual route any day of the week because it reduces/removes the moral hazard of getting to shift your criminal activity to an intangible, legal entity like a corporation. Sure, you'd never get the $435M settlement from these people, but once everyone knows the government is coming after them personally, I would bet my last dollar that this type of crap virtually never happens again.

But that's half the problem - we never do. These kind of criminal charges result in a few million dollars worth of fines. It's never enough to really hurt a company the way that losing one year in jail hurts a person.

The cost was probably less than the profit in this outcome for each of the companies.

Being a rich executive is essentially a get out of jail free card in America. Only good outcome for us commoners is that they can't screw us in the same way again. They have to invent a new way next time.

...not really, though. Laws aren't always changed based on such incidents, those that do are eventually struck down, and if the employer's not "caught," they can perform all the classic exploitative tricks.

Depending on their position and the law, it is possible that liability is limited so that they cannot be sued by external entities. That is, external entities can sue the companies, but only the company and shareholders and possibly the state can sue the execs.

Was there a criminal case to be made?

> Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees

How do they enforce this agreement?

Reminds me of Phoebous cartel agreeing to produce lightbulbs below certain lifetime. https://en.wikipedia.org/wiki/Phoebus_cartel

Google’s shareholders and board kept Eric Schmidt in a position of power for approximately a decade after his fraud against the staff was revealed.

Meh. It really wasn't that big of a deal. They got caught and fined and that feels like an appropriate level of punishment. There are times when a prison-term against bad-actor executives is the right punishment ... this isn't it.

>If this was a couple of small, local competitors who were the only two [whatever] in the area and they did this, I guarantee you the owners would be individually indicted.

No. 100% NO. I guarantee you that the regulators wouldn't care. And if they did care, the 'local competitors' would get AT BEST a slap on the wrist like a strongly worded letter with a time-frame or MAYBE a fine (if that). There would be no indictments.

I work with regulators all the time (FDA, Health Canada), and they will work with you to get you under compliance. Consider the fact that all companies are under a large amount of legal and regulatory constraints and chances are every company is doing something against some law or some regulation (knowingly or unknowingly), and you can see that as long as what you did didn't result in undue hardship (though I'm sure you'll try to claim that this was an egregious action - I disagree) and you fix your behaviour, you'll be fine.

>No. 100% NO. I guarantee you that the regulators wouldn't care. And if they did care, the 'local competitors' would get AT BEST a slap on the wrist like a strongly worded letter with a time-frame or MAYBE a fine (if that). There would be no indictments.

Unless of course an indictment is the politically determined goal. E.g. that one small Chinese bank that got screwed for the lending bubble that popped in '08.

"...they will work with you to get you under compliance"

Sure, as long as they are doing so in good faith. An act like this is clearly not in any sort of good-faith attempt to be in compliance with the law. It's obviously illegal. I would expect (hope?) that regulators and law enforcement would act swiftly and with much more than strongly worded letters and small fines for anyone who does this.

Yes, you are correct that I would definitely claim that this was an egregious action. If people are conspiring to limit the employment prospects and potential income of others and are doing so in a manner that violates the law - yeah that's pretty f'ed in my book and they should, in my opinion, be subject to the harshest punishment the law allows for these instances.

Or may law be changed to make executives get electric chair or lethal injection and then shutdown the company? Or you still think it is just slap on wrist?

So I was at one of these companies when the scandal broke. I didn't get screwed quite so much as my coworkers, since I'd only been working there for a year or so. The settlement was a joke - I got about $1100, but my compensation increased by roughly $100K/year the year after the cartel broke, and kept rising. Can't say I'm terribly pleased about either the wage-fixing or the settlement, but...

My wife works in philanthropy, and one of her jobs is investing in homeless shelters. We were talking the other day about how the Bay Area's housing/homelessness crisis is a direct consequence of the collapse of the high-tech wage-fixing cartel. Before 2010, the wage distribution from one of these huge companies was that founders and VCs would make billions, ~1000 early employees would end up with millions, and the rest of the employees live comfortable upper-middle-class lifestyles. The ~1000 employees who could cash out pre-IPO stock options would bid up prices in Hillsborough/Atherton/PacHeights/Woodside to ~$5M, but the rest of the Bay Area would be priced at what an ordinary professional could afford. After the cartel broke, the compensation structure changed so we have ~100K engineers each making ~$300-400K/year. That's enough to buy all the available housing inventory in the region. So now house prices in Mountain View and Sunnyvale go from $800K -> $2.4M, and you must be a dual-tech-income family to afford a house.

I say this not to imply that the cartel was a good thing (cartels are bad, and I'd much rather the solution be greater wage equality for everyone and building more housing so everyone can stay in the area), but to highlight the problem of unintended consequences. I've seen many people ask "Why don't companies hire remote workers at Silicon Valley wages?" and in the same breath say "Because I would never move to the third-world hellhole that the Bay Area has become", not realizing that if they did hire remote workers, the same thing would happen in their communities. Inflation is the flip side of higher wages; when everybody gets paid more, everything costs more.

>So now house prices in Mountain View and Sunnyvale go from $800K -> $2.4M,

This just proves that the housing crises was the same before. A regular middle-class income cannot afford an $800k home. The problem is the same before and after: there isn't enough supply for people who want homes.

Until you look at sales numbers and supply, your analysis is meaningless. Increased wages don't make housing prices increase.

>not realizing that if they did hire remote workers, the same thing would happen in their communities.

Again, this is bullshit. Google could hire 10,000 remote employees at SV wages in somewhere like the Detroit area and it would have a negligible impact on housing prices because the supply is so large.

Remember, techies still make up a tiny percentage of the bay area population. 1% of the population being flush with cash should have absolutely zero impact on a healthy housing market.

I don't deny that the root cause of this issue is lack of supply. I'm saying that over short time periods (and sometimes over long ones where NIMBY policies rule), lack of housing supply is a given, and so the consequence of more money for housing is not more housing, it's higher housing prices.

1% of the population being flush with cash has virtually no effect on a housing market where 5% of the housing stock turns over every year. It has a very large effect when < 1% of the housing stock turns over. If people start seeing an effect, they have every incentive not to turn their house over while its value is still going up. Right now, Mountain View has 111 homes for sale in a city of 80,000. Sunnyvale has 156 in a city of 150,000. Cupertino has 56 in a city of 40,000, San Francisco has 706 in a city of a million.

Realistically, if these big tech companies offered full remote work (which they actually do, if you've been at the company long enough, but a relatively small portion of the employees meet the tenure & job performance requirements), you wouldn't get 10,000 remote employees in Detroit. You'd get 100,000 remote employees who are free to move around the U.S. to whichever city they prefer most. It's highly likely they will clump in cities that are desirable for techies - Seattle, Portland, Boulder, Austin, Boston, NYC, Pittsburgh, Raleigh-Durham. All except the last 2 are already getting their own version of a mini-housing-crisis, but not to the extent that the Bay Area is.

What would you say the "dark horse" second or third-tier tech cities are in the US right now, the ones that still have good infrastructure and quality of life but aren't suffering from a housing crisis?

I guess if they insist in staying in this area, they need to start building tiny homes neighbourhoods...

