Facebook Refused No-Poaching Agreement With Google
techcrunch.com
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One funny thing about making the engineer-to-lawyer comparison regarding this salary fixing issue is that law actually has a much more obvious salary fixing problem, since almost every biglaw firm pays 160k and firms don't tend to compete for entry-level hires with compensation.
Additionally, it's my understanding that getting a shot [1] at the big leagues in law requires a top-12 school. Are mid-tier law schools pumping out lawyers who make $150k as first year associates? I'd be surprised, but I don't have the data.
[1] Even attending a top school is no guarantee. Law school is fiercely competitive, and only top-scoring students from top schools get the really lucrative & prestigious positions.
http://en.wikipedia.org/wiki/List_of_law_firms_by_profits_pe...
Pretty interesting reading:
http://www.skadden.com/sites/default/files/ckeditor/files/Ho...
This is as opposed to finance, where even associate level positions will generally pay a large portion of total compensation in the form of an annual bonus, tied to the firm's performance. In a good year, these can exceed 100% of base salary after a few years of experience, but this is not the case for any non-partner lawyers I know of.
The response: 'Not according to your billable hours.'
High cost of law school can only impact the supply side of lawyers. One need to understand trends in both demand and supply of these professions to get the larger picture.
Law school is competitive and software is not, will not be a valid argument that can justify higher salaries of lawyers.
In the same vein if you raised the salaries at certain large faculties the technology degrees may end up competitive as well.
It is true that a tiny number of lawyers make a lot of money straight out of school, but as noted their numbers are small and their hours (and often lives) awful.
That said is more than obvious that in a digital world the future belongs to developers, because the demand for them will go up, it's inevitable.
Mid-tier law schools are definitely not pumping out lawyers who make $150k as first year associates. Even coming out of a top-20 school, you have to be ~top 20% to be competitive.
You seem to be missing the economic realities at play. The cost of law school does not matter. All that matters is the supply and demand for lawyers and programmers. And if you've been keeping your ear to the ground, you may be aware that there is a significant oversupply of law grads nowadays.
There is no economic law that says that lawyers should make more money than programmers because they choose to be ripped off in pursuit of their training. If in the future, the salary of the average lawyer were to drop below that of the average programmer, Adam Smith would not bat an eye.
"There is no economic law that says that lawyers should make more money than programmers because they choose to be ripped off in pursuit of their training."
You don't NEED a degree to do programing. Arguably a computer science degree is standard but even then, you don't need 7 years of schooling. In order to be a lawyer, you need to complete law school.
At the end of the day, it's fair for a lawyer to charge more. Why? Because someone is willing to pay the premium.
Not in California.
Though there are successful independent lawyers. And an awful lot of unsuccessful ones.
So, you _do_ need to 'attend' law school, even if it's over the internet. (Unless you "study in a law office or judge’s chambers", which I guess is a type of apprenticeship.)
From the company's perspective, whatever an individual put into their experience is almost completely inconsequential if they are doing their job. In a healthy, functional market, pay isn't about "fairness", it's about bottom-line results, and programmers and engineers make the products and services these companies use to generate revenue which in turn creates demand and subsequently the available funds for legal counsel!
As far as lawyers are concerned, their wages just reflect the fact that they (should) have been trained as A-list negotiators, and it is common practice for lawyers to have a fee based on a percentage of the deal they negotiated.
There is a corollary for programmers for the above: start-ups. Though not trained negotiators, skill and work ethic can get you far enough. And it is common practice to receive a percentage of the reward.
The grass always looks greener on the other side.
The CEO is essentially the face of the company when things happen (good or bad) and has huge responsibilities. Managing a company is easy from the armchair.
I don't think that's how capitalism works. Your pay doesn't scale with your value, otherwise teachers and firefighters would be making bank. It's completely guided by supply and demand.
EDIT: Let's consider that "supply and demand" has artificially increased the price of programmers above their value. It's now a losing proposition for a company to continue to employ a programmer as the company is losing money, so the demand goes down and with it the price.
Conversely let's consider that the price of a programmer is artificially lower than his value. Any new company can come along and pay a bit more (but still less than actual value, for now!) and attract the best programming talent. Other companies must keep up in order to keep the talent, so the price returns to the actual value to the company.
Uh, no, that is not how supply and demand works. See <http://en.wikipedia.org/wiki/Economic_surplus>.
The gap between what people are willing to pay vs. what people are willing to sell for is often substantial. People spend a lot of time fighting over the distribution of the value in that gap between consumers and producers (see, e.g., price discrimination).
Replace x with "fair salaries" and "y" with "Tech companies making non-poaching agreements"
Despite the expense of law school, there are about 25-35k jobs per year for 40-45k graduates per year. And maybe 5k per year of those pay the kind of salaries people think lawyers make. What keeps supply limited in law is that the growth of supply is gated by the amount of legal work in the economy. Law is unlike engineering in that nobody wants to hire fresh grads. They want the seasoned veterans who have been to trials or handled a big deal. Preferably a bunch of them. There is only so much of that work to go around, which bottlenecks the supply pipeline in the stage between fresh graduate to employable lawyer.
The moral of the story is that economic systems are more complicated than simple neoclassical tropes admit.
