Apple & Google started wage-fixing cartel involving dozens of companies, over 1m employees

You probably haven’t read about this before — and if you believe the myths and the legends, Apple’s Steve Jobs was a kind-hearted visionary, and Google’s Eric Schmidt has your NSA-covered back.

But neither of these companies is what they seem. They benefit from Silicon Valley tech-cred, just like people like Cory Booker benefit from MSNBC lib-cred — cred by association.

In fact, both Jobs and Schmidt have been involved in wage-fixing for years. We know this thanks to reporting by Mark Ames at PandoDaily. Now Ames is out with a followup, showing that what started with a small number of SV companies quickly spread to involve dozens, and affected the earnings of millions of tech workers.

What is “wage-fixing”? It’s like price-fixing. It’s technically illegal for companies to collude to hold prices artificially high; that’s called interfering with the “free market” and with buyers’ right to bargain with multiple vendors for lower prices. When companies do this, when they act like a “cartel,” they can be prosecuted, at least technically.

Wage-fixing is the same thing; it’s when companies in an industry agree to keep wages artificially low, to eliminate workers’ right to force employers to compete for their services.

Now Ames, with his followup report (my emphasis):

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

“British medieval ordinances of Bristol cobblers in 1364 state, ‘Masters are forbidden to poach workers from other members of the craft.’”
Orly Lobel,Talent Wants To Be Free

Back in January, I wrote about “The Techtopus” — an illegal agreement between seven tech giants, including Apple, Google, and Intel, to suppress wages for tens of thousands of tech employees. The agreement prompted a Department of Justice investigation, resulting in a settlement in which the companies agreed to curb their restricting hiring deals. The same companies were then hit with a civil suit by employees affected by the agreements.

Evil enough for you? Or is the jury still out?

This is a Tell. Is the jury still out?

This week, as the final summary judgement for the resulting class action suit looms, and several of the companies mentioned (Intuit, Pixar and Lucasfilm) scramble to settle out of court, Pando has obtained court documents (embedded below) which show shocking evidence of a much larger conspiracy, reaching far beyond Silicon Valley.

Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.

The documents mentioned above are embedded at the source, along with the history of this wage theft (Ames calls it “wage suppression”) agreement. Google’s participation, for example, starts back in 2005. Please do read. There’s so much more than I can lay out here. If there are millions of workers affected, there must be billions of dollars that were diverted from employees into corporate (and CEO) bottom lines. Which brings us back to … CEO Steve Jobs, and CEO Eric Schmidt.

Your bottom line — Steve Jobs is neither a saint, a god, nor a man worthy of worship. In my mind he’s not even worthy of simple respect, but I’ve been watching him for years.

And neither Eric Schmidt nor the google has anything like your interest at heart. Did they fight SOPA? Only because it would cost them money if it were enacted. If Schmidt were in the oil business, you’d have fracking wells in your yard and oil on your Bay Area pelicans. But he’s not, so you have Android and the NSA storing your clicks instead. But make no mistake — Schmidt has a billionaire’s heart, just like the rest of them.

These companies, and these men, need a serious rebranding. You can help. Got friends? Spread the word. Some things do need spreading around.

GP

Twitter: @Gaius_Publius. Facebook: Gaius Publi.

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Gaius Publius is a professional writer living on the West Coast of the United States. Click here for more. Follow him on Twitter @Gaius_Publius and Facebook.

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  • ktrimbach

    Actually not. Henry Ford wanted the best workers for his assembly line and paid substantially hirer wages to get them. He was sued by his stockholders and forced to reduce his wages to the prevailing wage.

  • Sweetie

    “Sagal asked Schmidt how Google came up with the slogan, ‘don’t be evil.’

    ‘Well, it was invented by Larry and Sergey,” said Schmidt. Now, when I showed up, I thought this was the stupidest rule ever.’”

  • Tone

    Well this is disappointing.
    Corporations know only one word… more. (Thank you Chris Hedges!)

  • emjayay

    I don’t think that matters a bit. Privately owned by one guy, corporation, whatever. One goal. Oh, plus since now big wigs get a lot of stock options, getting the stock price up is another goal if that is the case.

  • Dave Babler

    I’m not the best student of history, but I have a feeling that neither of the Roosevelt’s would have tolerated the kind of stuff going on in the corporate world today, especially this kind of stuff. So,,,if we can’t resurrect Teddy how to we find the next best thing to run the country, cause it ain’t Hillary, as much respect as I have for her.

  • Tatts

    The next time you use Google Maps Street View, keep in mind that every frame on there was collected by temp workers hired through temp agencies (like Adecco) who work for $15/hour (that was the rate 3 years ago) and get no health benefits, no paid vacation, no paid holidays, no paid sick days–no benefits of any kind. At. All. And–when Google is closed for a holiday, they aren’t allowed to work (but they don’t get paid).

    Google hires lots of people that way–even some of that staff in it offices. It may look like a blast to work in a company like that, and the perks are cool, but that’s only for the people at the very top of their food chain–it is not for the bulk of the people who got Google where it is today.

    Google is a very tarnished company, in my book.

  • perljammer

    The lawsuit appears to have been over the no-poaching agreement only. No mention of compensation information sharing; see http://www.mercurynews.com/business/ci_24916714/silicon-valley-poaching-case-draws-closer-trial.