I don't think they would open an office in Detroit, might affect their diversity numbers too much /s

> if they did hire remote workers, the same thing would happen in their communities.

That's nonsense. There's a severe shortage of housing in Silicon Valley despite the fact that there's an abundance of housing in most of the country. Hiring remote workers means that you're hiring all around the country/world and people can move, not hiring in any one community. Also, hiring remotely means you can pay much less than Silicon Valley compensation because landlords aren't leeching an enormous bulk of it.

Silicon Valley could solve its housing problem tomorrow if it fixed its ultra-restrictive zoning laws, ended Prop 13, and built a ton of apartments. It won't do that because the people in power place the interest of wealthy landlords above that of the average people who live there.

Another (minor) nit, in my experience you have always needed to be a dual tech income to afford a house in the cities near the bay. My wife and I bought our first house in 1984 for $153,000 and it required us to both be working well paid tech jobs. You can also buy a house usually if you have a lucky equity break and can use that to pay big chunk down so the mortgage is affordable on a single income but as far as I can tell buying a house on a single engineer's income, that is near the center of activity, hasn't been true since the early 70's or so.

I dunno - my in-laws bought their house in 1986 on a single engineer's salary (then renovated it into a bigger one when my mother-in-law went back to work). I also had a number of coworkers at Google who bought houses in 2009/2010 as single tech workers. Heck, I could've done so myself (2BR condos in MTV were going for $400K at the time), and am kicking myself for not doing it.

Perhaps 09-10 was a bit of an aberration because it was the middle of the foreclosure crisis and housing prices bottomed out then. I guess another big "thing" is parents (particularly Asian ones) paying the down payment for their kids - 2 of the 4 coworkers I'm thinking of had that help, and one had a minor stock-option windfall from joining a company right before Intuit bought it.

Fair enough, but where? Back in the 80's when we bought our house in Sunnyvale, we could have bought one for much less either Livermore, Fremont/Milpitas, or South San Jose for much less but the commute would be high. Pretty consistently the outlying areas are about half the cost of the cities actually by the bay. Would love to hear more data points.

Cupertino, Cambrian Park, Sunnyvale, downtown San Jose, and Los Altos.

Cool, well those would be the neighborhoods of choice. I guess I was just underpaid :-).

"In the early 1960s, CA’s population was 15 million & we built 250K-300K homes/year.

Today, CA’s population is 40 million & we build 80K homes/year.

So our population nearly tripled while housing production dropped by over 2/3.

And people wonder why housing is so expensive."

Wow this is jaw dropping.

> By one estimate from the California Department of Housing and Community Development, the state needs to build 1.8 million units over the next seven years just to keep pace with population growth

You need to build about 257k just to keep up with growth, not to address any sort of shortage. This to me should sound like a builder's gold rush. Why are builders not flocking to CA to build? Are there some stringent set of regulations that greatly reduce the economic feasibility? Is this Prop 13 proving to be a failure?

> Why are builders not flocking to CA to build?

NIMBYs. Builders want to build, but the people who already own won't let them in most cases. I live in Cupertino. They want to build 2000 units next to my house. Most of neighbors are against it because it will "change the character of the neighborhood". That is true, it will. But I'll be the farmers who lived here in the 1960s said the same thing when all of our houses were built as the farmers sold their land.

The main difference this time is that the current residents can't get rich selling their land because the developers want to build up, not out.

CA tried to solve this with SB 827, which would force upzoning near transit. Sadly, it was poorly written and failed to pass, but it was a good idea. It would have forced pretty much all of San Francisco to allow building medium size buildings in place of existing single family homes. And a lot of the rest of the Bay Area too.

I have heard the NIMBY argument many times before but I just don't buy it. It's too easy of a target. Plus there is so much land. Ok fine, won't build in your backyard, I'll build in the next yard over. We have this exact situation in a town called Davidson, NC where I am from. Builders can't build there. So they built in the hundreds of thousands of acres immediately right next to it. Problem solved.

Plus people exercising their right to let things happen or not happen on land and electing to do what is in their own best interest sounds fine to me and nothing to be vilifying. It sounds like to me the "NIMBY" finger pointers are just upset that low cost housing isn't built in neighborhoods they want to live in -- that is, it is being portrayed as some altruistic goal but really has self interest in mind.

Even if I conceded your point about NIMBYism, it may explain a very small part of the problem, but it absolutely does not explain why builders are not flocking to a state with a 117k/yr housing shortfall to figure it out.

They've already done that. Average commute times in the big cities are 70+ minutes each way. There is only so far people will commute regardless of price.

That 117k/yr shortfall is not evenly spaced. All the jobs growth (and therefore the need for housing) is localized in the cities. They can build 200,000 units in the central valley where there is a ton of land, but no one would go there because there are no jobs, and it would be a 3 hour commute each way to the city.

The only solution is to build up, not out. We've already done all the building out that we can. And the NIMBYs are blocking the "up" growth because they want their cities of single family homes.

NIMBYism alone also isn't the problem per say, it's zoning plus NIMBYism that makes things hard. A vocal minority can effectively block zoning changes, which prevents developers from building high density housing. This is exacerbated by CA's so-so to terrible public transit. High density housing is far more annoying for whoever lives nearby when everyone living there has a car or two and the builder didn't also build a parking structure for those cars.

This is mostly a problem for coastal California too because land is limited and expensive. In inland California a developer can just buy and build someplace else.

Builders seem to be following the same playbook as the private equity firms who bought up homes to rent/flip, which is to limit supply to keep upward pressure on prices.

I've seen regulations brought up as a reason why there isn't much new construction, but other states with similar building code/environmental regulations don't seem to have the same problems.

The exception to this IMO are zoning regulations. When those limit high density housing, eg condos/apartments, they can serve to substantially increase home prices. But, that's assuming builders are willing to build enough units fast enough to actually reduce unit prices, and they've consistently shown they will not do that.

Prop 13 could contribute somewhat too, but I imagine it's effect is also much smaller than private equity and builders limiting supply.

It's just exposed and accelerated an underlying issue in housing policy. When demand goes up supply is also supposed to go up to meet demand in a healthy market, but because of artificial supply restrictions this is what happened. The government is to blame.

New housing development plans in the Valley, especially plans for higher-density developments, suffer from zoning restrictions arising out of “NIMBY” attitudes at the local level.

However, I don’t think that’s the state or federal government’s responsibility to change. If American government is truly to be “of the people, by the people”, then the people’s decisions at the local government level ought to be respected, including letting them suffer the consequences of bad choices.

If anything, the local zoning issues should be fought via campaigns to persuade local voters of better approaches. Fight a bad idea with a better idea. Not every local policy problem should be fixed with a new law from the state or federal legislation, or with federal/state funding incentives.

> including letting them suffer the consequences of bad choices.

The people voting NIMBY don't suffer any consequences though. VCs and big tech companies are happy to throw money away on higher salaries. Prop 13 keeps property taxes low for existing homeowners. The only people who actually suffer are those forced into homelessness and (to a lesser extent) those paying ever-higher rents for aging housing.

