Ask HN: Why is Pave legal?
5 months ago
If you haven't heard of it, Pave is a YC-backed startup that helps startups with compensation. I can't actually access the system so I'm speaking from hearsay and what's information on public parts of their website. The way I understand it works is that you connect Pave to your HR and Payroll systems, they take the data about who you employ and how much you pay them, combine it with all their other companies, and give companies a collective breakdown of compensation ranges.
My question is, isn't this specifically anti-competitive wage fixing? This seems exactly like RealPage but for employee compensation. As far as I know, colluding on wages like this is illegal. Is there something about the company that I'm missing?
I have never heard of Pave before, but this just sounds like yet another copy of Equifax's "The Work Number" [1]. Basically, HR at many companies gives your salary and employment history data to Equifax, who then sells access to the information to certain parties with supposed need to access it, including potential and current employers and creditors. This report is likely one of the most invasive consumer files out there for many people.
I cannot comment on the legality of this kind of data sharing, but as I and others have pointed out, it has existed for a while. I do agree that it is concerning. You can freeze your Equifax The Work Number report at least, just like other credit reports.
[1] https://theworknumber.com/
I downloaded a personal report from the work number website and found to my horror that my employer was reporting every. single. paystub. gross and net, to equifax.
That felt like a huge breach of privacy. Given that equifax had already proven incompetent at keeping my data secure, I immediately sent HR a request to stop sending my supposedly 'confidential' pay info. They politely told me to kick rocks, so I went on TWN's website and froze that report so no one would be able to request it, and it will be a cold day in hell before I thaw it.
I am an investor in equifax. Let me clear up a misconception on where the data comes from. Half the data comes from large enterprise customers, who “sell” the data in exchange for Equifax doing I-9 verification for free. The other half comes from 39 payroll companies. Every single payroll company except for Rippling and Gusto sell paystub data to Euifax. (Rippling will start next year). Those are exclusive revenue share deals. You cannot be a competitive payroll provider without the revenue share from Equifax. So before you blame your employer, they might not be selling it directly and even if they opted out, your payroll company will sell it anyway.
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Don't ever work in the public sector then. Your salary is public record, open to anyone who is curious enough to look.
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22 states currently have salary history bans. You can save the trouble of jumping through Equifax's hoops if you have that protection.
Many if not most companies outsource employment verification to The Work Number. When you get a new job, a frozen report will complicate your background check.
They don't give out salary info in employment checks though. AFAIK they require your explicit permission except for government agencies who use it to verify your eligibility for benefits. I would be surprised if they are not selling aggregate salary data though
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> They politely told me to kick rocks
The only way this stops is when people return the favor (on the spot, without a notice period).
Yep. Equifax got hacked a few years ago and the Government let them use ITS credit monitoring tool for those affected instead of reaching into its own pockets to pay for a third-party solution.
#sad #speakingOfMonopolies
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I froze the report, and I also told my employer not to report anything to Equifax (which luckily my employer allows).
This made getting approved for a mortgage more difficult. These days, loan officers just expect to be able to hit a button and get all your info.
We're losing the privacy battle.
Loan officers typically want to see bank account balance, paystubs, and tax records.
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The freeze is mostly ineffective for when you actually want it to work. From what I remember (even for the credit freezes) is that if you provide written consent to, say, a background check, then that overrides your freeze. So if you're applying for a job (basically the major instance where you'd want your salary information private) they're going to ask for your consent to do a background check and bingo they'll know how much money you make.
IMO this type of information should be illegal to sell or request.
I’m not sure this is true. The last time I changed jobs I had my TWN report frozen, and the background check company was really confused and said “we can’t seem to verify your job history through our normal means” without specifically saying why. I had to send some redacted paystubs.
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In case folks want to quickly know how to start a freeze, heres the info from the website:
To communicate a freeze request, send an email to the address below requesting a Freeze Placement Form: TWNFreeze@equifax.com
As a datapoint for how I've seen this used in the real world, I've spoken to startups who will defer to Pave regarding how much they'll offer to pay. The startup I spoke to said 'We pay you the 85th percentile for your YOE and role based on Pave data'.
Then I want 99th.
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I just signed up to see what they have on me.
I love that they have ALL my personal info, but I can't create an account with a password longer than 16 characters.. Why the heck are they not storing the hash?
Great security.
Pave is a company that has been snapping up other existing companies that performed this kind of aggregation of compensation data. Basically companies look at this benchmarking data to figure out what they should pay for different jobs and levels. Just some extent companies genuinely need this kind of data to figure out what to do. But I also think it breaks supply and demand. Companies are not discovering price of labor but just using each other’s signals to decide what to pay collectively
https://www.pave.com/blog-posts/announcing-paves-series-c-an...
These services feel not dissimilar to the Realpagr case that is ongoing now with rent price fixing.
How does this ultimately not end up having a depressing impact on salaries?
It does depress salaries, which is the point.
This thread got pretty off track. But, if I were to opt out of this database and went looking for a job, would potential employers not be able to see specific history about me (or at least not from Equifax)?
“I’m an employee looking for my data”. Links to https://employees.theworknumber.com/
Spits out 403 error forbidden
Gosh, that’s awful.
If one is required to sign an agreement to a background check, could this supersede one’s freezing of one’s Work Number?
In my experience the background check company (Hireright IIRC) was not able to complete the check “normally” with my TWN report frozen. Had to send redacted paystubs.
The FTC Guidelines for Collaborations Among Competitors https://www.ftc.gov/sites/default/files/attachments/dealings... says it’s illegal to share “competitively sensitive variables”, not just any data. Some forms of data sharing such as industry averages may not be illegal, but more detailed data such as numbers of applicants or price elasticity that enable the companies to act together as if they were a monopoly probably are. RealPage crossed the line by sharing an optimization algorithm and encouraging collective action. I’m not sure what Pave does.