Education in the ingenious arts, and in the liberal professions, is still more tedious and expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and physicians, ought to be much more liberal; and it is so accordingly.... We trust our health to the physician, our fortune, and sometimes our life and reputation, to the lawyer and attorney.... Fifthly, the wages of labour in different employments vary according to the probability or improbability of success in them. The probability that any particular person shall ever be qualified for the employments to which he is educated, is very different in different occupations. In the greatest part of mechanic trades success is almost certain; but very uncertain in the liberal professions. Put your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of shoes; but send him to study the law, it as at least twenty to one if he ever makes such proficiency as will enable him to live by the business.
http://www.gutenberg.org/files/3300/3300-h/3300-h.htm#link2H...
SUPPLY SIDE: "send him to study [x], it as at least twenty to one if he ever makes such proficiency as will enable him to live by the business." He is making is quite clear that the supply of qualified [x] is low (and giving a reason as to why it is low, but as Adam Smith himself would surely admit, the laws of supply and demand do not [directly] care about the 'why').
DEMAND SIDE: There is no explicit mention of the demand for these services, but as educated readers, we are able to deduce that during the time of Adam Smith, the demand for certain [x] heavily outweighed the supply.
*[x] blocked out because its specific value is not germane to the underlying logic of the argument.
You cannot turn this quote into a formula, because it's a description of how wages ought to be, and the reasons therefore. And it is completely irrelevant to discussion, as I'm sure if Smith were alive today, he would count the art of programming among the liberal professions. There is more to making a useful application than to be able to think mechanically. Because programmers create and shoemakers copy.
Of course, today you could point to a plethora of professions for which a long and expensive education is required, but for which compensation lags, often painfully. Though in some cases job security may be higher.
Also, the opportunity cost for law students is different than it is for engineers, since you can attend law school with a degree in art history.
When I was in grad school in engineering at UC Berkeley, I saw the average salary for MS and PhD level graduates relative to law and MBA programs in various surveys. It was pretty remarkable - not even a PhD in CS matched the average salary for a JD or MBA out of Boalt and Haas, respectivel. This was just during the first dot com boom, when silicon valley companies were lobbying congress for an increase in visas due to a severe shortage of UC citizens pursuing these degrees.
I always wondered why this question so rarely came up during the debates - why do you think you should be able to hire someone who majored in physics and went to 6 years of a PhD program in EE for 2/3 of what people are paying top law grads? I remember one part of a floor debate with Feinstein and a biotech CEO - the CEO was trying to get someone with a PhD in Biology with a focus on genetics, unix ability, and programming skill - and couldn't find one in spite of offering 90K, stock options, and a "lease on a new BMW" (which makes it sound like they're giving a BMW, but really they're just letting the worker drive it, a perk probably worth about 6k a year). Feinstein replied "what was the name of your company again?" and everyone laughed. Feinstein didn't say "why do you think you can hire someone like this for 2/3 the starting salary of an art history major with a law degree that can be completed in half the time with 1/50th the attrition rate?"
I get the feeling the gap isn't as pronounced as it used ot be, but it is still a good question for framing this debate.
And I think you misunderstand how big companys set wages - they use some very secretive "surveys" which they do not share with the employees to set the quanta for pay increases.
I agree that the practices were unethical, illegal, and infuriating as a developer, but it is an enormous jump to claim that the actions of several Silicon Valley companies lowered industry-wide wages by tens of thousands of dollars per year.
I don't even know how to begin calculating this cost to your typical dev, so I couldn't say whether tens of thousands is or isn't in the ballpark, but I feel pretty secure in theorizing that there is an impact.
This has resulted in industries being shut down at a massive scale in US where labor costs are higher and moved to a country where labor is cheap (China, India and so on) and also less regulated ("flexible" is the word used). As a bonus companies get to flout just about every environmental regulation which are non-existent in third world countries (think Bangladesh's textile manufacturing plants producing for luxury brands).
The net result of this combination of "free capital movement + restricted labor movement" is reduced wages across nations and industries. And over the time you end up having no skilled labor in a company's nation of incorporation (Apple?).
The supreme irony I see here is that the advocates of "free market" for capital tend to advance amazingly absurd arguments when it comes to having a similar free market for labor.
I highly recommend watching this talk by Noam Chomsky titled "Free Markets?": https://www.youtube.com/watch?v=WHj2GaPuEhY
Illegally colluding. The only reason they hire people is to make money. If they think paying more for employees will raise salaries all round and cause them to loose profit, they won't do it. It was cost benefit analysis.
And you're basically right, it was a cost-benefit analyses. And it was illegal to act upon it the way they did, which is the whole point.
But those sort of jobs dont face a lot of the issues that come with professional ones - if your a docker you boss is not going to trick you out of your vested stock and cost you millions ala silver lake partners.
The H1B visa program only serves to depress wages, take advantage of foreign workers, and eliminate the high-tech advantage that the US has developed over decades.
Its imposing a positive skew to the salary distribution.
There'd be a one-time cost to creating a campus in India, but honestly, it would be more than compensated for by the fact that they could almost certainly pay Indians in India a considerably lower wage than Indians in the Bay Area.
The reason they don't make their major campuses in other countries versus the US is because they feel that they have talent that is determined to stay in the US and which will not cross-pollinate well with physically remote offices, not because they think that it is cheaper to employ foreigners in the US than it would be in their home countries.
