Meet the New Silicon Valley Boss, Same As the Old Boss: Putting the STEM ‘Crisis’ In Context

During the last decade, we’ve heard repeatedly that there is a STEM jobs shortage, even as there is a PhD glut, a stalling out in the biomedical sector with a slight drop in wages, and a refusal to hire older technology workers. With that in mind, a civil lawsuit alleging anti-tech worker collusion by some of the largest technology companies seems…relevant (boldface mine):

In early 2005, as demand for Silicon Valley engineers began booming, Apple’s Steve Jobs sealed a secret and illegal pact with Google’s Eric Schmidt to artificially push their workers wages lower by agreeing not to recruit each other’s employees, sharing wage scale information, and punishing violators. On February 27, 2005, Bill Campbell, a member of Apple’s board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt “got directly involved and firmly stopped all efforts to recruit anyone from Apple.”

Later that year, Schmidt instructed his Sr VP for Business Operation Shona Brown to keep the pact a secret and only share information “verbally, since I don’t want to create a paper trail over which we can be sued later?”

That DOJ suit became the basis of a class action lawsuit filed on behalf of over 100,000 tech employees whose wages were artificially lowered — an estimated $9 billion effectively stolen by the high-flying companies from their workers to pad company earnings — in the second half of the 2000s. Last week, the 9th Circuit Court of Appeals denied attempts by Apple, Google, Intel, and Adobe to have the lawsuit tossed, and gave final approval for the class action suit to go forward. A jury trial date has been set for May 27 in San Jose, before US District Court judge Lucy Koh, who presided over the Samsung-Apple patent suit.

Despite the Silicon Valley propaganda, this collusion to crush workers’ wages has been happening since the late 1980s:

One of the more telling elements to this lawsuit is the role played by “Star Wars” creator George Lucas, who emerges as the Obi-Wan Kenobi of the wage-theft scheme. It’s almost too perfectly symbolic that Lucas — the symbiosis of Baby Boomer New Age mysticism, Left Coast power, political infantilism, and dreary 19th century labor exploitation — should be responsible for dreaming up the wage theft scheme back in the mid-1980s, when Lucas sold the computer animation division of Lucasfilm, Pixar, to Steve Jobs….

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 competition was driving up tech engineers’ wages.

The companies argued that the non-recruitment agreements had nothing to do with driving down wages. But the court ruled that there was “extensive documentary evidence” that the pacts were designed specifically to push down wages, and that they succeeded in doing so. The evidence includes software tools used by the companies to keep tabs on pay scales to ensure that within job “families” or titles, pay remained equitable within a margin of variation, and that as competition and recruitment boiled over in 2005, emails between executives and human resources departments complained about the pressure on wages caused by recruiters cold calling their employees, and bidding wars for key engineers.

It seems like the plaintiffs have them dead-to-rights: to leave so much incriminating evidence tells me they didn’t think they would get caught–or that they were doing anything wrong. The latter is awful. It’s especially galling when you consider how profitable these companies have been.

I hope the next time Silicon Valley argues there aren’t enough technology workers, someone asks them about this little wage problem.

Also, wages always clear markets. Or something.

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3 Responses to Meet the New Silicon Valley Boss, Same As the Old Boss: Putting the STEM ‘Crisis’ In Context

  1. bluefoot says:

    Not just high tech. I worked in SF/South SF in biotech from the mid 90’s to the mid-2000’s and certainly in the late 90s and though the time I left, it was well known that there were “gentlemen’s agreements” between the larger biotech companies not to recruit from each other, and there was definite sharing of pay scales, merit scales, etc. There were at least two times when I found out from someone *at another company* that my company had layoffs scheduled (right down to the number of people and the date). Apparently the HR depts shared the info amongst each other and word leaked out to people at the other companies long before the people affected knew.

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