> Under the Sherman Act, agreements among competitors to fix prices or wages, rig bids, or allocate customers, workers, or markets, are criminal violations. Other agreements such as exclusive contracts that reduce competition may also violate the Sherman Antitrust Act and are subject to civil enforcement.Dec 20, 2023
A good US.A. could probably argue this meets that bar. Didn't they just do something similar with the rent fixing from that similar SaaS product?
Op mentioned realpage, which is the company that does rent fixing as a service (RFAAS)
How sure are you that the incentives in place don't encourage inching toward this behavior as they begin to establish themselves?
As described, it is a fair ways away from what RealPage is doing. Specifically:
* RealPage sells raising rents, not just market info.
* RealPage pressures clients into taking their higher rents.
* RealPage also pressure clients to refuse to rent at lower rates for their own narrow economic interest - in other words, they actively seek to circumvent competitive pressure to keep rents high. (edit: to clarify, I mean they discourage lowering rent to attract a renter)
Pave does sound like it gives businesses a leg up over employees in wage negotiations, but until it e.g. starts promising clients that they will be able to pay lower salaries, the critical element of coordination won't be in the mix. Pave gives you the data, but you can still choose to pay above market to attract talent.
What's the point of getting this data if it's not to pay less money? What is the value add?
It's almost certainly for the companies to pay less money, but with a more generous reading, I think it could be argued that that doesn't necessarily have to come out of employee salaries. That data could be used to:
- Set reasonable ranges to find the right candidates they are looking for faster and minimize hiring friction
- Standardize payment levels in a way that reduces legal liability in certain states like Colorado/California. Or the most generous reading of "reduces legal liability" would be "promoting fairness".
- Reduce the time spent by HR/other teams of negotiating or setting salaries, as they can simply target some target like "we want to pay more than 60% of companies like us"
- For budgeting/forecasting with new hires, this allows companies to have more confidence in their estimates as they plan hiring.
- Some companies now offer calculators even before you're hired with what your salary/compensation might look like, such as https://posthog.com/handbook/people/compensation
But yes, overall I do believe that most companies also expect a general reduction in salaries when they use these tools.
I routinely get emails like "we'd like to hire you as our CTO, and because we just got a bunch of VC money, we're prepared to offer you a generous comp package of up to $90,000 salary plus .05% equity! Must be onsite in San Francisco."
If they were aware of market rates, they could avoid making potential candidates laugh at them.
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Because it's just as much to pay more money and get the employees you want.
When you don't know what the market is paying, you're liable to lowball offers and refuse to raise them, and not get the employees you want.
If you know market rates, you can provide reasonable first offers, or have a more accurate idea of how high you should go.
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What I've heard from leadership at more than one company is that they choose a percentile of the market they want to pay and then set the compensation there. For example, they may say "we want to pay at the 75th percentile for SWEs with X experience in the Bay Area".
I certainly don't trust that this doesn't hold wages down overall, particularly in the boom hiring market we had until recently.
To pay more money.
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RealPage pressures clients
To be clear, they're not "pressuring" them, they simply drop clients as a rule who don't use their suggested rent prices at least 80% of the time.
Now that is interesting. I personally find the difference almost without meaning, BUT I am very curious. What is the incentive for them to do this? To they get a point off of the increase?
Yah, that's the main difference: RealPage pressured landlords (i.e. tracked then) if they did not raise rents based on its recommendations.
If they had limited themselves to simply reporting the numbers, and letting landlords make their own decisions they would probably be legal.
Competitors making similar price adjustments or salary adjustments based on seeing each other's public announcements or sharing data is legal: https://en.wikipedia.org/wiki/Tacit_collusion
That's why it's "legal tacit collusion" when one leading law firm announces salary increases and other law firms immediately match it: https://www.reuters.com/legal/legalindustry/large-law-firms-...
That type of salary matching has been happening for decades.
What's illegal is competitors making agreements with each other to set wages -- via secret emails, etc.
Yes, but the information here is not public, since it's being sold as a service.
If it were public, employees and job seekers would also have the information.
Huh, this tacit collusion being legal thing is mind boggling.
The law firm example seems imperfect though. Publicly announcing that you’re raising salaries isn’t really the same as internally sharing that data and choosing to set the same salary based on that.
>Huh, this tacit collusion being legal thing is mind boggling.
Not really ... If you're looking to hire workers in a particular region, how do you know what a competitive wage is? Well ... you look at what similar firms are paying their workers. How do you know what similar firms are paying their workers? You read surveys, industry reports, public statements, etc.
Nothing about any of that means you cannot offer a higher or lower salary for the same position.
Information is either internally confidential or it's not. If the latter then it's very reasonable to expect other firms to take actions based on that information.
> when one leading law firm announces salary increases and other law firms immediately match it
Because it's public so doesn't reduce the amount of bargaining power employes have and therefore distort the market. Which is the main problem here.
Companies like Radford have been doing this for decades and are used by pretty much everyone, Pave is just a more efficient version of the same game.
Beyond salary, there is a whole industry of data brokers who get transactional data from individual participants in an industry vertical (CPG, Health Insurance, Salary, etc), aggregate it with their competitors and present it back to those participants as benchmarks. Management Consulting likewise is a way to launder getting strategic insight into your competitors from a third-party.
There's a long long history--especially when a lot of information was more opaque than today--when companies quietly shared a bunch of information with middlemen because they needed that information from other companies to function and the middlemen skimmed some of the the take.
Even price sheets that we would consider very rudimentary today were part of that.
I got access to Pave through one of my investors. Seeing the data made us set salaries and contractor rates higher, not lower. It’s like salary banding at big companies. It’s a framework for how much other people are paid at the same level, not a contract. HR will make it seem like a rule, but if you do spectacular work - you can always negotiate.
Collusion requires an agreement between rivals that negatively disrupts market equilibrium. Is this company not actually making the market more efficient and transparent? That said - an efficient market is good for the collective, not necessarily the rogue / outlier individual.
The market might be more transparent for the people who have access to pave, but for those who dont, the information asymmetry becomes worse.
Ding ding ding. Improving information for only the already-more-powerful side of such an asymmetric relationship doesn’t help the weaker side.