Obviously it's a complex topic, but why are you so sure?
And not for lack of trying, IBM, Google, Microsoft, and many other tech giants have subsidiaries here in Brazil for example.
Yet, everytime you hear about a brazillian that achieved something great recently, was NOT inside Brazil.
I can tell you, my personal reasons why I don't even applied to MS, IBM, etc here in Brazil: You have all problems of working in a big corporation, yet the pay is still terrible.
But I DID applied for US MS for example, because although it obviously has the same problems as working in BR MS, the pay is much, much higher (inside MS itself the US pay is about 4 times the BR pay for a entry level position).
Thus the best talent from Brazil (or India, or China) don't stay in their countries, they end leaving their countries, even if to work in companies that do exist in their countries, seeking a better life.
Now, why MS US and MS BR has so drastic pay gap? Basically, because of the things that made the US a great place to create startups in first place: much less regulation in general, much less corruption, and better infrastructure, in Brazil the mininum costs of running a company, without counting the employee wages, is so high, that not much money is left to actually pay the employees, we call this here "Brazil Cost".
Some examples: Brazil is the country in the world that is most complicated to pay the taxes, as result is the country where companies use a largest portion of their money paying accountants and tax lawyers.
Brazil has second highest taxes of the world (first place is Sweden).
Yet Brazil security, roads, etc... suck, to the point that most big companies in Brazil are concentrated in a private-built city named AlphaVille, companies and rich people living in AlphaVille built with their own private money their streets, guard stations, walls, electricity lines, etc... and pay with their own private money for cops, schools for their children, firefighters, etc... And STILL pay all the taxes normally too, as you can expect, running a business there (or living there) is crazy expensive.
Yet running our business there, is a necessity, when you have people assaulting business in São Paulo and Rio using heavy military weapons (even Bazookas were witnessed), you have no choice but to run your business in a private ran fortress, and pay everything doubled (once in form of taxes, and once in form of private contracts that actually solve your problem).
Why is the competition "unfair"? If it's unfair because we don't offer "social programs such as free higher education", then the solution ought to be offering those programs, not hamstringing US companies.
This.
The H1B program is essentially indentured labor.
Surely if a company says they want to employ a specific person, and that person is the best for the job, that should be enough?
Do you trust a government minion to competently assess either A) this highly specialized person's skillset, or B) the forthrightness of the applicant company's statements?
Sometimes an emperical "good enough" on the international scale is the best you're going to get. In the case of H1B visa program, from the host country's view, lowering the bar will increase the administrative overhead in a system where one could instead apply any increase in administrative capacity toward the already largely exluded applicant pool with high caliber credentials.
Many aspects of the H1-B suck. The same is true for their European and Asian counterparts. Just eliminating non-immigration visas would not solve the problem in a highly-integrated world-wide economy - it would make things worse.
However, only one of the reasons. I did not necessarily want to stay forever, just like I didn't want to stay forever in London (no restrictions for an EU citizen).
Also, I just don't see the wage-depression, at least not in any of the cases I am aware of (and there were quite a few at the companies I was working for in the Bay Area). I remember one smarty-pants ranting about H1B wage-depression after an otherwise fun EE380 session. I challenged him to guess my salary. He was off by a factor of three.
Traditionally, in the US, the law professions have restricted the entry of new lawyers into the market. This has artificially inflated prices for lawyers. They do this by folding in layers of complexity into the law, by imposing greater restrictions on the practice of law, and by imposing huge costs on participation.
Also, since in the US, most legislators are also lawyers, they have innate incentive to add more and more complexity and requirements into the law. More complexity and requirements increases the demand for lawyers.
Hate to be the PC police, but I personally feel offended by the use of this word, and I'm surprised that more people aren't. I'd like to propose using a more neutral phrase, like "hire away" to describe this practice, instead of "poach". I hope, upon reflection about their own role in the employer-employee relationship, others might come to this conclusion and stop using this word as well.
Personally, I take much bigger offense at the word "resources", because it is very dehumanizing. "FTE" is another term I'm not a fan of, because it's often used with fractional numbers like "1.5 FTE", as if we can chop a person in half.
Huh. See, I actually think that employee quality of life would be much better, at least on the high end, if employers really thought that two half-time folks were worth one full-time, and you could work half-time for half-pay. I dono about you, but I can live well on half what the market would pay me. Yeah, I like having more money, but at some point? half the money for half the time starts looking pretty good, especially with marginal tax rates being what they are.
In my experience, if you want to go part-time at a high-paying job you can, but it is quite difficult. You have to prove yourself to be difficult to replace, then use the leverage that would normally get you a large raise or a promotion, and spend that leverage on going part-time. You usually also, in my experience, lose company benefits.
Not only that there's nothing to stop you spending that newly-freed time on your own choice of work, assuming you have a sensible contract with your employer. 20 hours/week is a bit too much for me to fill without some direction!
1. It's very common for students to work 1 or 2 days/wk while in university, so companies (esp. tech companies) are already set up for it. This is because the way university funding is structured students have an incentive to work ~5-15 hrs/wk, but cannot work more than 15. Some stick with the same arrangement even after they graduate, working 15 hrs/wk to fund a startup, or game company, or whatever.
