Common leadership, via the sharing of board members, significantly increased the likelihood that tech firms would not hire each others' workers. This form of 'no-poaching' may have had much bigger impacts on wage suppression:
"It is worth noting that such collusion against workers may have costs beyond just the directly impacted workers in the high-tech sector. Wages and salaries of jobs in one industry can serve as reference points when workers in other firms/industries negotiate their wages. Thus, if high-tech workers get paid less, this may impact wages of other workers, say in finance, which may then impact wages in another sector and so on. Collusion in one sector can have impacts on other industries."
To read more: https://www.nominalnews.com/p/competition-no-poaching-real-p...
And I'd say it is probably worse for society & small shareholders than it is for workers. These board-members aren't particularly skilled and companies mostly just fall into success by accident. Having a small set of board members everywhere is basically corruption and is surely funnelling money away from businesses into the hands of a small politically connected group of people.
That being said, the best response would be to make it easier for workers to split off and spin up new businesses (ideally co-op style, we really should be experimenting with communal ownership styles now that communication tech is so much better). There isn't a mechanism to stop small politically connected groups conspiring with each other, that is just how power works. It isn't feasible to out-law the politically connected.
> These board-members aren't particularly skilled...
Are you suggesting Dana White of UFC fame joining the Meta board isn't particularly skilled? That he wasn't approached for his in depth knowledge of social network theory and practice, online ad revenues or AI ethics?
What did you have in mind to make it easier?
It’s already not hard for workers to split off and form a new company with whatever ownership structure they want.
What’s somewhat harder is to find a way to cover your bills until the company is able to pay your salary, assuming you aren’t willing to sell part of the company in exchange for that funding. (I’m not giving you money in exchange for nothing; I’m probably not lending you money to immediately spend on salaries without collateral that will be worth something if you fail, and if you have that collateral, you could already use it to raise funds.)
Unless you’re proposing some government scheme to give money for no security, I’m not sure of the form of making it easier that wouldn’t be immediately gamed.
I'd basically like to see worker-owned corporations being tax-privileged (maybe a 5%, maybe a 15% discount tax rate) and some QoL legal features to make it obvious to people that they are signing up for a high-risk high-reward corporate structure. If I thought the idea had serious traction I'd look up what they do in Switzerland [0] and suggest people copy that. But I'd like to see new ideas experimented with that make it easier for workers or citizens to take on controlled levels of risk.
It is more a political project than an economic one; I interpret serial board members as a problem of power centralisation. The incentives shouldn't be to engage in that sort of centralisation, it can't possibly be a technically good idea. One idiot in the wrong place will cause too much damage and board members don't have time to keep track of multiple companies. It'd be good to do things that decentralise power.
Investing in cooperatives isn't all that new, some sites (https://www.ethex.org.uk/) have a fairly long history in it. Cooperative financing options are generally debt instruments, or forms of shares which are a kind of like bonds that also confer membership and a vote.
The difficulty really is in organising people into a functional company and acquiring customers ASAP. The coordination costs are high and the prospect remains risky, so very few people do this.
Probably the best option for more cooperatives is to legislate the idea of a hostile takeover by employees into existence, such that a majority of employees can vote to take over a company if they can finance it's purchase. As you might imagine, certain quarters would respond badly to this.
If they can finance the purchase (at an arms-length price), they can already buy the company; no law change is needed.
The idea already exists and does not need to be legislated into existence: it’s a leveraged buyout (LBO).
A law change is only needed if you want to force a sale at a lower price than the current owner(s) will accept. In other words, if you want to forcibly take the company from them for less than the price they are willing to accept, so basically seize part of the value of private property and give it to other private people. I agree that would be unpopular.
Not so: you're thinking of companies that are traded in public. I'm saying even private companies should be able to bought by their employees, at the instigation of the employees rather than the owners, and that this should apply to companies large or small. It may still be an LBO and would still be at market price, but it'd be unappealing to say the least for owners. It'd still be beneficial.
If it’s bought at a price that the owners voluntarily accept, they’ll be fine with it (by definition), whether previously publicly traded or privately held.
No, the idea is that a formula would apply. The reliance on voluntarily handing over from the founders is specifically what a legislative change would alter. That's the whole point of what I'm saying.