I agree and as an employee I encourage everyone to take a second post their salaries on levels.fyi. We have our own compensation tool that is free & likely as good or better than Pave as long as people add their info.
> Collusion requires an agreement between rivals that negatively disrupts market equilibrium. Is this company not actually making the market more efficient and transparent? That said - an efficient market is good for the collective, not necessarily the rogue / outlier individual.
I'm sure you practice what you preach and tell all your employees what their coworkers earn?
I'm sure he means transparency in the market where employers are competing with each other, not the market where individual employees are choosing employers
With a few exceptions, I've found that companies that talk about transparency are transparent with everything but employee salary
> HR will make it seem like a rule, but if you do spectacular work - you can always negotiate.
Every single developer should take this to heart. The phrase I once used at the end of an annual review was, "you can't give me a review like that but a raise like this!"
Yes, my manager had to get permission to give me the % increase I wanted, but it was to his benefit to do it since he wanted me to stay.
> Is this company not actually making the market more efficient and transparent
No, not at all. Unless applicants/employees get full access to the same information.
Ok, so your company ended up raising salaries because you were underpaying. That certainly wouldn't be the case if you found out your salaries were ABOVE average. You'd keep it the same at best, but most likely lower it.
That's the point of these systems. If it's not illegal, then it should be.
Or at any rate, "as one member, we ended up spending more when we started participating in a thingy" isn't super-strong evidence that the thingy is OK.
__________
To illustrate this, imagine some kind of over-the-top incontrovertible conspiracy to depress wages. I'm talking a secret volcano-island base, a letterhead with a Et redigam operarios in servitutem in latin, members greeting each-other as "Hello, fellow conspirator!" while twirling deliberate Snidely Whiplash mustaches, etc.
Then a new company joins the cartel, and it turns out that company was one of the ones previously paying below the fixed-price.
The fact that some members pay more on joining doesn't change the core nature of the system, especially if there's "noise" in the organic prices.
anecdotes are not evidence
Not a lawyer, but this document seems highly relevant.
DOJ Withdraws “Safety Zones” for Information Sharing and Other Collaborations https://www.crowell.com/en/insights/client-alerts/doj-withdr...
Wage fixing is when multiple companies agree to set wages at a certain amount.
Sharing compensation data across companies doesn't necessarily mean wage fixing. Company A can use the compensation data from Company B to try and compete better for talent.
Not saying thats what it will be used for, but it's technically not wage fixing.
> Wage fixing is when multiple companies agree to set wages at a certain amount.
I am not an expert on wage fixing laws in the US, but I came across a class action on wage fixing a few days ago (Ron Brown et al v JBS USA Food Company et al) where part of what was aledged was the illegal exchange of salary data via surveys [1].
> The Red Meat Industry Compensation Survey conducted by WMS on behalf of the Defendant Processors violated the Safe Harbor Guidelines in at least three ways. First, the Defendant Processors, not WMS, collectively managed and controlled the annual Red Meat Industry Compensation Surveys. Second, those Surveys often contained information about the Defendant Processors’ future compensation plans and practices. Third, Defendant Processors had extensive discussions about the Survey results, including at in-person meetings, during which they disclosed their respective compensation rates, practices, and plans
[1]: https://www.classaction.org/media/brown-et-al-v-jbs-usa-food...
>part of what was aledged was the illegal exchange of salary data via surveys
Alleged doesn't mean illegal. In this case this point never saw court; the sides settled.
And what this claimed to have happened is not what is happening here.
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I'm asking this as someone with 0 legal knowledge: doesn't the context matter? If every company takes this data and is like "we want to pay at the 95th percentile" (which is what they all do), that seems like wage fixing even if they're not all agreeing to it together.
If they’re all shooting for the 95th percentile and have up-to-date data then you certainly won’t have fixing; rather you’ll get insanely rapid wage inflation!
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> If every company takes this data and is like "we want to pay at the 95th percentile"
It's thought by some that this is how CEO compensation has gone up so much: Corporate boards of directors have compensation committees, which are fed survey data about comp ranges; a comp committee will say, "We want our CEO's comp to be in the top quartile" — which, as time goes on, leads to an inexorable upward ratchet effect.
I think some basic math knowledge would help more, if every company paid at the 95th percentile then it wouldn't be the 95th percentile, it would in fact be the average. But no, these distributions are not flat like that, there is a large spread and "by definition" of the 95th percentile only a few companies pay at that rate.
If you opened up a business selling water bottles, you'd probably check what price water sells at across brands, then decide in which segment to price it.
"I want to sell my water at the upper end and market it as a gourmet brand"
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That’s how pricing works in a market?
In fact if every company did pay at 95th percentile then I’d say it’s a good outcome. There’s a 5 percentile slack which is not too bad?
>Company A can use the compensation data from Company B to try and compete better for talent.
My company has done this in the past sorta indirectly, we were losing a lot of people to competitors and data like this is how they justified paying a bunch of us better so we wouldn't leave. I agree that it could be used to fix wages, but companies will always have to pay their best talent more if they want to retain them, whether that means paying them above what the data says or if it means inventing new job titles for them to progress into.
Stochastic wage fixing is still wage fixing
Your honor, the algorithm made me do it!
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unless you collude with other companies, doesn't seem like it is.
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> Company A can use the compensation data from Company B to try and compete better for talent.
Company A could make offers and negotiate with prospective hires based on the value they can get out of the hire. Rather than secretly leverage surveillance capitalism against the prospective hire, to base their offer on what the person is currently making (and, hey, if lots of employers do that by convention, you pretty much have collusion).
Hate it in concept (I can't speak to Pave specifically). Metrics are useful if the manager doesn't make hard targets, the data is good and the model is good. How do you model compensation packages? how does 20 days leave compare to unlimited leave? Are two companies with unlimited leave equivalent? When the managers have targets, they're incentivized to massage the data in their favor. So even if you're doing it right, that makes every other companies data suspect.
This also sounds like it will reinforce some negative behaviors. If the data shows that other companies are paying women 80% of their male peers, shouldn't this recommend I also pay women 80%? But I doubt the output will spell it out that way, will I even know it's influencing me this way?