2. Since benefits (healthcare/childcare/etc.) are provided directly by the state, not tied to your employment, part-time vs. full-time doesn't matter from that perspective.
People do want the right to work, and also want to have employment at will. They are generally patriots, wish communication was more decent, and would love to be allowed to trade freely.
And at first blush, people might react negatively to at-will employment states, but the devil is in the details on proposals to replace at-will employment.
1) Google employee applies to Facebook on their own.
2) Facebook employee tells a Facebook recruiter, who the best Google engineers are based on his experience at Google.
3) Facebook hires a popular and charismatic Google manager, and their first assignment is to bring over the best engineers in the group.
What terms do you use to describe these situations? I am happy to adopt a more PC term, but there is a difference between being "hired" and being "poached". When you are hired, you do a shit load of interviews, when you are poached, you get a bunch more money and don't have to do a bunch of interviews.
On the other hand I see nothing fundamentally wrong with getting a job and a salary bump without an interview, based on a personal recommendation, if it's information that can be freely disclosed. I got my first job out of school with only a cursory interview.
In this specific context, no-headhunting would be ambiguous.
The irony is that while "poaching" traditionally referred to illegal activities, the opposite is true in the business world: preventing the "poaching" of employees is illegal.
>What terms do you use to describe these situations?
Recruiting fits very well.
The distinction you're trying to make is not real, as these no-poaching aggrements are many times also about rejecting candidates that apply out of their own will. Sometimes this involves notifying their employer too.
Salaries in other industries have been dropping due to market forces - supply bigger than demand, etc... but the free market cuts both ways, as can be seen in the software industry and no-poaching aggreements should be illegal.
Free will averages out at a bigger scale. Employees are resources and with more capital you can secure more resources. period.
A poacher (in the employer sense) wouldn't really consider their actions evil - just necessary to get the best employees.
The companies being preyed upon would obviously view the poacher as, at best, a bounder and a cad of the lowest kind.
I can understand moderating terminology when we're referring to humans (or not, wild game poachers are evil people) but this term is being used in reference to corporations, which need not be spared harsh terminology to preserve a sense of well-being.
Despite the best efforts of lawyers everywhere, I believe that a corporation, while composed of people, is just a thing, akin to a table or a vase, though maybe not as corporeal.
Even after the class action lawsuit is settled, it's likely the penalty won't be anywhere near the amount of profit that was illegally captured.
Furthermore, think about what these companies would have chosen to work on had engineers been more expensive. Would we have seen more useful products coming out of the valley if staff allocations had worked out differently?
When people are cheap, throwing them into doomed ventures like Google Buzz or Apple's awful Samba clone isn't nearly so devastating to whatever middle manager chain dreamed them up.
If that's the case, then it would not have saved money, rather, it would have had the effect of simply shifting the money from going to existing Google/Apple/etc employees to applicants from smaller firms.
That is, it changed the distribution of spending, and probably in a more egalitarian way, distributing the spending over a larger pool, instead of simply fighting over, and raising the wages, of the small group of superstars at the big companies.
These companies are spending on R&D and increasing the percentage year over year, they are also spending huge sums of acqui-hires, and hiring faster than the local communities, or their own office space, can handle.
You could argue that excessive salaries are actually bad for allocation. Wall Street has infamously brained drained tons of the best and brightest to figure out how to gain small efficiencies in stock trading. What discoveries might have occurred had string theorists not left to go optimize portfolios?
One thing I wouldn't call engineers is cheap. You're talking about people making upwards of $150-200k in salary, and probably up to half-million when total compensation is considered. I paid more in taxes last year than my mother earned in several years of working as a cashier. And that's pretty sad. I grew up poor so I have a different perspective on this, but I see a lot of #zeroethWorldProblems whining going on in the valley while the world around them is falling apart. It's useful to have some perspective, and honestly, if these companies are to be fined and sanctioned, I'd rather the money go to poor people, instead of lawyers and techies who need to increase the bid on their studio apartment.
To an extent, existing employees with stock-based compensation, and also seeking "purpose/control/mastery" satisfaction at work, share their employers'/stockholders' interests in quelling rampant mercenary turnover and salary-over-all bidding wars.
Another second-order beneficiary of any attempted employment cartelization could have been the startup ecosystem. As a founder or very-early employee, you "eat what you kill" rather than any industry-average salary. And, the pool of willing founders could have been expanded by missing/lower recruiting from the giants.
I don't think the evidence supports this theory.
If the illegal agreements had artificially raised salaries then you would expect salaries to remain the same or even decrease after the DOJ stepped in.
Instead, according to the WSJ, Google gave a 10% pay increase to all of its employees six weeks after the hiring collusion ended.
http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pa...
Anyways... even if one were so inclined to not share my perspective on this point (that our earnings as an industry are great), you would still need to acknowledge the possibility that this "agreement" might have actually freed up salaries for the wider job pool, instead of coalescing into singularities around a handful of rockstars.
The system should be equitable from top to bottom.
There were no explicit compensation controls in place here. The top engineers at these companies are millionaires. Good engineers, as cromwellian points out, make easily in excess of 200K (sometimes a lot more) with total compensation.
