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Company A reciprocates, so wages are being kept down. Not that different from https://www.engadget.com/2014-02-19-apple-google-and-other-t...

This situation can lead to even more negative impacts on the employee down the line as a company can use your employment verification step to confidentially say anything they want about you. Employers have entirely too much power over your reputation and career even when you are long gone.

Quid pro quo strongly tied to the balance of power. Tiny Co. will probably not only refuse to hire people coming from Huge Co. but may may go the extra step and give Huge Co. a heads up in an attempt to gain favors with them. Plenty or such small companies got burned by getting on the wrong side of much larger companies, and ended up crippled by being denied contracts, or having their best people poached.

The rest is the classic collusion between companies who see no reason to compete over people because this only drives salaries higher and raises payroll costs.

Class identity and broad social ties can be much stronger than an individual's ties to any single corporation.