No, you don't set salary bands based on race or sex. That sounds like it would be illegal. The way that bias creeps in is not from data gathering and setting salary ranges, it's from managers bias when they choose from the ranges for candidates.
Setting company wide salary bands actually HELPS fairness in pay by providing objective ways employees can argue that they are underpaid if that's the case.
> it's from managers bias when they choose from the ranges for candidates.
It also comes in from how / if they choose to promote. If they take too long or if they just don't put you up for promotion / reject you, overall earning potential is weakened.
Do this enough times and it becomes a substantial reduction in life-long earnings, life-long title, respect, etc.
Gratitude for the expose. I was(and assume most here were as well) completely unaware of Pave. I will, and hopefully other potentially impacted, look up if I am affected by this and if so - share experiences/info here.
The overwhelming question I have when reading these responses is "don't you guys read salary survey data when you're looking for a new job, or at annual review time?"
But then we're not sharing other people's personal information.
Are they actually sharing personal information? From the OP it sounds like they're sharing aggregate data. (I've never heard of Pave.)
Isn't levels.fyi or similar just the employee side of the coin?
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But the salary data that’s available online to me as an employee is imperfect and extremely limited. This would be like if every employee of a major company sent their exact salary and demographic information to levels.fyi, which would never happen because it’s an insane sacrifice of privacy
I believe wage-fixing would require companies to agree to…fix wages. Having knowledge of average compensation is not inherently problematic. Firms are still able to decide to pay more or less than the prevailing wage.
RealPage also gave recommendations. Giving a salary range seems like the same thing.
By this logic, employees who share their salary publicly also contribute to wage fixing.
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"I believe wage-fixing would require companies to agree to…fix wages"
They don't need to officially twirl their mustaches and laugh evilly while telling each other how they're definitely fixing wages. They just need to share data on wages with other companies in the same or a similar business with the intent of decreasing wages. That is already illegal, because they're colluding with competitors to keep wages low.
The whole point of getting such data is to ... fix wages.
Do you actually believe they will be doing this?
I guess my issue with all the “it’s just info” arguments is this. Employers inherently have an information advantage in salary negotiations. A tool like Pave drastically increases that imbalance.
How am I ever going to realistically negotiate salary vs a company that has this level of information (even during performance reviews)? And frankly something that worries me is, what level of data are they getting? If it’s tied to your HR system, does it get anonymized performance reviews? If every company can perfectly profile me and place me in an expected salary, I as the employee give up all my power. That’s strictly bad for me
Your salary negotiation point speaks more to a call for open salary data, which many people have been arguing for.
You're missing a lot with your second point though. If a company has excellent salary data and can put in you a band, then it also means that you have better grounds to argue for raises when you gain experience, or argue if you are underpaid, or even find jobs at companies who intentionally pay a higher percentile to market as a way to attract better talent.
In contrast, if we all operate 100% blind with no data, as many here seem to want, it would lead to all sorts of unfair wage situations with people doing equivalent jobs earning vastly different amounts. This sort of environment is biased towards more aggressive people who have strong social skills when it comes to negotiation. In fact, you see exactly this when companies choose not to buy data like this to set their bands.
I super agree that fully open salary data would be amazing.
On the second point, I would argue that you have very little ability to determine when you’ve gained enough experience as an employee to argue for a raise. Whereas an employer with access to Pave has a _ton_ of ability to determine whether you have or have not. Yours is based entirely on personal experience and feel, plus maybe talking to a few coworkers. Theirs is based on aggregated data from thousands of employees
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>What level of data are they getting? If it’s tied to your HR system, does it get anonymized performance reviews?
Pave user here. Absolutely not. It's anonymised comp data. Essentially salaries and job titles only.
Whilst I do agree with your point that data like this should be publicly available, I'm not sure I understand how it gives employers a negotiation advantage?
Sharing compensation ranges may not be enough to qualify as wage fixing.
It seems like there would have to be an agreement or at least a collective incentive to lower wages.
While companies could use the data to ensure their offers are always below average (pushing wages down), they could also use the data to ensure their offers are above average, pushing wages up.
Think about it: prices are transparent in most markets and that doesn't seem to generally lead to anti-competitive prices. In fact, it seems to encourage companies to compete.
"at least a collective incentive to lower wages."
???
In accordance with HN guidelines I am going to resist giving a snarky answer and will instead clearly articulate: Companies clearly have a strong collective incentive to lower wages.
"While companies could use the data to ensure their offers are always below average (pushing wages down), they could also use the data to ensure their offers are above average, pushing wages up."
They may do both. Collude to keep average wages low, so that when they offer outliers "above-average" it is still cheaper to cross that many standard deviations.
"Think about it: prices are transparent in most markets and that doesn't seem to generally lead to anti-competitive prices. In fact, it seems to encourage companies to compete."
The problem imo is less about transparency and more about information asymmetry. It's asymmetrical that companies have access to literally what every other company is offering, while the employee is sitting there trying to guess based on glassdoor (which is utter shit information) and levels.fyi (marginally less shit?).
> Companies clearly have a strong collective incentive to lower wages.
Of course they all have an incentive to pay the lowest wages they can. I did not think we needed to state that.
But what I don't see here is a synchronizing mechanism. That is, what here will push companies to *collectively offer below average salaries on average* vs above average salaries on average?
> ...Collude to keep average wages low, so that when they offer outliers "above-average" it is still cheaper to cross that many standard deviations.
Yes, companies could collude. CEOs and HR managers of a range of companies in an area or industry could start an email chain, or conference call, or slack channel and commit to keeping their average offers at 45th percentile or lower. That's collusion, and illegal.
But is that what Pave is offering? What's the communication channel or other synchronization signal they are providing? A chat channel? Bonuses for companies that keep their average offers below average? Penalties for companies don't? IDK, perhaps there is some collusion mechanism they provide, but we should not just imagine there's one without a reason.
> The problem imo is less about transparency and more about information asymmetry.