This is about a no-cold-call agreement for employees, with a possible extended no-poaching agreement. This certainly already applied to executives, not just engineers. More-over, it is open to debate whether this actually had a negative effect on the industry as a whole. It might actually have given startups the opportunity to hire decent talent, and may have deflected hiring spending to engineers not already at Google/Apple/etc...
I'm not trying to justify the backroom, in-the-shadows type of dealings that went on here. That certainly came across as a little slimy. I am purely making a commentary on the perception that this somehow had a material effect in depressing the tech industry, engineering wages and/or quality of life.
I think it's acceptable to say that this scheme was bad and wrong and also to acknowledge that there are more significant and severe wealth and wage problems in this country for a large group of people outside engineering, law, medicine, etc. and those problems need to be addressed. I don't like the attitude of saying hey, the engineers are doing pretty good guys, it's ok if the even richer take money from them they should have rightfully earned. That won't solve any problems, least of all the more severe wage discrepancies or plight of the poor.
It would only be price fixing if there was an industry wide agreement to put a cap on engineer salaries. Rather instead, what you have is an agreement to shop in one market exchange instead of another.
I mean, what do you think is better for both engineers in general, as well as the companies: Trading a small set of engineers back and forth with ever more escalating compensation in a bidding war, or, hiring from a large, general pool of applicants?
One way leads to disruption, mono-culture, and somewhat unfair bias towards those not on the roster already of the big companies. If anything, not cold calling should increase diversity as well.
This scheme only seems slimy to me, because any agreement between companies in secret, seems slimy. But I am really not seeing it as a price fixing scheme, and I find it hard to get myself motivated to Occupy Mountain View protesting.
This reminds me of several years ago when Google switched the Holiday gift from giving $1000 tax free cash in an envelope, to giving a free device (phone/tablet/etc). Some people were irritated by it and complained, but I found the complaints to be a solo on the world's tiniest violin. Seriously, there are people starving on Christmas, unable to even buy their children toys or clothes, and people earning in the top 1%-10% are annoyed that instead of $1000 cash, they get a $500 device for free. It's an even more absurd version of Louis C.K.'s "everything is awesome and no one is happy."
Focusing recruiting, sure. But pre-filtering on the basis of factors "not relevant" to the person performing the job starts to get into a very grey territory in terms of discrimination. (I realize on the surface this seems silly since where you are working is totally relevant to a new job, but not in the context in which it was being utilized.) I really don't intend to draw a strawman with this, but that I see a big difference between their limiting their effort, and their prohibiting your effort.
On top of that, unless I missed something, the documents I've read excluded engineers, the ones getting their jimmies ruffled, from the 'do not hire' list and simply had them on a 'no cold call' list. It was management and sales that were under some 'do not hire' list, right?
In this whole thing, the only part that I find morally/legally suspect is the agreement to not hire certain categories of employees from certain companies. Everything else is just a bunch of hand waving from highly paid people that want to be paid even more. And even that, had it been worded slightly different, would be arguably legal.
I (as an engineer) have my "jimmies rustled" because this sets a really worrying precedent for the behaviors of these companies I do/might work for, and is frankly the sort of behavior that makes me have implicitly low trust for people with this sort of power, which is an unfortunate state of things. (I'd really like to be able to trust people, I promise...)
I know it isn't a popular view, but I see nothing morally wrong with two companies agreeing not to hire each other's employees. I see no rights being violated. Apple employees have no right to be hired by Google, and vice versa - therefore Google and Apple not hiring the other company's workers does not constitute a violations of rights.
Nor do I think it violates any free market ideas, at least not mine. What Google and Apple essentially are doing is disadvantaging themselves compared to their competitors. Any company that does not enter into a no-poach agreement is at a competitive advantage compared to all the companies who do. Let's say Samsung is not in this agreement, the result is that Samsung can hire both Google and Apple employees, while neither Apple nor Google have this privilege. The talent pool for Samsung would be greater than that of both Google and Apple, and it will be at a better position to hire the people with the qualifications they need.
Now, if Steve Jobs start making threatening calls to Samsung's CEOs, then we would have something that would constitute criminal activity. That is not acceptable. Steve Jobs cold-calling Brin/Page/Schmidt (can't remember who it was), and telling them in an agitated manner not to hire his employees is also on the verge of being criminal, at least if threats were involved. But my impression is that Jobs knew at least Schmidt fairly well privately, which makes it another matter than cold-calling some CEO at some company you've never heard of, and shouting at them not to hire your employees.
i.e. If Google wants another engineer it can hire from outside or it poaches Facebook's(or another's in that club). In the second case Facebook (now needing an engineer) will then either poach from Google(or another in that club) or hire an outside engineer. The only way an outside engineer isn't hired is if Facebook/Google decide that an extra engineer is not worth the new higher salary (or the expected lower worth of them since they constantly jump ship).
Even if the pool is smaller than the current pool of engineers at the big companies it would still arguably be a "fairer" distribution of wealth because the profits are more evenly spread through the successful companies. It would also mean that as the larger companies produce less (fewer engineers to make things) there are more engineers that could be working on competing/niche products that are currently worked on by the larger companies.
Also, again, this is only about no-cold-calling. If someone truly thought they were hot stuff, and wanted to cash in, all they need do is threaten to quit, seek out an offer themselves, and they could gain your "fairer" distribution.
