Google, Apple, and Other Tech ans’ Wage-Suppression Conspiracy Estimated to Cover One Million Workers
You have to give credit where credit is due. Technology leaders like acting on a grand scale, and that apparently includes when they engage in criminal conspiracies. As a price-fixing case against the some of the America’s most celebrated companies moves forward, the estimate of the number of employees victimized has grown ten-fold, to nearly one million.
By way of background: the Obama Administration looked to have gotten a spine infusion in pursuing an anti-trust case against Silicon Valley’s elite for conspiring to lower wages of tech rank and file workers. The Department of Justice’s charges hold up pointed to slam-dunk criminal violations. Recall that an early 1990s price rigging investigation involving lysine and citric acid at ADM led to $100 million in fines and jail time for top executives, including the vice chairman, who was also the heir apparent, and criminal fines from other corporate co-conspirators. But this being Team Obama, the tech big boys are getting off on the cheap, with the DoJ content to have them swear that they won’t engage in this sort of bad behavior again.
And don’t labor under any illusions about who was responsible for the pay-suppression deals. Just like the ADM case, this scheme was conducted at the highest level of the participating firms. As we wrote in January:
The government’s case, as summarized by Mark Ames at Pando, is chock full of damning e-mails among top executives, which reveal Steve Jobs to have been the lead actor and main enforcer of the pay-containment pact, which dates to 2005. But its real mastermind was George Lucas, who had a similar scheme in place in the 1980s and enlisted Jobs when he sold the computer animation division of Lucasfilm to Pixar.
Ames highlighted this section from the filing:
George Lucas believed that companies should not compete against each other for employees, because ‘[i]t’s not normal industrial compe ive situation.’ As George Lucas explained, ‘I always — the rule we had, or the rule that I put down for everybody,’ was that ‘we cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.’
Translated, Lucas’ wage-reduction agreement meant that Lucasfilm and Pixar agreed to a) never cold call each other’s employees; b) notify each other if making an offer to an employee of the other company, even if that employee applied for the job on his or her own without being recruited; c) any offer made would be “final” so as to avoid a costly bidding war that would drive up not just the employee’s salary, but also drive up the pay scale of every other employee in the firm.
Jobs held to this agreement, and used it as the basis two decades later to suppress employee costs just as fierce compe ion was driving up tech engineers’ wages.
This is the guts of the government’s allegations:
Between approximately 2005 and 2009, Defendants Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar allegedly engaged in an “overarching conspiracy” to eliminate compe ion among Defendants for skilled labor. The conspiracy consisted of an interconnected web of express bilateral agreements….Defendants memorialized these nearly identical agreements in CEO-to-CEO emails and other do ents, including “Do Not Call” lists, thereby putting each Defendant’s employees off-limits to other Defendants. Each bilateral agreement applied to all employees of a given pair of Defendants. These agreements were not limited by geography, job function, product group, or time period. Nor were they related to any specific business or other collaboration between Defendants.
Consider what this means. Here we see the companies that are touted as the epitome of American entrepreneurship, who supposedly fetishize finding and nurturing the best “talent,” instead focusing on containing worker wages as they way to bolster their profit. That’s apparently easier than making superior products.
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