I don’t see why there’s anything inherently better with having this happen at the local level vs the state level. If a majority of Californian voters have elected state legislators who will vote for these policies at the state level, that’s just as valid, and still a completely democratic, path towards change as having it happen city by city.

That’s a road to not only maintaining the status quo but worsening the root cause. If you ask people if they’d like their home prices to fall and new people to move in, of course they’ll vote no. The problem is that many people who are hurt by NIMBY laws don’t live in the relevant cities. They live somewhere else in California, or in Wisconsin, or Nebraska, or Georgia.

You are widely assuming that because a pie was split to 10 people instead of one, there are more money buying houses. That's plain wrong. There is still a single pie. Houses were bought just the same, but by one person instead of 10. I don't know how much more first home purchases facilitate this when there are 10 people instead of one, but I doubt it had any impact since those folks are buying more than one house themselves anyway.

In the end, the only thing that prevents housing prices/bubbles, is denser desirable residential areas.

There might be other factors, but one is definitely NOT money distribution schemes from the top 1% to the top 10%.

One person doesn't need 10 houses.

One person doesn't need billions of dollars either. Doesn't mean it doesn't happen. Real estate is a good investment.

I'm speaking empirically, not abstractly here.

I know a number of pre-IPO Googlers, as well as a couple folks who have struck it rich with startups. For the most part, they own their own (pretty nice) home, and have little interest in owning other homes. A couple owned double homes, a big suburban one in the South Bay and either a condo in SF or a beach home in Santa Cruz that they could stay at for weekend getaways. One guy owned homes near every Google office that he would regularly travel to, but since they're in different cities, they don't do much for Bay Area real estate prices.

For the most part, people who got rich in tech tended to invest fairly conservatively in conventional index funds etc, and do a bit of dabbling in angel investing on the side. (Another unfortunate unintended consequence of the huge Silicon Valley wage increases is the near-collapse of the individual angel funding market; it used to be someone could write a check for $100K and sustain a founding team for a year or more, but that's increasingly difficult with Bay Area housing prices.) That makes perfect sense: another cardinal rule of investing is to stick to what you know. People who go into real estate because they've heard real estate is a good investment tend to get slaughtered; like any capital market, there's a lot of subtlety to knowing where, when, how much, and how to buy. If your passion in life is software, these details are going to be terribly boring, and you probably won't be much good at them.

I also know a number of landlords. Interestingly, this group is largely disjoint from the people who struck it rich with tech startup options. They are largely ordinary high-paid professionals who are comfortable with leverage. They might use their salaries (and perhaps a little inheritance) to buy a duplex, pay that down a bit, then use the rental income to justify another loan on a small apartment block, fund the mortgage with cash flow from that, pay down principal, etc. The entry into becoming a landlord is made significantly easier if you're making $300-400K/year than if you're making $100-125K.

(Interestingly, duplexes seem underpriced in Mountain View right now - you can sometimes buy an old 3/2 duplex for less than a ritzy 3BR condo. That indicates to me that a number of home buyers today have no interest in becoming landlords.)

Speaking empirically, I have plenty of friends that are renting rooms in investment properties owned by rich people.

Just a nit: Inflation is the result of too much money chasing too few goods, so not everything increases in price. Electronics and mass consumer goods typically stay the same price. Only goods which have limited supply and no substitution get more expensive, like housing.

Otherwise everything else makes sense.

You’re confusing inflation with real prices. Inflation means that the level of prices rises. If house prices rise because local government forbid new construction then that’s an increase in real prices.

It's more complicated than that in coastal California. During the housing bubble, real prices were the same and new home permits were double to triple where they are now.



In that situation, relaxed lending standards and easy money from the Fed allowed a ton of money to flow into residential real estate.

Even though there's still easy money from the Fed, lending standards have tightened since then, and builders and private equity seem to be effectively limiting supply to keep home prices high.

But this wouldn't have happened in the first case if the executives hadn't made this cartel. These are just second-order consequences of their actions - what might have happened over the course of two decades happened within 1 or 2. But this isn't the government's fault, this is a market imbalance caused directly by Google et al. acting in bad faith in the first place.

> So now house prices in Mountain View and Sunnyvale go from $800K -> $2.4M, and you must be a dual-tech-income family to afford a house.

Weird that this is a problem in Vancouver, Toronto, etc. The larger trend that you're ignoring is that global capital finds real estate in these areas to be good investments compared to their domestic options for storing value.

Instead of competing locally or domestically for real estate, people in the US, Canada, etc are competing with the richest people on the planet for a slice of the pie.

Yup. It should be illegal for non US residents to buy residential property in the US, especially in areas of high demand like the West Coast cities. Vancouver, BC implemented a tax which is somewhat helpful but clearly not enough. Land is a finite resource that's extremely valuable and selling it to foreigners for their vacation homes or investments is incredibly stupid. London is a place that's quickly learning this, although not doing anything about it. I wonder how bad it has to get until we change the laws. How many empty neighborhoods do we need to have before we reclaim the land for the people that actually live here? Probably a long time while the diversion is migrant workers crossing the Mexican border. It's amazing how stupid government and the people who support it can be.

> We were talking the other day about how the Bay Area's housing/homelessness crisis is a direct consequence of the collapse of the high-tech wage-fixing cartel.

Inflated housing costs are a worldwide phenomenon, you'll see a very similar story in Sydney, London, Tokyo and other places so I very much doubt the root cause is anything to do with the bay area. It might be worse there given the amount of money flowing in, but it's a much bigger problem.

It’s not nearly such a big deal in Tokyo. It’s only a problem in cities where local government limits the supply of housing.

The reason everyone at Apple and Google got a massive pay rise after 2010 is that Zuckerberg didn't join the cartel and Facebook turned on a firehose of money in SV. For employees of Apple and Google. Even of you never worked for Facebook, you owe Zuckerberg thanks for your raises.

how much do you pay for coca cola? If the price has gone up, it's probably not nearly as much as real estate has (probably more in line with what real inflation has been). And that's because real estate is a natural monopoly... luckily there's a solution, read Henry George: land value taxes.

Here's an email I sent to my city councilperson on 2017-12-01. It contains information that refutes your claim. I received no response:

Dear Aaron Peskin, I live in Supervisorial District 3, at ... . You represent me and my neighbors in your position on the SF Board of Supervisors. Your work is very important. I have lived in SF for 6 years and have seen the housing market get more and more expensive while the city's businesses have grown. Economically, the city is prospering and adding many jobs which bring workers to the city every day. Unfortunately, the city has not added enough housing for these people. Here are the numbers:

- In 2011, SF jobs increased 2% (see [1] page 5) and housing increased 0.07% (see [6] page 4).

- In 2012, SF jobs increased 5% (see [2] page 5) and housing increased 0.4% (see [7] page 4).

- In 2013, SF jobs increased 5% (see [3] page 5) and housing increased 0.9% (see [8] page 4).

- In 2014, SF jobs increased 5% (see [4] page 5) and housing increased 1% (see [9] page 5).

- In 2015, SF jobs increased 5% (see [5] page 5) and housing increased 1% (see [10] page 5).

The 2016 reports should appear at [11] when they are available.