In fact, it was not at all uncommon to people to threaten to leave and get big counter-offers to stay in recent years, especially higher level employees.
As to your second point regarding the cold calls if the cold calls do not have some benefit for the one called then it wouldn't matter if other companies were making them (as why would the employee leave). The fact that these companies colluded to avoid them speaks to the fact that threatening to quit vs being poached does not have the same benefit for the employees(or that not all employees have the tendency to act as mercenarily as perhaps they should).
You could raise salary of your existing engineers to match the market. "Poaching" is possible only because finding job elsewhere is often only way how to get raise, no matter how much they learned since they started working with you.
It also introduces systemic risk for engineers, because then the wages could only go down over time. Because any attempt to look for a wage increase would be stopped short by the don't-share-employees-agreement. I also want to note that the companies in the best position to offer you a wage increase are the top-tech companies like Google and Apple.
And yes, compared to other people engineers have little reason to complain. But I still think this incident is a valid reason for complaint.
There were a lot of tech companies that weren't in on it. They were still poaching employees, and employees were leaving to do their own start-ups.
I especially don't mind it if, as the great-grandparent suggests, the existence of other non-cartel competitors meant it had no effect on salaries.
Even if it did have indirect effects on salary levels, such conventions might also plausibly help prevent certain kinds of ruinous/negative-sum-for-all competition, that rewards a few rapid job-switchers, but at the expense of the industry, region, or majority of employees.
I would mind a "don't-hire-if-they-apply" agreement. That'd be an abusive oligopsony conspiracy in restraint of employees' ability to seek out new arrangements.
Admittedly more tenuous, but other emails mention HR staffers being fired for cause due to contacting employees from another firm in the cartel. This would send a fairly extreme message to other recruiters about where to direct efforts.
In my own experience, I never heard from Google while at Apple. 6 months after moving into finance, three recruiters from Google contacted me independently of each other. Ironically, the only reason I went into finance at the time was because I needed to move to NYC and Google wouldn't speak to me.
The fired recruiter lied about a job offering and its pay level.
I thought we agreed not to recruit any senior
level employees…. I would propose we keep it that
way. Open to discuss. It would be good to agree.
OK, I’ll tell our recruiters they are free to
approach any Adobe employee who is not a Sr.
Director or VP. Am I understanding your position
correctly?
*I’d rather agree NOT to actively solicit any
employee from either company ….. If you are
in agreement, I will let my folks know.*(Personally I think Wave was and still is ahead of its time)
And what happens next is precisely what is supposed to happen when companies don’t collude to defraud their employees of fair-market wages: Google coughed up more money to improve its retention.
From the blatantly illegal smoking gun emails, to Google's almost immediate raise after this scandal became public. It's so coarse.
Now years later Google, using the power of massive data, has figured out that it didn't really matter all that much that they were hiring from this artificially limited pool. Which means it didn't matter all that much to start with for any of these companies.
If they hadn't colluded on pay and poaching, but stayed selective, they would have been eventually forced to either reach outside this selective pool and end the "shortage" or suck up the higher wages.
Basically the market would have resolved the issue of higher wages for them.
I know "vision-statements" and things like that don't get a lot of mileage here but character matters.
dont be
don't be a menace
don't be hatin
don't be sad
don't be evil
Organizing the world's famous last words.
I don't think Facebook should get much credit for not participating, when they couldn't have.
Also, from a more game theoretical approach, they were a free rider on the collusion - they could have outed the collusion if they were that benevolent, since they clearly knew what was happening. Why didn't they publicize the blatantly wrong agreements at the time?
And I don't particularly like having to say this, because I've been a Google fan ever since I switched to their search engine from AltaVista, whereas I think the world would be a better place if Facebook shut down their servers and deleted their database tomorrow. But yes, damn it, Facebook does deserve credit here.
I'm sure some lawyer somewhere could argue conspiracy if they felt the urge.
Facebook was much smaller then, and likely had a lot more to gain from poaching than they had to lose.
This is an important fact when looking at the evidence. She is only going to say enough of what she needs to say in terms of the lawsuit. The burden of proof of the law suit has to prove that Facebook had one - she could only speak about her own involvement. There was nothing about the other people at the top of the company - and in Law - nothing equals nothing.
It's not that Facebook is the only ethical company in this, it is just that at the time there was no upside for them in it.
She was talking only about herself - not for other people in her company. She was not talking about her knowledge of other people's actions either.
I'm sure they weren't worried about bleeding employees to Google if they said no, especially when you remember $GOOG was near a 3-year low and FB growth was exploding..
Facebook might look good in this instance but remember they were growing really fast at this time so it would have seriously hurt them to agree to any hiring pacts.
Sometimes, however, recruiters may not necessarily know and reach out to candidates and violate this unwritten rule.
Also depending on the case, boardmembers/investors may look the other way.
It was more of a guideline, rather than a hard fast rule.
This agreement didn't prevent people from recruiting friends, or from people actively looking to join another company.
Also, if the person is/was unhappy at one startup, the investors would prefer they join another portfolio company rather than not.
The "free market" system is just an illusion. When you are on the side of those with the lowest power (e.g. the workforce), the system does not work.
So much about the notion, that the "free market" system will correct itself.