Sure, yes. But that's something different than collusion to fix wages. That's an argument that we want organizations like Pave, but ones that will provide the same data to job seekers.
You're assuming that it would depress wages, which is not necessarily true. A more likely scenario is that such a thing can slightly depress wages in low-skill, low in-demand jobs but is more likely to slightly increase wages in high-skill, high in-demand jobs. Companies that are growing and want to be the best and are flush with cash will happily pay premium wages to premium employees based on salary data. Other companies won't. So that's the big difference between the two companies. The "collusion" doesn't necessarily cause lower wages, that's just a big assumption that some people are making. Whereas RealPage was specifically touting and actively encouraging increasing rents.
It’s new so the government hasn’t caught on yet. They probably also need a larger market share to be considered fixing.
ADP has a product called compensation benchmarking which is very similar to how this is described.
They’ve had that product (with various names) for years.
Experian also sells a similar product
No, this is not new. There are many many many companies selling compensation metrics. This is also not salary fixing. These companies typically do not offer recommendations. It's up to each individual company to decide how to structure their salary bands and how they want to stack up to the market.
I actually run a product in this space in Europe as part of my portfolio. To echo your recommendation point; How we do it is pretty much the industry works. We give the low, mid, and high points in our data set based on what variables you input. We get the data from salary surveys and government data sets.
It’s all very boring and above board.
If companies choose to talk to each other to suppress salaries, they’re not using our tooling to do it.
There are also firms that will do all this work for you especially if you lack enough people in your own offices for an internal benchmark. If you’re building a CAD tool you can tell them (paraphrasing) to pretend you’re just like Autodesk and ask how much you should pay a UI designer.
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I found that salary data for some of my employees was being leaked and very accurately reported by a now defunct company called Paysa. We determined that the employees who had their data leaked had recently applied for mortgages and auto loans. Your bank could be selling your data.
> helps startups with compensation
It's not only startups - I know decades-old, listed firms that use it too.
Well, I wouldn't mind getting my wage fixed, if that works both ways, down _and up_, because then I would be guaranteed to never earn less than average for my skill and experience. Assuming, that those things of course factor into the averaging. Person X with experience Y in position Z. However, something tells me, that there is a tendency towards the downwards direction and none towards wage increase.
(Background: In Germany not so many companies pay competitive wages for their software engineers, especially not, once you worked for some years and are no longer a bloody junior. So I calculate it would result in a wage increase for me, since everyone says I am underpaid for my experience.)
Genuine question: What makes you believe that an employer would decide to pay you more when they notice that they're paying you less than other companies would? Why wouldn't they just think "Oh, neat, we got such a bargain!"
That's the reason I wrote, that I wouldn't mind, if (and only if) the upwards direction also happens and why I wrote, that "something tells me" that that wouldn't be the case ; )
If they cannot fill positions or are shedding talent.
What stops senior devs in Germany from remote contracting for foreign companies that pay better?
Not everyone wants to be self-employed is at least one factor.
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If you're truly underpaid for your experience and location then you should be able to get a new higher paying job easily. And if you can't easily get one well maybe you aren't underpaid.
> My question is, isn't this specifically anti-competitive wage fixing? This seems exactly like RealPage but for employee compensation. As far as I know, colluding on wages like this is illegal.
As long as Pave just helps employers look backward in time so to speak I’m not sure I’d call it collusion. But if they enable some kind of coordination between future potential employers, then yes, maybe it is.
In the RealPage case the coordination aspect consisted of providing a recommended rent for the property if I understand it correctly. I guess the equivalent for Pave would be if they gave a recommendation on what compensation to offer.
Companies compare pricing all the time even if it doesn't involve smoke-filled rooms with execs doing tit-for-tat. You don't think your local grocery store knows what the other local chain is charging (or what they're paying their employees)?
Sure. And as I said there’s nothing illegal about that, as long as it’s about historical and current prices. But if your local grocer walks over to their competitor and has a conversation about what the prices (or salaries) should be tomorrow, then that’s illegal in many jurisdictions. The same rules should apply if they use software.
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So, I'm sure the format and medium is different, but companies HR depts have been sharing notes and checking on what the market compensation is (for any given job and experience level) since forever. IANAL, but this is not a new thing.
I've even known co-workers who said "I deserve more $$, I'm underpaid for my experience and job" and supervisor repeats this to HR, then HR checks on it, and a few days later says "true, here's a raise". This was in the 90's, btw. Not a new thing.
“I’m not punching you in the face, I’m just putting my fist on a movement vector that happens to intersect your face.” I hope these guys get their shit rocked in court. I’m tired of a world run by cartels.
"Alright, pie, I'm just gonna do this...and if you get eaten, it's your own fault!"
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FWIW, I believe that Pave works to raise engineering salaries. Every company wants to say, "We pay above the 50% mark", thereby steadily raising it over time.
FWIW, I believe RealPage works to lower rent. Every landlord wants to say, “We charge below the 50% mark”, thereby steadily lowering it over time.
> Every company wants to say, "We pay above the 50% mark"
This is a true thing I've heard several company representatives say.
> Every landlord wants to say, “We charge below the 50% mark”
This is not a thing I have ever heard any landlord say.
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I hear the complaint but it's a bit of a trap to just seek protection.
Yes, the law on point is permissive. That goes with the evolution of law.
But assuming for the moment that we want not just avoid injury to ourselves but to create the world now and to come, what are we called to do?
- What exactly do you, or employees, want in this situation?
- What would Pave do if they wanted to take the high ground? Could that be a business differentiator?
- What law could you write and enforce, to protect what interest, without also damaging other interests that are socially beneficial?
I think the organizational evolution towards having loose laws with tightening enforcement, or tight laws with lax enforcement, give way too much latitude to policing/enforcement and create a corrupting political franchise of affected stakeholders taxed with managing regulators.
My hope would be that internet-scalable transactions have similarly scalable regulatory solutions: dead-simple to detect and assess, finely-tuned to the balance of interests, and so patent as to be indisputable. Then people can get stuff done without dealing with the shadows and forces of ambiguity.