I took Econ 101 in college and learned about the Law of Supply and Demand. It's clear to me that SF's housing crisis is caused by demand growing much faster than supply. The city has enacted many policies and programs to boost the economy, creating more jobs. It has not done enough to make places for all of those workers to live. It's an imbalance of epic proportions.

Fixing this situation is the responsibility of the San Francisco Board of Supervisors. You are our elected member of the board. Please tell me what you are doing to increase the housing supply.

Sincerely, Michael

[1] http://sf-planning.org/sites/default/files/FileCenter/Docume...

[2] http://default.sfplanning.org/publications_reports/Commerce_...

[3] http://default.sfplanning.org/publications_reports/Commerce_...

[4] http://default.sfplanning.org/publications_reports/Commerce_...

[5] http://default.sfplanning.org/publications_reports/2015_Comm...

[6] http://www.sf-planning.org/ftp/files/publications_reports/20...

[7] http://sf-planning.org/sites/default/files/FileCenter/Docume...

[8] http://default.sfplanning.org/publications_reports/Housing_I...

[9] http://www.sf-planning.org/ftp/files/publications_reports/20...

[10] http://default.sfplanning.org/publications_reports/2015_Hous...

[11] http://sf-planning.org/citywide-policy-reports-and-publicati...

The settlement is laughable given the number of people whose salaries were held down as a result of this collusion. It's not just workers at these companies that suffer. It has a network effect of holding salaries down at companies which aren't even colluding.

Another example of (usually giant) companies deciding to risk breaking the law because its cheaper in the long run to do so.

Let's call settlements what they are: Bribes. Sometimes a bribe can bring justice, but in cases like this where they've created a systemic problem, the knock-on effects are too large for a bribe to ever be true justice. Thats why people need to go to jail.


Settlements go to the plaintiffs, not the authorities. Plaintiffs have to agree to the settlement offer.

The plaintiffs could have gone to trial over this matter. They chose not to because fundamentally they must have perceived that the guaranteed settlement money was better than the risk that they walk away empty-handed. If the case was a slam dunk, the settlement would have been higher or they would have just gone to trial.

The value to the defendant in this case to not admit responsibility or wrongdoing is of higher value to the company than it is to the plaintiffs. The settlement money could always end up being higher than the plaintiffs would get out of trial so they can avoid this. The end result - those with the resources/lawyers to become plaintiffs get their money, the companies get to keep doing what they want, and justice isn't actually done.

EXACTLY. I remember us engineers getting 0% raises for years in the mid 2000's when I worked at the Evil-i. Managers had to have meetings to explain to us it was only temporary due to the bubble bursting (options from '97 were underwater until practically 2011). And what, they throw a few $k at us and that's supposed to make up for it? Glad I got out of that toxic shithole. My peers who left in the 90's tried to encourage me to leave, but I thought I'd be stable and loyal. I remember around 1990-91 when former employees who had been "wrongfully terminated" were protesting, and I was a just some mid-20something laughing at them for being slackers. Joke's on me, they were dead right.

It was a long time ago. I got a raise out of it and later retired early, and I'm a pretty average software engineer, for Google anyway. Your argument that I "suffered" when actually they treated me very well by almost any standard isn't going to work.

Based on what I've heard about current salaries for in-demand people, I think it's safe to say that any depressing effect on software engineers' salaries is long gone?

And if not, and this is what holding down salaries looks like, imagine what the housing market would be like without it.

The fact that some "average software engineers" got lucky to join at the right time and a sweet deal (by some metric) does not make a criminal act okay that makes thousands of more software engineers who would join later and did not share the same economic upside suffer. Note that people who joined Google before 2010 are a small minority of the current employees.

> I think it's safe to say that any depressing effect on software engineers' salaries is long gone?

Every problem can be solved with one level of indirection. At scale, all of the big tech report their salary stats to survey firms who "aggregate" them and give it back to them. Yup.

This reads like Stockholm Syndrome at its finest.

You're OK with them paying you less because you still got paid well by some standard? You (and as a result many other people) would be making more both in the past and today if they hadn't colluded.

For at least some subset of those affected by this collusion the salary lost will make a significant difference in their families' and their own quality of life either now or in the future.

It was never OK, but it was settled, they don't do that anymore, and besides, Steve Jobs (who apparently started it) is dead.

And as for the people theoretically adversely affected, you'd have to figure out who they are, which wouldn't be easy, since it's people who were in demand enough that they might have started a bidding war.

There is not much more justice to be had in this case. If you're interested in pursuing justice, why not focus on current problems with identifiable victims?

A bidding war is precisely what should have happened. It's called competition and is the number one way capitalism is supposed to end up serving the public interest.

And reading your comments on this page, I have to ask: are you representing nobody's opinion but your own, on your own terms?

Yes, just my own opinions.

It sounds like someone who made enough money to have their empathy towards others seriously diluted.

Probably no one is arguing that SV programmers have particularly hard lives in the larger picture, but if you get in the habit of punishing collusion insufficiently because, 'eh, I've got enough flex in my budget', you're being a little selfish. That's like boomers supporting an unsustainable social security system: 'Look, it works well enough for me today. And I'm not going to be in the system when it turns sour.'

This was going on at the height of the smart phone wars, which was a trillion dollar opportunity that ultimately made Apple the most valuable company on the planet. If Apple defended its early market position by poaching employees instead of by litigating competitors, there would have been a huge jump in engineer salaries that would have rippled across the industry.

You can see this going on today with autonomous cars increasing salaries for engineers working on that problem, which has had knock-on effects for machine learning engineers and top tier software engineers in general.

As a Google employee, you were especially shafted by the settlement. Google's compensation structure at the time had a significant performance bonus component, even for low performers, but the settlement distribution was allocated based on base salary, so employees at companies with smaller bonus compensation got a disproportionate amount of the settlement.

The critical point is that, potentially, you were a candidate of having your wages colluded to be depressed illegally. Ponder about this fact for a moment. Now, how could you straightforwardly make an argument that you are okay because they "treated me very well" or that it's a good thing because it helps the housing market (less income on your end)?

These are not in any way, shape or form arguments or defences for these practices.

It was never OK or legal but it was settled. I can say that I was happy with the settlement. I cannot speak for others except to say that I don't think I'm all that much of an outlier, so don't write me off, bro.

I still think this is a better argument than people arguing on behalf of hypothetical others they don't know anything about. One data point is better than zero. If you want to pursue justice, find a current problem with some identifiable victims.

Imagine if they had been paying you actual market wages, instead of "collusion-depressed" market wages. Then they came to you and said "Hey skybrian, we need you to take a $100k/year pay cut. You'll still be making a ton of money by any standard and this will help us hire other people for less money, so our business will be even more profitable". How would you feel about that deal?

Perhaps you got a better deal, but the settlement itself was pennies (/u/nostrademons) reported in this thread it was ~1K for him/her but the wage inflation the next year was around 100k).

> I still think this is a better argument than people arguing on behalf of hypothetical others they don't know anything about. One data point is better than zero.