- [deleted]
It's been argued that similar dynamics also inflate executive pay, although I'm not well-versed enough in the overall economic policy debate to know how well-established this actually is [1].
[1] https://www.epi.org/publication/reining-in-ceo-compensation-...
>Common leadership, via the sharing of board members
We used to call this “interlocking directorates” and it’s a fundamental pillar of antitrust law. Why are we using a new term?
I mean thats a pretty big stretch. You can certainly make the argument but I believe they call it casting a wide net.
It's baumol's cost disaease no? rising wages in one sector, have a side-effect of bringing up wages in another.
I agree that its possible but it seems to be the authors trying to cast a wide net via hypotheticals. Its easy to say its possible - but without any evidence its heresay, and within a paper like this its about trying to show the widest and broadest potential wage suppression possible.
It seems sloppy to me to be honest.
I mean I know a lot of people who explicitly decide between sectors early/mid career.
Tech vs consulting/finance for MBAs, tech vs. HFT for SWEs, tech vs. advertising for creatives, etc etc
I really doubt that could override the fundamental supply and demand forces.
If hiring a finance "worker" will make my company $500k/year I will offer him $450k regardless of what Google engineers make.
Will you offer him $450k regardless of whether he would accept $250k because his next best alternative is offering $200k?
In that case I would offer $250k, of course, but that assumes there is no other firm that can put that person to work on something equally profitable.
Either way, engineer wages at Google would not be a factor.
In this example, if their alternative was a $300K/yr job at Google, that would certainly affect their willingness to accept your $250K/yr offer.
If it did not at least affect that willingness, they might not be worth $250K/yr as a financial analyst.
> Either way, engineer wages at Google would not be a factor.
...for you. It would be a factor for who you are trying to hire. If who you are trying to hire sees Google engineers making $$$, but you are offering $ for job X, and they do not see it as an unbridgeable gap in their own aptitude, they could well say "I am going to instead try to be an engineer at Google so I can make $$$, instead of being offered $ doing X". This happens all the time.
This is absolutely not how wages are set anywhere and certainly not in tech. Workers are paid according to the prevailing wages and what they’ll accept, not according to the value they generate for the firm.
Having had real conversations with company leadership about "the board being concerned about engineer salaries being above industry norms" despite "having the highest revenue per engineer in their portfolio" I can... anecdotally confirm.
I'm here to second this.
I've been in the board room when discussing salaries and told that we need to offer the lowest that the candidate will accept - "it's just good business".
I was arguing against that mentality as responsibilities and retention are a more important metric to my mind when thinking about compensation. But even there, I'm part of the problem as I would set my "retention" target to some measure above industry standard: where-by I am still thinking in industry standard terms. (as per this thread)
and yet, they could, no matter what happens in other industries
if they were paid for exactly the value they produced the firm would not profit as all the profit would be paid out to those generating it
> the firm would not profit as all the profit would be paid out to those generating it
Then what is the firm doing at this point?
In theory, it could re-invest those profits into the company, in hopes of further gains down the road. (But like all things, there's a healthy balance.) In practice, I think the answer is "executive bonuses" and [short-term] "stock buybacks".
(But morally I agree; there is no reason every company has to be Scrooge, and I think it's to their long-term unprofitability to be so, by effectively ensuring a lack of experience & growth within the employees generating the value in the first place.)
oh okay, if anyone anywhere suggested otherwise in this thread I'll let them know
How much value a worker generates is of course much harder to quantify in tech, vs a finance trader, but the market forces will produce a rough equivalent result over time.
But to get back to the topic, tech wages are definitely not set by comparing with finance wages!
> the market forces will produce a rough equivalent result over time.
No, they absolutely will not. Absolutely not. The entire history of the labor movement and of labor law is testament to this. We’ve tried this, repeatedly, in the real world, and labor gets fucked every single time. Employers do not pay according to the value generated by the employee, they pay the minimum they need to get an employee. Get this model out of your head, it is wrong.
There's probably a case for Henry Ford, if the parable about paying above-market wages is true.
But certainly not since then.
And even he probably paid the minimum overage he could. It's the nature of business.
Every once in a while someone recognizes that paying good workers good wages works out well for the business, but that never makes it back into the textbooks somehow.