Is something like that possible here? Could Pave be a champion of it?
This already existed for decades. It's called "Radford".
Sharing data about wages, I think, is not wage-fixing. Agreeing not to go higher than a particular wage is. What got RealPage into trouble was the fact that, in order to use the system, you HAD to use their algorithm for selecting rental prices. You entered into a legal agreement not to compete on the prices that RealPage provided.
I had the same concern where I work. They told me data are aggregated anonymously, so no risks, in any case it's useful to compare yourself with others when your salary is below average, so you can ask for a raise (which I will do next salary-review cycle) :)
"data are aggregated anonymously".. that's what almost every data broker with a security breach also said at one point in the past.
Realpage does the same thing with rental market data but they are clearly at risk.
You may also be interested in the Work Number product: https://news.ycombinator.com/item?id=29834753
if y'all think that being in the dark about market wages is going to result in employers offering higher salaries then I don't know what to tell you
From a US perspective, if Pave existed in a market where salaries weren't transparent, I would say yes, it's veering into being an anti-competitive/wage-fixing tool.
However, more and more states every year are introducing laws that require salary ranges on job listings. What that means is that Pave is basically just organizing the data that's already becoming public for job applicants and employers alike.
VERY similar to the situation in the rental market where large landlords are being investigated for using software to enable collusion and price fixing.
https://www.politico.com/news/2024/07/12/justice-department-...
My guess is that they would argue that most of the data they use is public, just go on LinkedIn and look at 10 job listings to have a range.
Pave's data is _incredibly_ revealing. First of all it covers historical data for every single employee, secondly it includes stock as well. It also relates the compensation to performance.
Job listings is very different kind of data than compensation actually paid to employees.
It's almost certainly illegal, but it benefits the capital class, so it's going to get a pass for a long time.
That said, it's exactly the same thing that landlords were doing with that pricing software and the government is coming after them, so maybe pave will get hit with a big lawsuit sometime soon.
Here's hoping this sort of thing gets regulated down into the earth.
I'm not sure about the legal aspects in your jurisdiction but in many others it is common for unions to aggregate this information and there are usually companies that do this or hook into the books and compare what different companies are paying for services and material they use that then sell back information about whether they could cut costs.
There's a lot of technically legal anti-competitive behavior. We need our legislators to get off their asses and legislate.
Salary surveys are not new. Robert Half does this already, and has for decades.
What RealPage does is sell a pricing algorithm using that data, which is the bit DoJ and Congress has an issue with.
Carta has a similar product, and Radford is a popular one as well. These things have been around for decades. Nothing new.
Isn't this just salary benchmarking. It's been happening for ages. As far as I know they submit the data anonymously with only your job title. so that companies can benchmark their pay ranges against others for the same role. It forces upward pressure on wages for some companies too.
Huh, looks like they've pivoted (or is that a different Pave?).
> Pave: We turn your Google Analytics data in actionable insights + reports with our data science AI algorithm.
https://www.ycombinator.com/companies/pave
https://www.ycombinator.com/companies/pave-2
That proud phrase "HR Tech" in that link, gives me the heebie-jeebies.
I'd say "if you work in a company like this you're a bad person", but sociopaths, sorry, Wharton graduates won't give a shit anyway.
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Yep,this sounds like something that will be judged to be illegal once the right people see it.
If this were illegal, so should the KornFerry Hay system be, and that system has existed for decades.
This is exactly what Pixar/Disney and Ed Catmull got sued for. Apple, Google and FB as well.
Didn't they agree not to hire each other's employees? Which would serve to suppress salaries, even without sharing what anyone was getting paid.
Apple and Google got sued and lost because they were colluding, strange to see that a YC would get into that business because discovery seems pretty much "let's see how you run" then the prosecutors can sue you out of existence
The funniest thing about all this is that everyone around knows about the employees’ salaries, except the employees themselves, and at the policy level it is often written that you do not have the right to disclose this information.
Because it's not wage fixing?
To be competitive you need to be paying more than others not the same as them. This is why FAANG got themselves into a fix of paying 500k for people they would have paid 200k for a year or so beforehand.
The "funny" thing really is the fact that most company forbid you from discussing your wages with your coworkers, but this seems like an automated way for companies to discuss the salaries they pay with other companies.
> most companies forbid you from discussing your wages ....
Yes, but this interdiction might not be legal. Companies typically add such clauses to achieve a chilling effect. (Ie, you abide because you fear running a risk if you don't). Consult your legal representative.
1) Salary surveys for local or national startup scenes have been a staple for decades. Here in Waterloo (Canada), there was a dominant local survey that all tech companies participated in annually with results being shared. Then, as you get bigger, you come across larger versions of the same thing.
2) VCs are often the vector by which this all happens. They ask their portfolio companies to pull together the info for their employees, presumably submit it into the companies aggregating everything, and then the startup gets a copy of the recent data.
3) Even done the old way (Excel), the data was incredibly detailed. You can slice and dice by startup stage (series A vs series B vs seed), employee count, region, sector, etc to determine if you're paying market rates or not. This is particularly useful for growing startups, where the founders have no idea what to pay, say, a VP Marketing at their pre-revenue mobile gaming startup in Helsinki.
4) Obviously whether or not this is bad for employees themselves is debatable, but I think people are missing the point that these surveys are ALWAYS skewed UPWARDS due to the much higher volume of data from the large tech companies (because they have far more employees and tend to be offering significantly higher comp). So in practice, the impact is likely to RAISE wages at earlier stage startups who are competing for the same talent as later stage tech.
An interesting artifact of the information disparity between the startup executives (who have access to this benchmark data) and the employees (who don't) is that the employee is often wildly off the mark in their expectations, either too low or too high.
There are so many variables at play too that it turns into a negotiation like everything else. Say an employee wants a big raise because they are having their first child are heading towards a higher cost base at home. Say the employer simply says "the salary data shows that your current pay is at the market average".