Harh, harh. I must admit, I know nothing about a lot of things. Thanks for sharing your viewpoint however, it grows my knowledge by at least one :)

My main point I'll make is simple -- you were victim of wage depression, it was found out and 'fixed' because it was illegal, and you benefited -- precisely because you were an identifiable victim. Now, imagine if you 'benefited' X to (X+Y) years earlier. Wouldn't you have retired earlier -- if that's your desirable outcome?

Well, maybe but filling in those numbers would be hard.

The reason it makes sense to settle something like this is that it's a bunch of what-ifs and would be hard to prove either way. How important is recruiting for getting people to switch jobs when it's well known you can get a higher salary from job-hopping and some people already do it? Particularly since there is also competition from other companies not in on it, and many people ignore recruiters.

It's never going to be clear whether the settlement was overly generous (a bit of unearned money for us) or whether we would have done much better if it had never happened, so the settlement should have been higher. The illegal collusion stopped, so I guess that's successful government action? Since the market for software engineers was and still is pretty robust, it seems like you could just as easily argue that it was a big success or that it made little difference.

It just seems weird to question the settlement now. Would you want to re-argue a settlement for some bankers who supposedly got screwed a decade ago? Aren't there more important injustices in the world that are still going on?

The critical thing here is that if pay was uncontrolled, then skilled employees could market themselves to the highest payer, and that would put more of the profits of the work of those employees into employee pay instead of into company margin (aka profit).

It is pretty clear when you look at the revenue per employee numbers at some of these 'digital product' companies (specifically Google and Facebook), that rank and file employees are not sharing equally with management in the returns.

That is not to say that pay is bad, or that wage theft is going on (extreme positions), employees in California at least are at will and can quit at any time to offer their services to another player. The regulatory requirement though is to identify and prevent collusion between those players in keeping salaries low.

> That is not to say that pay is bad, or that wage theft is going on (extreme positions), employees in California at least are at will and can quit at any time to offer their services to another player. The regulatory requirement though is to identify and prevent collusion between those players in keeping salaries low.

Wait, but isn't this situation actually making them getting hired at other players much more difficult due to the collusion?

It was not "much more difficult." They didn't have recruiters calling them, which I guess is market information of a sort.

This is the part of the whole internet-anger about this I've never understood.

I hate having recruiters call me. It's actively annoying. Having only Facebook recruiters call me was strictly better than the alternative that all major tech company recruiters cold call me, which started happening right after this broke.

I'm totally in favor of distributing more profits for all enterprises to workers, tech workers included, but "we agreed to not annoy one another's workers, but we're happy to hire when they apply" isn't really the story people tell. But that was my (and it sounds like your) experience of this.

>equally with management in the returns.

Managers at Google don't make much more and in some cases don't make more than the SWEs they manage. Did you mean to say shareholders?

I expect he means rank and file employees including middle management vs. Execs, which is probably limited to the set of people who are VP or above. (maybe Director, but I think the data would disagree).

Yes, I was generally draw the line at the same point, although I expect Director is in there too. Much of the director and above remuneration is in stock and bonuses which benefits disproportionately from profit.

From what I've seen, director level compensation follows mostly the same structure as non-director compensation, but with the dials turned up in much the same way. That is to say, L5 -> L6, L6 -> L7, and L7 -> L8/Director modify your compensation structure in similar ways.

This ignores things like truly discretionary cash bonuses and one-time stock grants which exist, but I'd have no visibility into.

> This ignores things like truly discretionary cash bonuses and one-time stock grants which exist, but I'd have no visibility into.

Having played at that level my experience was that generally they start at 100% of your 'base' salary and go up from there. Much of the knobs are intentionally opaque.

I was told by someone in HR that has HR friends at Google that the manager of a group always makes at least as much as the highest paid employee in that group.

This is definitely incorrect.

Your friend of a friend lied to you. Comp is mostly based on level and performance and it's totally possible to have a higher level employee reporting to a lower level manager.

That's the plan, but it doesn't always happen due to internal transfers. Anyway it means little because if you are highly paid then you also are high level title so you just get managed by your manager's manager but stay working on your same team.

One of the things that made my mind explode was that this was blatantly recommended in The Hard Thing About Hard Things. Horowitz argues that your relationship with your business partner is worth more than the employee and you shouldn’t entertain solicitations for employment.

This is why, as an employee, I am not willing to put my neck out for my employer - modern society and goings on are a pretty clear lesson that employees that take risks for a company end up eating them and nobody higher up cares (unless it's essentially free to care, which is more easily explained by self-interested behavior than any sort of altruism).

Balancing the risk/reward of poaching employees from a partner company makes sense.

This is not about backroom agreements to artificially keep wages down, but about weighing the pro's and con's any particular action which could derail important projects.

If the employee is worth more than the risks of poaching them, then do so. If not, it would be foolhardy to do so.

I mean, at least he kept it real.

Sadly, employees are just another resource ( human resource ) in the modern world.

Reminds me of the work “Disposable People”

> estimated $3 billion in lost wages. Before the case went to trial, the companies settled for a total of $435 million

So you get busted doing something illegal and walk away with a 2.5Billion in your pocket and 0 jail time. How do you expect execs to not do this all the time?

We are talking about a hypothetical wage calculation with many unknowns versus a cash settlement. In truth, nobody knows what would have happened in the counterfactual case, but settlements require picking a number.

The number ought to err too high, not too low. This is supposed to be punishment and deterrent, not a gamble to get ahead illegally.

Maybe it was already on the high side? How do we know?

If the number of 64,000 employees is correct, even that $3B seems like a pittance. One commenter wrote their wage jumped by $100k the year after this settlement. $3B / 64k ~= $50k per person, less than half that number[1]. In the end they only had to pay an amount that was < $7k per person. What a joke.

My guess is the executives who orchestrated this got a big bonus as a result. And why wouldn't they? They optimized for the corporation's good. How do we collectively start incentivizing not being evil like this?

1. Sure it's only one data point to extrapolate off of but anecdotally hearing that people were paid $100-150k in SF while this was going on is a substantial amount of wage suppression given that those same people employed now would be making $300-500k at those same companies without blinking an eye.

It was orchestrated by CEOs. They get big bonuses regardless.

Also you are conflating base salary with total comp in your example.

A fair point about CEOs but the leaders of engineering had to sign off on this all along the way.

Of course my math is back of the envelope and nothing to go by but it definitely hints at the massive discrepancy.

To your point about salary/comp, Netflix is at least one example of a company that allows (allowed?) comp in the form of 100% salary.

> Top executives of leading tech companies secretly agreed among themselves not to hire each other’s employees

That's not accurate. The agreement was about recruiters cold-calling each other's employees. Employees were free to reach out on their own between companies. Workers routinely switched companies while the agreement was in effect.

I still think it was bullshit, but it wasn't quite as egregious as the article makes it sound.

Disclaimer: I was one of the affected employees, and got a share of the settlement.

Your statement is also not accurate, because there were several variants of "the agreement" and for some pairs of companies the agreement extended beyond cold-calling [https://www.lieffcabraser.com/antitrust/high-tech-employees/]. I'm sure multiple careers were set back when their prospective employer's HR department notified their current employer's HR department about the disloyalty.

