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Comment by internaut | Hacker News Reader

Why do you find the idea of a wage fixing cartel so bizarre? It's a phenomenon as old as labour markets themselves. The employer does not want a market for labour, they want a steady supply of workers for the lowest price. Since there are fewer employers than workers, it is easier to coordinate a plot against them.

Also when the economy becomes more centralized and bigger companies swallow up smaller ones, you should expect more cartels. That is just logical.

I didn't say I had evidence but I know the number of competitors for positions in the UK has been going down, not up. The price for labour however has not shifted.

This is indicative of fixed prices, in this case wages.

Does you think the prices for turnips can be fixed but not that of plumbers? It's all the same thing.

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Think about how people won't buy turnips (or consumer goods in general) if the price is higher than they expect -- even if that's the break-even price. I think something similar's happening with employers: they won't pay more than $80-$100,000 for a programmer, the market-clearing price for programmers is somewhere around $130,000, and thus you get a STEM shortage. And this applies pretty much everywhere; it's astonishing how few employers are willing to admit that they can't fill positions, they aren't offering enough money.

That's what I think as well.

Why are they motivated to do this though CT? I feel like I'm missing a piece of the puzzle.

Labour costs are tiny fractions of these company's profits, and code stays 'fresh' for decades. You can easily get leaps in productivity that save a huge quantity of money for the company by just thinking a little harder. And it should be the case that smaller teams are better teams.

Why do programmers even make wages similar to the middle class? Their work isn't remotely comparable to lawyers or dentists. Surely million dollar salaries should be the norm. The practice of acquhires suggest a starting salary ought to be around 1.5 million dollars.

Even if it was one tenth of that...

good point. Price stickiness can apply to wages as well - it's often used to explain why it's supposedly difficult to decrease wages to keep positions filled during a recession, but I suspect in the current market the opposite is more often true: companies have a certain price point for labor in mind and are unwilling revise their payscale upward. It's a sinister version of your grandmother complaining about the price of milk, since large companies have a lot of leverage to distort the labor market.

I would have thought that Google and Facebook coming in would cause wages to rise?

Well, perhaps, but at least Google had been taken to court for hiring collusion.

I don't know about Facebook but yes, in Google's case they offer superior wages to their employees.

However that doesn't diminish my original statement because Google is likely to hire the most expensive talent and also their employees in London are paid I think about 30% less than their counterparts in the US. I suspect the American programmers are actually more effective at their jobs for a number of reasons e.g. being at ground zero when new domains open up but there is still likely to be wage gap which I'd explain by the depressed wage market in London. There are many very effective workers who ought to be paid twice or triple what they are currently earning. I know some of the younger programmers in the UK are being paid as little as 12-16k a year.

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