5-10 years before we have a moat around a campus, a technological one though that blocks all non-essential communication while you are Under the Dome, then, apartments, pretty soon "bring out your dead" (https://www.youtube.com/watch?v=grbSQ6O6kbs).
Taking away someone's opportunity to be employed elsewhere oversteps the line between the employer and the employee's personal life.
Is there a benefit to this agreement depressing wages in that, for startups, obtaining competent developers was cheaper than it would have been otherwise?
It seems like they had this agreement - only because they hated their employees being poached on.
It's not price fixing.
It's self preservation.
Sure it had a side effect of keeping wages low - but that was not their goal. None of them are short on money.
I'm not saying what they did was right - but lets not frame it in a context that makes it look like they did this to not let employees have more money.
When in reality - they did it to stop others from stealing their employees.
> It's not price fixing.
> It's self preservation.
BRB, applying to Google SRE.
Your taxes and living observation gels pretty well with my ongoing experience in the city :(
The whole culture of those colluding companies seems pretty feudal - "you should feel honored to be a member in our court"
That, and it's a fun exciting place for young people, the bikes, free food etc.
I'm certainly going to write to my MP about this. I think you should too. In fact I think every programmer out there should be involved in bringing a class action case against them.
I'm always fascinated by what people don't understand about free markets. The author appears to think "free market" means lots of government enforced market controls (which would be an obvious contradiction in terms).
In an actual free market, it's not illegal to collude to suppress wages, just like it's not illegal for employees to form unions, leave for other better jobs, or start their own companies to compete and pay superior wages to steal talent.
In intentionally overly simplified terms, "free market" means a lack of, or severe limitation of, government controls. How is it possible the author doesn't know that?
(If you want to see how easy it is to "start a union," there are plenty of active campaigns by unions to unionize various companies: Starbucks and Jimmy Johns are the ones that come most quickly to mind. The people running those campaigns would appreciate your help, and you'd learn a valuable lesson about labor politics.)
If there was a market opportunity to make money, capital was available. For every juggernaut there were numerous others that wanted to chop that juggernaut down to size. JP Morgan, Rockefeller, Carnegie, they all had countless large enemies willing to finance competitors.
Why should it be easy in a free market to start a union inside of a company? Free markets don't guarantee you have a right to a job or a right to start a union at a company. In a case where the employees don't own the company, assuming they're strictly labor, they agree to work there and get paid for it, or they can quit. That's a free market for labor. You also don't have to work at a company to attempt to organize its labor in a free market.
(also I should note, my intentions aren't to have a debate on the pros and cons of free market economics, but rather to describe what a free market for labor actually is)
Because you are (your words) using 'intentionally over-simplified terms.' A free market is not simply one without government controls, it's one without government controls or other de facto authority, such as price-setting monopolies.
Excessive government regulation means a less free market. Similarly, excessive monopoly control or cartel-like behaviour means a less free market. These are similar forces; the market loses freedom because one group has excessive control of it.
So, paradoxically, government regulation can result in a freer market - it's more complex than you are claiming.
The only way a corporation can acquire de facto authority in a free market is with violence (in which case they become a competitor with the government as it regards rule of law). There is no other way they can literally hold back competitors.
this isn't any shining beacon of ethics.
In intimate atmosphere of Silicon Valey it is hard to keep employee salaries/benefits and skills a secret, therefore it is much easier and cheaper to contact employee of a rivaling company and offer a better mutually agreed package. You either agree not to poach and let prospective employees go through your normal hiring process or chain employees with timed contracts.
So just think that no-poaching agreements might be the thing keeping your salaries that high.
Kudos for Facebook for doing the right thing here.
I'm just curious what ramifications this has, if any.
Is it because there's proof now?
More like "Don't get caught."
http://gawker.com/mark-zuckerbergs-self-serving-immigration-...
From what you've written, you're equating engineers as commodities (as in they are no different from each other), which is quite insulting to the actual engineers here from India and China. They are just better and Facebook knows this. They want the better quality and they are willing to pay more (than those in India) for it, but they won't go so far as to greatly inflate the salary of the entire software engineering occupation in America.
...make that nine things we know to be true...
For programmers, getting into the workflow of a company, their existing codebase, becoming efficient, it may take months.
Shipping a product may (and typically does) take over a year. The lifetime of a product may be over a decade.
And if a developer quits mid-way through a project, they may derail the entire project, while someone else has to spend the time, step into their shoes and continue their work.
I honestly can't imagine the morality of someone who would just abandon their project, their baby, so to speak, and go work somewhere else at the first call from another company offering more money. Did they take the first job out of desperation? We're talking top-of-the-top companies here. I doubt so.
Poaching employees like this is also very unfair to every company spending a lot of resources to find the right employees, to build the right teams from other channels, only to have the competition cold call them and take them away after the former company has done the hard work.
There's also the problem of trade secrets. An employee who has spent some time at, say, Apple, learns a lot about their product plans, processes, methods, and so on. Getting those employees means that one way or another you get access to these carefully kept trade secrets implicitly, if not explicitly.
Keeping wages down is bad, but employees who keep shifting jobs, leaving a trail of destruction behind them is also bad.
How do we resolve both sides of the issue so everyone is happy?