Those allegations didn't have very strong evidence. They were repeated by some lawyers looking for people to opt out of the class action. When I asked for details they didn't have anything.

A lot of the discovery was never redacted & released; it remains under seal. I think there was more going on like a courtesy "we're going to hire your person. You want us to turn them down & earn a chit for the future?".

Recruitment is a vital part of the work companies do and they traditionally pour a ton of resources into that aspect of hiring. But yes, I agree specifying the deal was "limited" to recruitment hiring would be better and more precise.

That shouldn't be used to diminish how vast of a deal this was. But I generally agree with you.

I was a member of the class and got a settlement. It's been quite some time so I don't recall the details exactly, but I think the settlement was divided through some combination of the amount of time you were employed through the time period in question, and maybe base salary or title? I would have been in the maximum bracket for time but probably pretty low in the salary/title spectrum as software engineers go. I think the amount I got was just under $7k.

FWIW, I didn't feel particularly underpaid at the time, given that I was making way more than I'd ever had at any other point in my life, although I was relatively junior then and didn't have a good grip on the market. It ended up just being a bonus for essentially no effort on my part. I don't hold any major personal antipathy towards any part of the process.

I don't know how this is still a super secret unknown to the public at large. This has been reported for years. What am I missing?

These employees aren't very sympathetic victims. Nobody wants to hear about how some 5%-er with a bunch of good alternatives should be making more and having more choices about who to work for.

You'll even find in the comments here that many of the affected employees themselves feel they got at worst a fair deal, because after all some (most!) workers get paid less and work in harsher conditions and so forth.

> The project was made possible by a grant from the eBay Settlement Fund.

It is pretty amazing how this story was memory-holed by so many in the industry.

It's interesting the lengths they'll go to rip off their own workers, and yet they won't even make the slightest effort to hire in locations where labor is much cheaper. There's countless places in the US where they could've fairly paid 1/3 less. And significantly more savings outside the US.

These companies have offices all over the world, including China and India.

A lot of companies have satellite offices in smaller cities with lower CoL. But they still want to be in urban centers with lots of people and next to strong CS colleges.

It should be possible to crunch through LinkedIn histories and determine where there's collusion between employers. If moves between employer A and employer B are lower than between A to C and C to B, something funny is going on.

With something as complex as employment decisions, there could be a lot of confounding factors. Example: What if A and B are located somewhere more desirable? There may naturally be a desire to stay where you are and less impetus to move. A and B might be in a class of company which confers more prestige, so there would be less impetus to move. A and B might entail more risk somehow. There are many of these.

Using bulk statistics to show things like bias and collusion is fraught with these issues.

If A and B are both located in desirable locations, and C is not, then the strangeness of there being more A->C->B jumps than A->B is only stronger.

If A and B are in the same desirable location, all the weirder.

If A and B are both located in desirable locations, and C is not, then the strangeness of there being more A->C->B jumps than A->B is only stronger.

Again, you're assuming that there only a few entirely orthogonal variables. If A and B are both located in a desirable location, the cost of moving to A or the cost of moving to B might be high enough, such that it's only justified if there is a large increase in salary. So this factor might well apply more to moving from C->A than it would A->B or B->A. The same housing expenses might also motivate other people to move from A->C. In this case, you might well see more A->C->B jumps than A->B.

However, none of these are cleanly applicable to real people in the real world. We're not dealing with particles or spherical cows here.

That's just one metric. This is a good machine learning problem. Use companies caught in anti-poaching collusion to train the system.

It's not determinative, but it shows who to investigate.

"It shows who to investigate," also implies a predetermined outcome and guilt. It's more that it shows there's something to investigate, period. In 2019, we should be cautious about applying bulk statistics instantly to blame or suspicion. It's that sort of attitude which propagates the 70% wage gap myth, when more detailed analyses narrow this to 94%.


I think, in the case of Apple and Facebook, there's more than bulk statistics, anyways. The focus should be on that evidence, not such crude measures.

Agreed. Such an approach would be a money wasting dragnet. Once upon a time the DEA tried a similar approach and began investigating people for buying bill counters (drug traffickers count a lot of bills). They eventually admitted it was a massive waste of time because without another reliable data source to correlate it with it just generated low quality leads that basically always led to nothing.

> A separate class action lawsuit was filed on behalf of 64,000 tech workers for an estimated $3 billion in lost wages. Before the case went to trial, the companies settled for a total of $435 million.

How would we know if they resumed the bad behavior?

That's only $6796.87 per person.

Depending on how much the mean/median person's base salary is that's on the order of a bonus. On one hand it's not that much. On the other hand I'd be pissed if I didn't get my bonus because of some back room deal between execs.

It’s not nearly the amount of an annual bonus, which is typically about 15% base pay. This is the order of a spot bonus (e.g. the director wants to thank you for working double time to make a product launch happen in time for a conference). Or it’s the price of 1-3 successful referrals to a company.

"It’s not nearly the amount of an annual bonus, which is typically about 15% base pay."

Not in plenty of industries.

> that's on the order of a bonus

It's likely far less, considering the fees paid to the law firm(s).

...and it's probably denominated in gift cards to the various companies' stores.

I wonder how much small firms/startups have /benefited/ from this arrangement. By artificially reducing demand for labor, big tech firms have effectively made it more profitable for smaller firms to compete against them.

I think you got it the other way around. They have decreased the price of labour and thus increased the demand for it.

This is more or less an employer union.

I don't get your point. As I understand it they have decreased the demand to decrease the price.

It's a approximately a zero sum game in the cartel. That was my point. If the price goes down the demand goes up. So the total demand for programmers increase (the demand for the other companies programmers decrease, of-course).

It's a subjective matter of semantics, though.

I prefer "buyer cartel". It sounds more sinister.

That, along with regulatory enforcement, was basically what broke the collusion scheme. Facebook as a growing company did not want to play ball, and aggressively poached from the other tech companies with bigger offers, forcing them to raise their compensation to retain employees.

I think the tech anti-poaching lawsuit is kind of a strange case because these are the highly-paid employees, not entry-level laborers, and the free market for top employees is likely to increase inequality, which is sort of the opposite of the goal of the Sherman Act. It’s similar to how collusion in the NBA reduces wages at the top while increasing team profits as well as enabling higher wages at the bottom (sports teams are excluded from the Sherman antitrust act), making a more viable ecosystem (see Planet Money episode https://www.npr.org/sections/money/2018/07/11/628137929/epis...). So it’s possible that forcing a free market of top employees will increase wage inequality. And ironically, politicians now complain that these tech companies are paying too much, driving up the rent of housing (thanks to the region’s restricted housing supply), since the lack of housing channels high wages into the pockets of landlords.

How should the Bay Area economy have grown in the past decade if we had wanted to prevent the poverty created by tech and landlord wealth? We should have allowed far more housing supply, allowing apartments to bid down rents and also allowing new workers to bid down wages. We should have had higher taxes on land, allowing the poor to share the wealth created by the increasing concentration of employment centers. And we should have had higher national income taxes, spreading the wealth from the highest-paid workers in the winners-take-all economy to the rest. But given the dysfunctional local government (restrictive zoning), dysfunctional state government (Proposition 13), and dysfunctional national government (low top tiers and low taxes on homeowner rents), the collusion that the tech companies did was not clearly a bad thing. The Sherman Act is about enabling the price signal to be the “central nervous system of the economy” (U.S. v. Socony-Vacuum Oil Co) to mobilize labor and capital. But when the dominant factor in the labor market is local governments’ restrictions on the housing supply which prevent mobility, I don’t see much point in enforcing the antitrust act against companies.