Well, is the employee truly "average"? Perhaps they're a high performer. Does the average number take into account not only the company dynamics (stage, domain, funding, revenue level, etc)? Not perfectly.
But then on the other side, just because an employee wants a higher salary due to a higher cost structure at home doesn't mean they are automatically entitled to it, right?
Then on the startup side again, the manager is looking at the data and thinking about all the time and cost of replacing this person and realizing it's likely more than the cost of just granting the raise.
Then the HR person comes in and says the salary grid -- whose whole purpose is to provide in theory tight constraints on these conversations -- rules this all out, there's no budget or wiggle room. When the Manager suggests the grid hasn't been updated in a few years, HR takes it personally and tells the person to take it up with the CEO.
So then the CEO gets involved. She knows the employee has a unique view on the technology and market direction and considers them Tier 1 can't-lose-them. She knows the grid is out of date. She looks at the data and thinks that she can justify to herself and the financial plan that it'll be OK to do it, with fingers crossed that this doesn't happen across the board because then their runway will shorten considerably.
So the raise happens.
My point is just that the salary information asymmetry is just one relatively minor aspect to this whole negotiation and in the end I'm not sure it advantages the company all that much.
Hm, sounds like the recent rent fixing collusion. Which was ruled illegal.
They already expect people to work for next to nothing simply because they're "startups". Instead, maybe they should focus on hiring decent people AND paying them industry-fair wages.
This sounds very obviously illegal. Where is the local DA on this?
The fundamental difference between something like Pave or Radford is that, AFAIK, they are simply providing companies with information.
I am not a lawyer, but I believe the fundamental issue with RealPage is that by entering into a service agreement with them, you agree not to violate their price “recommendation” and so you are centralizing actual pricing power into a single entity.
I believe RealPage has some way to negotiate out of this standard deal but it’s not common.
Companies likely insist on staying within certain pay bands for a whole host of legal and HR reasons but they aren’t getting a specific salary from Pave that they are contractually obligated to use in their offer.
I can recite at least five situations where "simply providing X with information" is considered a crime. One of them is company A providing planned price to company B in order to agree on it, and it is called price fixing. Other are insider trading, pump and dump, etc.
Collecting and sharing data is in itself not illegal. RealPage was also using the data to algorithmically generate a rent number and encouraging landlords to automatically use that number with no room for negotiation. It literally branded itself as a service that would prevent landlords from bidding against each other. That part is what pushed it into collusion.
And regardless of whether it is legal or not, the problem has to go beyond a handful of small startups for the DoJ to get involved. RealPage is used in 80%+ of multifamily rental buildings in the US. What is Pave's market share? How many employees are affected by their practices?
No. DoJ is suing RealPage because they used non-public, sensitive data to set rental prices in a way that reduces competition. Literally what these guys are doing.
Complaint: https://www.justice.gov/opa/media/1364976/dl?inline=&utm_med...
more readable Press release for DoJ on RealPage: https://www.justice.gov/usao-mdnc/pr/justice-department-sues...
I've been hired to a startup that uses Pave - they mentioned that they paid at the 75% percentile, and my offer ended up being more competitive than others I was getting. I think that while obviously some companies can use this data to pay less, the more likely outcome is that they pay MORE. You forget that companies are competing with each other for talent, they are not in the business of colluding together. So if I can see that other companies are paying X, I am more inclined to pay X + Y
This could get interesting in light of recent changes to California law. A similar program designed to "normalize" rent. Is now illegal. Even the FTC has agreed that price fixing by algorithm is still price fixing. https://www.ftc.gov/business-guidance/blog/2024/03/price-fix....
They provide benchmarks, before them was Radford. They’re just taking a tech-first approach of an age old product.
IANAL so i don't know the actual legality, but it certainly seems like it should be. Definitely immoral.
I have to say I am pretty surprised to see the negative sentiments toward Pave and salary benchmarking data in general here. Why is the assumption that salaries would always be lower given this data? It seems just as likely to inform companies that what they had in mind is below market or that they are under-compensating someone in light of market changes.
A company doesn't need to know they are under compensating for a role from a third party. They'll find out by the quality and number of applicants pretty fast. I've seen this in practice directly when we couldn't hire for certain roles, raised the range, filled the spots.
On the other hand, to know that other companies are paying lower and still able to deliver roughly the same work is harder unless you know how much they are paying.
I have to disagree. If you're not getting quality applicants, how do you know if that's because of your salary range, the default applicant pool, or something idiosyncratic to your company?
If you're a new startup founder, you don't always have a good sense of what the default applicant pool should look like. You might have a sense of what quality looks like but how would you know without recruiting experience what the mix of quality to non-quality applicants is supposed to be? There are many reasons why you might not be getting the number of quality applicants you want, and compensation is just one of them. Salary benchmarking data helps eliminate that as a possible cause.
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I think it's a pretty safe assumption that a company paying to gain information that gives them an advantage in negotiation isn't going to freely give up that advantage.
You're assuming that the only reason to pay for Pave is to get a negotiation advantage. My point is that there are other reasons, for example, to make sure that you're not below market.
I've never run a company and probably have a chip on my shoulder, but I also think that it's a reasonable assumption that most employers want to pay as little as possible.
I guess my point is that without some sort of sense of the market, whether through Pave or something else, the motivation to pay as little as possible may lead some employers to have lower salary ranges than they would otherwise.
Obviously, this sort of information would always be used for good.
Because information has to be used for good or bad and never both?
Yep all of these compensation intermediary are basically supporting illegal collusion
I'm guessing that this practice is not possible in the European Union?
Extremely common practice.
All tax data should be public. Then we would know exactly what everyone makes.
Probably not, but it doesn't matter until there is a complaint (lawsuit)
It shouldn't be, and neither should The Work Number.
Uber and AirBnb are essentially illegal taxi and illegal hotel services. Remember taxi medallions? Remember zoning laws? Being illegal is not a showstopper for a startup because they are under a radar, being illegal is not a problem for a large business because they have enough power to not get prosecuted.