  • http://www.rebeccamorn.com/mind BeccaM

    Absolutely it was intended for that.

    My own contention is although these ‘smoking gun’ documents were found and dated some of overt collusion to around 2005, I think the linked article misses the point.

    The 2005 memos and “Special Agreement Hiring Policy” wasn’t the beginning. It was an attempt to tamp down a violation of the previous status quo agreements. Namely, Google, in need of way more workers than they had, began offering higher salaries and better benefits. For about a year, Google became THE place everybody wanted to be hired.

    That, according to the rest of the tech industry, obviously had to be stopped. For the first time in about 5-7 years (since the end of the tech-boom), employees had some leverage to ask for salary and benefit increases.

    I don’t know whether there are similar documents as these 2005 memos pre-dating them. But I do know this “do not recruit” arrangement — whether formal or informal — was definitely in effect years earlier.

  • http://www.americablog.com/ Naja pallida

    Back when I worked for one of the above big companies, we got a letter in the mail a couple times a year that supposedly compared our salary to those of other similar companies in the area for the same or similar job descriptions… some how, every company always offered the exact same range of salaries. Even when one company was doing really well, and another was on the verge of collapsing or being taken over. I always got the feeling that either they colluded to artificially match their salaries, or the letter was simply a way to try and shut down people who might be inclined to try and jump companies for a raise.

  • perljammer

    You have overstated fiduciary duty requirements a bit. While it is true that by law, a corporation’s board and management owe a fiduciary duty as their primary obligation to the stockholders to maximize the value of the equity of the corporation, it is not, as you say, “to the exclusion of any other consideration.” Corporate management is also required by law to meet its contractual obligations, satisfy its creditors, and to follow the law in dealing with its employees and vendors. There is also quite a bit of leeway in determining the best courses of action in maximizing equity value, such as trade-offs between short term gain and long term corporate health.

    It is really hard to find examples of stockholders filing suit against a corporation for breach of fiduciary duty, outside of cases where the corporation has filed bankruptcy papers. It is much more common for breach suits to be brought against, for example, estate executors by purported heirs, or against financial advisors by investors.

  • http://www.rebeccamorn.com/mind BeccaM

    As the post and linked articles indicate, this practice truly wasn’t limited to the “big names” everyone recognizes — Google and Apple.

    As someone who worked in Silicon Valley from the mid-90s onward, I can assure you, every technology company of significant size was doing this, refusing to ‘poach’ employees from each other. The obvious result of this was it was difficult to secure a pay raise by moving from one company to another, but another more insidious effect was it increased “job lock.” Another sign this collusion was going on was how these tech behemoths would not interview or consider resumes or applications from anybody currently employed by one of the others.

    You had to quit your job first. Even then, a highly skilled person might have to wait a few months before the phone would start to ring and the emails begin to be answered. Why? Because another angle on this ongoing collusion was the companies didn’t even want there to be an impression that someone had been able to jump from, say, Cisco to Apple or Google or Yahoo or HP. And guess what? If you’ve been unemployed for 2-3 months, that makes you all the more likely to accept a salary equal to or less than what you’d been earning before.

    This, among many other reasons, is why tech salaries remained stagnant from the late 90s onward, even though productivity was going through the roof and, despite the economic downturns, tech industries remained insanely profitable the entire time.

    By the way, the collusion wasn’t limited just to salaried employees either. Corporations often need to have some flexibility in workforce, and given the lack of job mobility, they filled the gap — with temporary workers and contractors. And those rates were also fixed by the ‘cartel.’

  • nicho

    Actually, that goal is required by law. Corporate directors are required — by corporate law — to maximize return to the investors to the exclusion of any other consideration. If they don’t, the investors can sue them. We need to change corporate law.

  • emjayay

    Once again, whether a business is run by Jesus or Gandhi, or Mitt Romney or the Koch brothers, it has only one goal – maximising profit. Not that there is anything wrong with that, but it does not include any issues of morals including exploiting workers or trashing the environment or anything else, unless it hurts the bottom line.

    Only government and law, or public opinion that impacts the bottom line, is any control on the behavior of any business.

  • jared

    To be fair, you could say the same of anyone who also interferes in the free market using any technique including the power of government.

  • caphillprof

    Clearly the arrangement went beyond compensation information or they wouldn’t be entering into settlements. Also, information sharing can constitute a violation when there is an understanding what to do with that information

  • caphillprof

    A combination in restraint of trade is illegal whether it sets prices high,, low or in between. They can be prosecuted. There is no technicality about it.

  • perljammer

    Companies have been sharing compensation information for a very long time, and they haven’t tried to keep that a secret; to the contrary, they frequently use the data in salary negotiations (e.g., “our offer places you in the top 5 percentile of workers with similar skills and experience”). What did Apple, Google, et al, do differently? Did they actually enter into agreements not to violate a set of compensation standards that they cooked up among themselves? That sort of sounds like the corporate equivalent of factory workers agreeing among themselves not to exceed their quotas in order to keep the bar from being raised.

  • http://liberawheeler.blogspot.com Elijah Shalis

    Well it looks like the rich only like the idea of a Free Market when it applies to them. Surprise Surprise

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