You remember a few years back when Apple and Google were exposed as having an agreement not to poach each other’s employees? Well it seems there are some new companies which also took part in this handshake agreement not to steal employees. They are Pixar, Lucasfilm, Adobe, Intel, and Intuit. Next week a class-action civil lawsuit will be heard in San Jose regarding the matter.
Interestingly the agreements not only apply to poaching employees but declining to give offers to employees who applied.
There are a few reasons companies would do something like this. First they would want to keep talent which has been trained and productive. And they also would obviously not have to pay as high compensation levels if employees had a few less options.
While this is a pretty anti-employee move, it is pro-consumer and shareholder as it allows companies to have lower costs. And although I am not condoning illegal behavior, the Silicon Valley labor market – even in this less than stellar economy, is doing well. Moreover, I hear stories of headhunters who collude with workers to jump from company to company on a regular basis in order to share in the headhunter fees.
In other words – corporations hiring in the tech space are paying inflated amounts due to a few factors.
One other point worth making is since Sarbanes Oxley was passed the number of US IPOs has plummeted – the act is at least in-part responsible according to many people I speak with. The degree of course is open to debate. Moreover any drag on taking companies public in order to allow investors to get a faster return leads to more acquisitions by cash-rich companies like Google and Apple.
In other words the balance of power in tech has shifted to a few large companies and a result you could argue that wage levels for skilled workers have been depressed for this reason as well. And wage may not be the best term – let’s say compensation in order to factor in stock options.
So if we would like wages in the US to increase we should look to what actions have been taken in the last decade to discourage companies from going public and undo them. This is not a partisan point but I would be very interested in having it discussed by Democrats and Republicans to see which party has solutions to reverse the dearth of IPOs.
TechCrunch and Engadget have more and the redacted Exhibit Joint Case Management Conference Statement attained from Pacer.org above contains evidence from the DOJ investigation pertinent to the upcoming civil case.
On a side note, the tech space is one of the leading engines of job growth in the US and moreover companies like Apple and Google not only have enormous levels of consumer trust, they are doing well enough to not need to take actions such as this to make a profit. In my opinion there should be no room for tech leaders to act in such a criminal way and I hope the employees seeking additional pay via a class-action lawsuit from a 4-year period are compensated handsomely but fairly when the dust settles.
Disclosure: I own Apple shares