As my colleagues over at Pando Daily have been aghast to find out, no one’s really been paying much attention to the class action suit over wage fixing in Silicon Valley. Certainly there’s not been the outpourings of rage I and they would have expected. And now we find that that civil suit has been settled ahead of trial for the less than princely sum of $325 million. Sure, that’s real money, but compared to the allegations of what had been going on it’s peanuts.
Here’s the background: it was alleged that the major tech firms in Silicon Valley, Google, Apple, Intel and Adobe (Facebook was an admirable holdout from the scheme and several other smaller firms settled earlier) conspired among themselves to hold down the pay of their engineers. OK, so the geeks and the nerds of the valley are some of the best paid people on the planet so it’s not all that difficult to with hold sympathy from them. The companies did this by insisting that they would not recruit or poach employees from each other.
Unfortunately, as even Karl Marx noted, the way in which the wages for the workers rise is by employees being able to bargain with employers. Most obviously by threatening to go and work for someone else offering more cash for their labour. Agreements not to hire from other companies means, obviously, that this tactic isn’t open to the worker. It’s also what Marx called monopoly capitalism (although we would call it monopsonist capitalism these days) and it’s very much something that we don’t want to happen. Partly because the entire point of this economy thing is to improve the life of the average guy, the worker, but also because the price of labour is an important signal in our economy. If wages rose for engineers then more people would be attracted to that calling. And given how profitable the technology business is these days that would be a good thing: another name for labour moving to a higher productivity use is “making us all richer”.
So, we’re unhappy in an economic sense that this wage fixing went on. And we should also be unhappy, angry even, in a social sense that anyone had the temerity to do this.
There wasn’t any doubt about what had been going on either: the companies admitted to it several years ago. This is the civil, class action, suit that followed that admission. And it’s just been settled:
Four major tech companies including Apple and Google have agreed to pay a total of $324 million to settle a lawsuit accusing them of conspiring to hold down salaries in Silicon Valley, sources familiar with the deal said, just weeks before a high profile trial had been scheduled to begin.
Tech workers filed a class action lawsuit against Apple Inc, Google Inc, Intel Inc and Adobe Systems Inc in 2011, alleging they conspired to refrain from soliciting one another’s employees in order to avert a salary war. They planned to ask for $3 billion in damages at trial, according to court filings. That could have tripled to $9 billion under antitrust law.
The class was some 60,000 people in size so this is perhaps $5,000 per affected worker. That’s hardly a punishment for the companies when they will have saved much more than that in lower wages over the several years the scheme lasted. Ever since I first heard about this case, a few months ago, I’ve been insisting that the punishment should be severe. Over here in the European Union, for example, the fines could have been as much as 10% of each company’s global turnover. I regard this as letting them all off extremely lightly.
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