I would love a study, which compared how well a company did, and what their overall expenses were:
1. For paying a team of N people the going wage.
2. For paying a team of N/2 people, double the going wage. Aiming for the best workers it could find.
3. Paying a team of 2*N workers, whatever the bottom of the market is.
This would be for teams where high functioning workers resulted in high value results, i.e. creative/design/technically challenging work.
I have no idea how a study like this would work, but the more challenging the work, the higher likelihood that you save money going high salary, high talent.
Some AI researcher seem to be falling into this category, with really high salaries. Researchers certainly have 10x talent. But I bet there are a lot of 2x, 4x engineers, designers, whatever, that are being overlooked and/or under motivated. That would be cheaper to pay, and produce more value, in small numbers, than others in larger numbers.
These type of firms exist in all sectors.
- [deleted]
I think/hope we're talking about different things.
I think you're saying that employers pay employees as little as they can, not according to some formula based on the value each employee generates. Aside from some very specific exceptions, I think that's very true.
But then we need to explain why all companies don't just pay minimum wage!
I claim that prices (wages) on a labor market, like on most markets, is determined by supply and demand. Obviously, companies that pay employees more than the value they generate will run out of money and die. This sets an upper limit on wages.
The lower limit comes from companies outbidding (demand) each other for workers (supply) as long as it's profitable. In aggregate this means wages will converge on on some large percentage of the value generated by the typical employee.
I wonder if market forces would work better if everyone's salaries was public.
There's a viable place to do a case study:
Thanks for posting. That article was really interesting!
I saved my company $3million+ / year in Opex costs. Still waiting for my juicy $1million/year salary in reflection of the value I generated.
I made a former company $100M p.a. And all I got was a 30K bonus paid out over 6 years. Not even a promotion as I was on a visa. The asset required maintenance and without me it slowly degraded away. Every now and then I offer to go back and fix it for a flat $1M but instead they would rather believe that it’s impossible. You could imagine the sheer dysfunction required to let that much money go.
A former colleague built a program that would have saved $30M p.a. in OpEx but as a policy they can’t deploy something unless more than two people understand it and they wouldn’t pay enough to hire someone capable enough. Probably would have taken $600K.
It’s about power and in general management does not want to yield power to ICs no matter how much money they could make with it. The more productive the IC the more power management loses.
My advice is to sleep on those kinds of improvements. Optimize things that are making your job/team's daily life more difficult, which directly translate into better WLB. You can sometimes knock significant hours-per-week off of your actual work done.
We are giving away this expertise for fractions of a penny, but companies react to market pressures. Let them spend the extra $36 million for not keeping up with it. When they offer incentives, then do the work.
Heck, maybe you can make an underhanded pitch to whatever cloud provider it was that you earned them millions by not fixing the issues.
- [deleted]
Markets are not guaranteed to convergence faster than surrounding conditions change.
Markets are not guaranteed to converge.
“The market can stay irrational for longer than you can stay solvent”
There are price makers and price takers. Guess which side labor is on?
Curious, have you always been a market determinist, or did that develop in a unique way for you?
I've never heard that term before, so it's hard to answer :)
After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
> After learning how microeconomics/"price theory" explains how prices emerge in markets, it can be hard to discuss with people who don't understand the mechanisms.
AP Physics is learning that a perfectly spherical cow does X.
Common sense is realizing perfectly spherical cows don't exist, and that certain things are overly simplified or more chaotic than theorists would sometimes like to admit.
But then wisdom is recognizing it's AP Physics, not common sense, that put a cow on the Moon.
There may not be perfectly spherical cows in the real world, but then real cows will also do X, to the extent their non-perfect-spheriness doesn't interfere with it. Theorists don't simplify for the sake of simplifying, they're trying to study specific components of the whole in isolation. Yes, it's important to not confuse a component for the whole thing, but then it's also important to know the most impactful components and how they behave.
True wisdom is recognizing the folks that put stuff on the Moon had more than just AP Physics under their belt.
Understand that the people arguing with you aren't doing so because they don't know or understand the theory, they're arguing with you because the theory is a toy that only works under very specific conditions which are almost never met in the real world.
Economists have studied that question a lot, and the general result is that the theoretical models work quite well, even on substantially imperfect markets.
I think these concerns are pretty similar to the religious idea that "evolution is just a theory". Our human minds really don't want to admit any facts that would force us to change our world view.