By depressing tech wages, workers are forced out of big tech companies and into smaller companies with competitive salaries but fewer open positions.

Big companies complain they can't find enough workers with their relatively low wages, and lobby for more H1b worker visas, depressing wages even further as foreign workers cannot change companies easily without moving back to their native countries first.

I can totally imagine Steve Jobs writing that email over "no poaching" to the other big tech companies.

Powerful people colluding? Sounds like one of those "conspiracy theories"</sarc>

Given how these large companies have a penchant to buy a promising company just to kill the product a couple years later, it seems like it's in the market's best interest to encourage distribution of power. This includes encouraging entrepreneurship with technologists & incentives to grow individual businesses to profitability, while discouraging M & A.

This happened but it's old news. I remember when they announced the raise we got as a result. If you never heard of it, you weren't affected.

I think the latest expression of this concept came out when a friend of mine was up for a senior role at Google and they ended consideration when they suddenly decided that he switched jobs too often to be a leader, but they were happy to continue considering him for a role beneath what he currently already had.

Isn't that a reasonable concern?

The decision is specific to that one candidate and related directly to the candidates work history.

Is there no N, where N is the number of jobs someone has had in the last five years, where you would consider someone to be a questionable candidate for a key position?

“A separate class action lawsuit was filed on behalf of 64,000 tech workers for an estimated $3 billion in lost wages.“

So they went through all this effort to save 3 billion/64000 = $46,875 per employee. Is that how it should be interpreted? If so, these executives are greedy scum.

IMO, there ought to be a law that makes it easier to pierce the corporate veil in these sorts of cases.

Can any member of the class lawsuit here comment on the settlement? How did that work out for you?

I was a member of the class. After the settlement went through, I remember receiving a few large booklets in the mail from a law firm explaining the settlement and offering the opportunity to opt out.

After what seemed like a really long time - at least a year - I received a check for about $5000, which I had to pay taxes on, so it ended up being around $3000 net. I had left the company by that time, but still owned a substantial amount of stock, so I wouldn't be surprised if I ended up losing more from the negative impact on the stock price than I got in the settlement.

The people who really came out ahead in this were the lawyers, who took something like 25% of the settlement for themselves.

Not a member of that class but one of the things that happened as a result of these revelations was that everyone at Google got a large raise (much larger than typical annual raises) and a substantial one-time cash bonus which appeared to be, during the announcement, just Eric being Uncle Moneybags but just after the all-hands we all found out the reason from the newspapers.

Are you talking about the 2010 adjustment or something in more recent years. I don’t remember this.


I got some stuff in the mail, and eventually two checks for the two phases. I think they were something like $1100 and $7000.

I was kind of annoyed because the initial settlement was apparently so embarrassing that the _judge_ rejected it, something like $330M on supposedly $3B in lost wages. So they went back and increased it to the $435M, still nowhere close to what it should have been. Of course at this point the lawyers' incentives and the class' incentives are not aligned at all, so that's how it ended.

I can't reconcile how anyone with integrity would work at these firms. Which then it follows that only people without integrity work at these firms.

Now it all makes sense.

These companies still routinely conspire against their own workers to slightly increase profits by reducing benefits, salaried roles, sick pay etc.

And employees conspire to get more by gaining experience then moving to other companies, differentiating themselves and asking for raises?

You are describing negotiation.

Companies are not supposed to want to raise wages any more than employees are supposed to want to lower wages. The balance is how the market puts a value on different kinds of work and skills.

Sometimes it's a negotiation between parties each with some measure of power, but it can also be completely unilateral like using layoffs and redundancies and shutdowns and bankruptcies as an accounting tool and not necessarily because they're losing money or making strategic changes.

I really think that this is crazy. I mean, that they did these kinds of agreements and actually thought they wouldn't get caught.

Rules sooner or later will apply!

They didn’t apply to Harvey Weinstein until they did!

Employee compensation at these companies significantly tied to the stock price. So if these practice somehow outlawed, doesn't mean that company will have to spend more thus lower the stock price thus lower the employee compensation ?

669 ...

So while this is bad... I don't know how to feel about this. The other side of the coin is that these companies pay WAY ABOVE average salaries. I'm intimately familiar with this having

FAANG companies average of 50% more compensation than average. Especially outside of the bay area.

Typical range TC Sr. SDE in nyc: 150-250k + Bonus. Typical range TC for Sr. SDE in nyc: for Google/Facebook/Amazon 300-400k ( and goes higher ).

Only the most well paid Quants working in horrible environments made 500k+ There's a good portion >E5 engineers at these companies making well over that.

Anti-competition is bad.. but they are at the top of the industry on compensation. :( So again, don't know how to feel about this.

> So while this is bad... I don't know how to feel about this.

Just to be clear: you are saying it's possibly ok for a cartel of billionaires to collude to suppress wages for a bunch of people making six figures? Because those employees have it "pretty good" and should be happy with what they're given, even though they are working to build world-historical fortunes and power for the business owners?

Additional irony is, that behavior is condemned while any sort of orchestrated labor union in the industry is met with resistance at every turn.

Your employers, even as competitors dealing with monetary counts in billions, try to unionize (aka collusion). Stop pretending businesses are looking after your best interests. Chances are, if the business supports something, unless your goals align on that thing with the business, you probably want to do the opposite. Compensation maximization and labor expense minimization are nearly orthogonal.

No, being clear, since it seems you aren't separating concepts.

You're not happy that these companies have SINGLE large shareholders. That the founders kept so much company equity. I FULLY AGREE no one should have that much wealth. But, no one here is complaining about families or others having similar wealth. They are complaining that founders kept that much ownership.

The real wage suppression is happening in other industries and companies. How about the lack of a livable wage in industrial and service industries? How about that fact that the average wage has not kept up with cost of living?

Why are you advocating for engineers like myself making many times the average income and living way above average lives? That's insane!

How about oil companies with similar profits paying engineers 80-100k? at an actual risk of loss of life?

We should focus on the actual problems. The lack of ability to tax generational and asset wealth. The reason they accumulate so much is that we can't tax their share of ownership.

I agree with what you've said, but there's not much that individuals on here can do about it. I'm just trying to convince readers here not to willingly participate in reducing their own wages for the benefit of insanely rich business owners.


I don't think people really understand the gravity of those fortunes.

Jeff Bezos could now (in theory, at market prices) buy Tacoma, Washington.

As in buy every piece of real estate, private and public, all utilities and infrastructure.

A town of 200,000 people. One man could buy it all. The assessed property value for 2017 was just over $105B, including government-owned, plus wiggle room for other properties.

That "should not" be possible. Buying (or being able to buy, rather) a "mid sized urban city", as an individual.

> That "should not" be possible.