Employees (most of the time) don't own the work that they produce for the company, and they themselves are not property of the company. Unless they are contractually obligated to stay at a company for a certain amount of time, there is no reason for them to work for less than they are worth and reject an offer that would make them happier.
Employees have good reasons for switching jobs. If they feel dedicated to their current job then they always have the option to stay.
>Poaching employees like this is also very unfair to every company...
Employees are human beings, not chattel. You started off by doubting the morality of people who switch jobs, but now you make it seem as the are powerless to choose where they work and must always leave for a company that offers more money.
>spending a lot of resources to find the right employees, to build the right teams from other channels, only to have the competition cold call them and take them away after the former company has done the hard work.
Not every employee will switch jobs because he or she received a better offer. And if finding another employee is so costly, then matching the new offer would probably save them money.
>There's also the problem of trade secrets. An employee who has spent some time at, say, Apple, learns a lot about their product plans, processes, methods, and so on. Getting those employees means that one way or another you get access to these carefully kept trade secrets implicitly, if not explicitly.
That's what the legal system is for.
> Keeping wages down is bad, but employees who keep shifting jobs, leaving a trail of destruction behind them is also bad.How do we resolve both sides of the issue so everyone is happy?
Pay the employees what they're worth.
Yeah, same thing, sure. You realize that for 90% people, even most at the hot companies, a job is above all something they do because they want or need the money, right? And there is such a thing as joining a company and realizing that thery weren't what you expected.
People leaving companies not only is a reality, it's something that can be expected. They can leave for a better option, but it's also possible that they have some kind of accident that either incapacitates or kills them. Completely undesirable, sure, but it does happen, so not even the most faithful employee is guaranteed to stay indefinitely in the company. Companies know that, and this is why things like the "bus factor" are taken into account. A project can't rest on one single person's shoulders, and almost everyone is more or less replaceable. Stop the emotional blackmail rubbish, please. I'm tired of hearing that companies are not charities and they're in mainly for the money, so why would then be wrong for a person to maximize their income? And that's without starting to consider the many, many reasons to change job, including, by the way, working on a more interesting project.
And if a company doesn't want their employees to voluntarily leave, they just need to work on employee retention as much as they do in hiring. It seems that a lot of companies understood this as "prevent them to find better jobs" instead of "make better jobs for them", and, well, many of us don't consider this acceptable, nor justifiable.
I realize it, and that's extremely sad, because it doesn't have to be that way.
Your argument isn't just about cold-calling; you seem to be saying it's "immoral" to consider switching jobs at all. But you are not in moral debt to your employer. It is entirely reasonable to want a higher salary, and we shouldn't cry for the corporations that have to pay it.
Switching jobs comes at a cost to the person, too. It involves breaking professional connections and quite possibly relocating. It seems considerably more disruptive to the life of the person who's switching jobs than to the company who has to train someone else, so they're probably doing it for a good reason.
Your life is more than your work. Your project is not your "baby". You might have a baby that's your baby.
I'm not sure what it means to take a job "out of desperation" if it doesn't apply to basically everyone. Most people work because they need money. If these people didn't need money, they wouldn't work for Apple or Google. Maybe they'd start an unprofitable lifestyle business doing what they love. Maybe they'd do something very fulfilling and very unprofitable, like teaching.
There is so much more that you can aspire to than advancing Google's bottom line. If your goals align with Google's, it's entirely because of the paycheck.
I feel like your mind is playing a trick on you. Corporations don't exist as a standalone entity. They're an aggregate entity - one that's made of people.
It's not corporations vs. people. It's people trying to be happy working with other people who also are trying to be happy. We're all trying to work together and build something that's bigger than any of us.
A corporation can't "feel", but it also can't "think", or "decide". The people in it feel, think and decide.
When people "harm the corporation", they hurt other people whose hard work gets diminished in the process.
Maybe you think management is "incapable of feeling", well, then sure, you better leave that company. But I'm insulted by the implication that's the rule, rather than the exception.
And also I'm insulted by the implication these companies are in it just for the money. While Google and Apple, the two biggest companies mired in this scandal are led by people with widely different world views, do you honestly think they're in it just for the money?
Maybe you're letting your cynicism inform your opinions too much, or maybe you're working for a company that really is focused just on money. But don't speak for everyone.
The person in payroll? It doesn't actually make them unhappy to put higher numbers on a check.
Someone in management who sets budgets? Working with economic constraints is their job. People I know in this role are happy when they're able to give raises, because their employees are happy.
The shareholders? Cry me a goddamn river.
Of course there are people who are passionate about their work at large corporations, but you can't tell me that the large corporation is what they would choose if they could do anything they wanted with their life and money was no object.
That’s definitely not true[1] for many of the engineers that I know at these companies. There are lots of extremely valuable and interesting engineering projects that are only possible to tackle in the context of a large corporation (or agency) with billion-dollar budgets and the scale and influence that brings.
[1] How do I know? Because they don’t need the money; they’ve seen enough RSUs in their careers that they could easily “do what they loved” if it were anything other than what they’re doing now. Also, because they tell me as much.
Both sides should certainly strive to be ethical. But no one should be loyal to anyone and just expect that they will hold up that code of honor when they have no obligation to. When we're talking about necessarily more impersonal billion dollar corporations, that is especially true.