There's not exactly a good descriptive term, but the vibe I got was beyond, "Markets are the best tool to solve exchange problems," and ventured more into "Markets are an inevitable fact of nature, provide the most utility, and efforts to intervene produce worse outcomes." Let me know if I got that wrong.
“In theory, there’s no difference between theory and practice. In practice there is.”
- Yogi Berra
After learning how bad people who know a little microeconomics are at noticing or accepting it when their "explanations" diverge grossly and repeatedly from what happens in reality, it can be hard to take them seriously.
As an extension: an opposite of "collusion through common leadership" might be "collusion enabled by common exclusion"; in other words, blacklisting.
The inverse of a "no-poach list" would be a "no-hire list".
In the past, blacklisting (now should be called denylisting) was a real labor issue. People who stood up for workers rights (think: coal-mining towns in the late 1wr800s) or had unpopular political views (think: Hollywood in the early cold war) were, so the story goes, put on shared lists and denied work.
But the effect would be similar. Enabled beneficial collective action for the executive class, through a concerted and curated collection of who can participates in working together.
Does tech do this, too? If so, it could explain the need to import labor, and reflect or contribute to an artificial inability to find high-tech labor domestically?
That is-- some of the collusion enabled by "common leadership" might not be possible with a workforce having full agency--but, with the risk of blacklisting, basically, there is potentially another side to the collective action of the executive minority.
Of course, blacklisting might be illegal, so, hard to learn about, but so might be some other other forms of collusion, which the paper talks about?
I am not a lawyer, just wondering if this is part of a bigger workforce pattern, reaching further to the lower rungs of the ladder, too, even if in the inverse form (exclusion, not inclusion).
Links:
- https://firstamendment.mtsu.edu/article/blacklists/ - https://pen.org/censored-free-speech-hollywood/One of the pieces of advice I would give to someone early in your career is to find a trusted seasoned executive who can share a perspective that I have never seen captured well in writing. Typical actual comp structures for a number of career paths. Board dynamics. The true sources of negotiating power. The types of restrictive terms included in exec and board contracts. etc.
One of the companies I worked at had the no poach list on the company open confluence for anyone to see if they looked
Marx predicted this. But he usually does.
Marx also predicted many things that turned out to be completely false. It's easy to make a convincing sounding argument after the fact if you only cherry pick the bits that support your view.
Give examples of things he got dead wrong?
If you're familiar with Marx's work beyond capitalism-bad-communism-good, I think they're fairly obvious, but I'll bite since most of the other comments so far are fairly brief quips. Marx predicted that communism would rise from the internal collapse (or revolution, but the two are interchangeable in his context) of late capitalist societies, however this has not happened. Neither China nor Russia were really capitalist societies in any reasonable sense when they turned to communism, if anything, you could call them agrarian.
Similarly, Marx claimed that as capitalist societies develop, workers would face increasing poverty, declining living conditions, etc. While the income gap between the top and low end is ever increasing, in the grand scheme of things, living standards for workers have improved considerably across the board in pretty much every category. Marx also argued that capital accumulation would lead to a decrease in profit margins, which would eventually result in an economic collapse, again ending capitalism. While we've seen numerous economic downturns, practically all affected economies have eventually recovered.
And so forth, there's many other examples we can take turns picking apart, but I doubt there's much value to it — most people arguing over Marx don't actually know much about Marx.
He didn’t lay out a specific timeline though. So who is to say if this might come to pass? Also, perhaps his work and the development of more left leaning politics and policies actually slowed down the future he predicted. Finally I think people in the comments are deluding themselves about being petit bourgeois when they are more comparable to working class. Many of us have small savings but that does not mean we are not working class - having a million in savings means you might be able to retire, hardly being wealthy. I think a delineation that makes sense today is if you trade your time for money you are working class.
This has always been the definition of working class. A good example of my last point about Marx.
That the industrial working class would come to compose the supermajority of society? That history was driven by a Hegelian dialectical structure which would guarantee that something like the attempted German Revolution would succeed?
Are the working class not the majority of society? 1% of the population of most western countries are farmers. 1% are extremely rich and 98% are the rest of us.
Well, as far as industrial workers, they definitely aren't a super-majority, given all the people working in service, creative, and white collar jobs. But I don't know why that would matter.