That actually seems pretty small compared to Bezos impact on global commerce.

I am all for constraints on wealth being created or compounded by political and market corruption. But see no reason to discourage or cap wealth created by productive means.

That makes his wealth seem pretty small, to me.


Serfdom doesn't pay that well.

Note well: I'm not saying that this is OK, either legally or morally. I'm just saying that the parent is way overhyping the problem.

Naw. You're underhyping it.

Creating this artificial ceiling in the low 6 figures is awful, regardless of how badly people making less than that are getting screwed. As far as I'm concerned, they're as hopeless as a bucket of crabs and we shouldn't use them as a bar or relative bar for anything.

Do I-bankers look at they're comp and say "yeah that's pretty good. I'm ok getting screwed out of any more"?

I think we should always be advocating for our group as hard as we can.

These aren't the only choices. I think our industry is actually a little better with that, where we have some software engineers advocating for more money for the contractors. [1]

[1] https://www.vox.com/2019/4/4/18293900/google-contractors-ben...

Absolutely everything you say could be true, and that still wouldn't make it serfdom, nor even close.

Who gets to judge how much an engineer is worth to a company making billion upon billions of dollars a year? If some of these engineers are what is enabling these companies and their executives to make millions then maybe they really are worth a 1 million dollar salary.

I think the fair thing to realize, as a society, is that corporate profit taxes just make sense. If a company is operating in a high profit margin line of business it has more than enough money to invest in future growth, fairly compensate employers and owners _and_ provide a societal benefit for all those other community members that work in less high profit margin societies. Sure, you've got good healthcare and what not, why not make sure your barista has the same access before buying that third house.

I applaud anyone who decides to do this of their own volition, but I think we can agree this makes sense societally and it'd just be easier if a third party was responsible for shifting the money around as needed and made sure everyone was paying proportionate to their ability.

I can't understand how people don't realize that putting some of our massive, massive wealth towards building a better society would not benefit them.

Can you imagine how many more inventions and advancements there would be if everyone had access to good education? Didn't have to worry about going bankrupt or dying because they can't meet medical expenses? If we put money into things that don't necessarily directly directly go into corporate bottom lines by next financial quarter? (roads, transportation infrastructure, clean water and air...)

I think you probably meant to say: "I can't understand how people don't realize that putting some of our massive, massive wealth towards building a better society would benefit them." (removing the extra 'not')

When you're super rich, you already have that better society, it just costs a bit more (nothing you can't easily afford). Who cares about the rest of the hoi polloi.

That's how our society works and we applaude it by promising the potential to become one of the super rich, when much of obtaining that degree of wealth isn't earned through hard work and innovation but instead, pure situational luck and ability to curb your morals and ethics to climb over people and pull the ladder behind you.

You know, this, and you see this in the way the super-rich politicians elected to represent most of the country act.

"We want to grow the pie, rather than redistribute anything, so everyone can live the American dream" -- when in reality, the pie is plenty big but verrrrry badly distributed when you're among the working poor.

There was also a great video making the rounds recently about Rep. Katie Porter grilling Jamie Dimon about the base wages at his bank in Irvine, CA. She got out a posterboard and did the math on a hypothetical single mother working full-time as a teller ($16.50 an hour). After some very straightforward math, the hypothetical single mother is in the hole $587 every month. She kept pressing Dimon for how he expects that role to be filled, and he had no answer (repeating "I'll have to think about it.") Obviously, on some level he doesn't give a shit, but I think it's the sort of thing where he's also simply never confronted with the reality for someone who doesn't make $31 million a year plus whatever other non-cash he takes home.

Also, this happened many years ago. Wages have soared since this was uncovered. Now (actually 4hrs ago, the last I checked) a college hire’s signing bonus is 2/3 my base salary was 6yrs earlier.

you're right. But there's MANY other companies making similar profits.. yet not of them pay anything similar?

I think you guys can't separate your dislike for these companies, with an actual, thoughtful analysis.

Most oil companies make similar profits.. yet the average oil engineer makes 80-100k. With a lot more risk, and in similar high demand as a software engineer.

The skill required is much lower though. With a lower bar, it’s much easier to work as a oil rigger. All it requires is a high school degree.

To be clear though, the people doing data analysis, land exploration, etc. for oil well discovery get paid much more by the way. They make similar amounts to what tech companies can offer in fact.

Sure, but the ones who aren't doing that are also getting paid really well.

In your scheme they would not :)

> Sure, but the ones who aren't doing that are also getting paid really well.

So, don't require a 4.3 GPA from Stanford/MIT/Caltech for entry-level back-office/maintenance type developers. It seems like you're claiming that FAANGs are overpaying non-contributors, or at least those whose impact is not easily measured. So, stop paying so much and see what kind of developers you get.

You've got the timeline backwards. The compensation only went up after this collusion ended.

This argument is very weak IMO. Paraphrased “I got paid happily, industry collusion to suppress wages is therefore OK”

Have you actually look at wages in other industries?

Why are we focusing on the companies that actually do PAY ABOVE. how about we focus on the industries that UNDER pay. Someone getting compensated many times the average income is not the person we should trying to advocate for. The market can decide that.

That industrial or service worker not getting paid a living wage. THATs who we should be fighting for.

I love how i'm getting downvoted for my parent comment, but no one has taken the time to compare to other industries and companies with similar profits, who pay their engineering talent SUBSTANTIALLY less. Oil industry has similar profits, yet pays engineers 80-100k.

> The market can decide that.

How, since they were not allowing the market to decide that.

> THATs who we should be fighting for.

It's not binary. Both fights are important.

It was never OK but was settled long ago and compared to the many, many other forms of injustice in the world that are ongoing and more severe, why focus on this one? Even if you limit your scope to tech companies, there are more important things.

There is a lot of ageism in this industry. I'd be curious if SWE at FAANG is equivalent to football players in the NFL.

Aka, Sure you might make more but what's the earnings over total career?

The salaries and other compensation are often high enough that if you live modestly, invest your money, and most importantly, the stock goes up, the career might be over when you realize you have enough to retire early.

But as they say, past performance is no guarantee of future results.

Yeah, until you compare how much they spend on wages to their market cap, which is just insanely low relative to most other industries.

Remember this happened before FB / Netflix / Unicorns started an open war for talent and blew salaries up.

Now compare the wages against CEO and shareholder compensation.

Yea, this is where things get really stupid. The contribution of shareholders is very close to nil - the CEO may be the most impactful employee (though I think they're honestly not nearly as important as modern society says, being a replaceable cog themselves) but they are not worth the equivalent of 20 or 5000 employees.

How about we compare to engineering wages in other companies with similar profits? Pretty much any other large engineering company. Or how about the oil industry? where profits are higher, the risk to life way higher, yet engineers make 80-100k?

What you have in these companies are single large shareholders vs institutional or family shareholders. That's what you're ultimately uncomfortable with. One person having so much net work.

> How about we compare to engineering wages

Why? Why not vs. CEO compensation? Is there some rule that CEOs and shareholders must make absurdly more money than workers, or society will collapse? CEO salaries are routinely defended with "that's what they're worth" - why does this not apply to the lowly worker?

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