I'm no scholar of this stuff by any means, but by my understanding the relevant difference was between those that lived by what they owned versus those that lived by selling their labor. I don't know the exact numbers but I would assume those that live by selling their labor are a majority but not super-majority. Those that live entirely off their property are a tiny minority, but there currently exists a solid chunk of people that both sell their time and build wealth from property/interest.
Most of the HN crowd probably falls into that later category
>I don't know the exact numbers but I would assume those that live by selling their labor are a majority but not super-majority.
They are a global supermajority. In some of the wealthiest nations on the planet, they are instead only a majority.
>there currently exists a solid chunk of people that both sell their time and build wealth from property/interest.
Yes, they are called the petite bourgeoisie. Marx wrote about them extensively. In very wealthy nations like the US, Canada, UK, Australia etc my understanding is that they make up roughly 30% of the population. The rest are proletarians & lumpenproletarians, aside from a negligible-in-numbers percentage of the population that compose the haute bourgeoisie or "real bourgeoisie". I believe the percentage of the population who are bourgeois in the US is around 0.3%, much lower in the other wealth nations because so many of global elite choose to live in the US.
The percentage of the population who are petite bourgeoisie in countries other than the wealthy nations is highly variable, class composition varies a lot worldwide (e.g. there are many countries like the Phillipines where there is quite a large peasant population still). In general, outside of the wealthy nations the petite bourgeoisie are something like 5-15% of the population, and the haute bourgeoisie make up significantly less than 0.3% of the population.
I think having some money saved does not make one petite bourgeois as I say in the comment above I think people who trade their time for money are working class. If you’ve saved enough money that you can retire you aren’t not working class, you are working class. The bourgeoisie do not need to work and so don’t retire.
>Well, as far as industrial workers, they definitely aren't a super-majority, given all the people working in service, creative, and white collar jobs. But I don't know why that would matter.
The Marxian theory, as such, concerned specifically industrial workers, because they were, by their own occupation, brought together in organized thousands at single sites of production.
That communism is compatible with human nature.
Tell that to monks.
Or, your atomic family.
Or heck, the bulk of the Neolithic.
All of which are small groups that rely on a ton of interpersonal trust. Large groups that lack interpersonal trust (like nations) tend to fail under communism.
Catal Huyuk, Mohenjo- Daro, Harappa, Tripolye-Curcuteni, Norte-Chico, Hopewell, Ain Ghazal.
Populations from hundreds of thousands to tens of thousands of people, over the course of millennia, in effectively completely egalitarian, likely communal societies.
And those are just the ones we’ve found.
Indus River Valley civilization may have been as many as 5 million people, no rulers, no social hierarchy, uniform housing, no monumental/elite structures or housing, no evidence of centralized power or government, standard weights and measures, collective infrastructure projects, etc etc.
It lasted roughly 1400 years.
So… no, you don’t actually need a small groups. You actually only really need it to be completely socially unacceptable for some to live in excess while others suffer.
In the entirety of human history, the only mechanism by which the human condition as a whole is improved is by applying a portion of the private surplus towards the public good. How much is a question of the moral character of the civilization in question.
In the 50’s, in the US, if you made over $200k (~$2.2million in 2025 dollars) you paid over 90% of every dollar earned above $200k in taxes. The top corporate tax rate was 52%.
So perhaps one could say that human nature isn't compatible with such massive scale? Over here in capitalist paradise, it sure sucks for most people
Compared to what?
I’d argue that the US is reverting to the average global experience precisely as its domestic market breaks down due to interventions — eg, destroying small businesses via regulation and mass importation of foreign labor.
> Over here in capitalist paradise, it sure sucks for most people
Pretty sure this reflexive, luxury belief is not borne out by the data.
https://ourworldindata.org/grapher/world-population-in-extre...
The people who have won the game in our current system love to point to this statistic, as if "extreme poverty" is the only thing that matters.
Even if people have a roof of their own head and bread in their belly, they don't like living with anxiety about being able to pay off debt, or what would happen if they had an unexpected hospital stay. And above all, they don't like working so hard only for the value they produce to be sucked up and used to buy back stock for the benefit of billionaires.
This is talking about High-Tech Employee Antitrust Litigation form the aughts.
https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust...
Also, in retrospect, this timing was funny. https://www.apple.com/newsroom/2009/08/03Dr-Eric-Schmidt-Res...