Anybody else remember that time YC funded an international smuggling operation?
https://news.ycombinator.com/item?id=8199286
Hell you could write off all of web3 with that sentence
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Their website is "backpack bang"? What a strange name, the last thing I want is for my backpack to "bang" when moving unknown goods across international borders!
Looks like they are still active!
Anyone else remember when HackerNews had an adventurous libertarian ethos before the school marms infested the place with irrelevant and low vibrational commentary?
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Eric Schmidt echoed similar sentiment in his recent interview. Basically do it, if startup fails then it doesn’t matter. If it succeeds then lawyers can sort it out.
He would know. https://www.npr.org/sections/thetwo-way/2014/04/24/306592297...
Also in these "gig" type companies, the people who are actually breaking the laws are the workers, e.g. the drivers or the homeowners in the case of Uber and AirBnB. The startup is the enabler, yes, but they will try to throw their workers under the bus before they take responsibility themselves. They don't own the cars, they don't own the properties, and they are most likely in a far-away jurisdiction.
SBF and Elizabeth Holmes would like a word.
And hopefully everyone else "successful" having the morals of a greedy chimpanzee follows the same fate as those swindlers. Whatever happened to doing good by people and society (or at least pretending to)?
Should inciting others to commit crimes be in itself a crime? Certainly, if somebody influential enough does it, it has the potential to destabilize our society with catastrophic results.
Didn't work for Elizabeth Holmes
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Which makes total sense for consumers as well. If the startup succeeds is because consumers are finding value in it. Uber is the best example. Uber is ilegal only in countries with deep corruption where taxi unions can make legislators ignore their constituents. Uber (and any other car sharing app) is the best solution for me as a consumer compared to the traditional old school taxi service.
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Ironically for a question about antitrust price fixing you just named two incumbent government-sanctioned cartels (zoning and taxi medallions) that restrict supply and keep prices high. They would be illegal if private companies made them.
> They would be illegal if private companies made them.
A lot of things governments do would be illegal if private companies did them. Are you arguing that governments shouldn't have special abilities that companies can't have? Should every road be owned by a company? Should the police report to Amazon instead of the local municipality where you may actually have a say in how they are run?
We give governments additional powers because they, at least nominally, answer to citizens and society. Companies have no such responsibility.
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> They would be illegal if private companies made them.
Yes, that's kind of the main difference between government functions and private companies. Are you saying the very idea of zoning strikes you as a problem? Or are you trying to call out the bad implementations which strangle urban prosperity in the US?
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That's not ironic. Governments and private companies are not the same kind of entities. They have different roles, different roots of legitimacy, different forms of accountability, different operational objectives, and carry different expectations.
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I did not say those were even good laws. Many people go to jail for breaking bad laws though.
And the government can establish monopolies on many things, my private nuclear weapons startup did not get much traction either.
Zoning, ok, but yellow cabs are now often cheaper than Uber. Last time I took a ride from the airport the difference was not small, like 50%.
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Many things a government does would be illegal if private companies did them. For example, prison, the draft, and taxes. The government is allowed to do it because we (as a society) believe it's better for the government to do these things than private individuals or companies.
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> essentially illegal taxi and illegal hotel services
I don't know about Uber, but Airbnb deflects this by saying they are not in fact a hotel service. Rather hosts are hotel services, and Airbnb is simply a discovery platform matching buyers and sellers. It's up to an individual host to make sure they are complying with local laws including whether their city or district allows an individual to rent out their house or a room in it without a hotel license (this varies from city to city). In this way Airbnb (fairly or unfairly) pushes the burden and liability onto the hosts.
I believe this is also a huge reason why Uber doesn't want to classify drivers as employees because then it is the taxi service, whereas it could argue that the drivers are each operating their own taxi service and Uber is just a discovery and payment platform.
I’m pretty sure an assassination marketplace would not fly under the same legal pretense. The platform won’t do the killing, right?
If hotel or taxi lobby was more powerful or caught the threat early on AirBnB and Uber would have been destroyed.
Taxi medallions were (and AFAIK still are) required to respond to people hailing a taxi from the street. It is not required to book a ride via phone or internet. Uber and Lyft drivers never needed taxi medallions.
uber: mostly not technically because the key thing is that they are not soliciting rides from the street, was my understanding.
airbnb had a much more legally tenuous start
Uber even had a whole program to thwart law enforcement attempts to investigate them called “greyball”. They knew what they are doing. https://www.nytimes.com/2017/03/03/technology/uber-greyball-...
Yeah this is borderline. It probably won't fly in California. In the past big tech companies (like Symantec) used to require you to submit your last W2 or tax return for a job offer. Credit card companies also sell your salary information etc...
I cannot fathom how any organization would willingly allow such a trojan-horse operation to see internal data like this. What possible value is there to add such an enormous vulnerability surface for such laughably tiny, if any, benefits. That this company raised $100M+ at a $1.6bn valuation is...bizarre.
This feels like one of those things where VCs (including YC and A16z) force this nonsense on their other startups in a circle-jerk sort of pyramid scheme fashion. There is no universe where this makes sense as a product.
Legal or not, Pave is unethical.
How so?
In the UK and EU it would be outright illegal on GDPR grounds (unless you consented to it, which would be unlikely without coercion — also illegal)
Pave (and many other comp platforms) are prolifically used in the UK and across the EU because no individuals personal data is being shared. Pave doesn't get told 'louthy is a software engineer and gets paid £50k a year' - they get a list of job titles, seniority, and salaries but no identifiable data.
In the EU there are definitely companies providing aggregated salary band norms, in fact utilizing them is nearly required by upcoming EU directives as salaries must be justified by HR. In the Netherlands I know Bureau Baarda is gathering and selling data.
Sounds very illegal.
This sounds like levels.fyi for companies? As long as they are selling aggregate data and not data specific to an individual (e.g. for determining an offer for a particular person) it seems reasonable.
I assume that as a European our GDPR laws would make this highly illegal if it were operating inside the EU?
a lot of companies already do this - in the UK they call it benchmarking. they get data from companies they compete with for talent, from data-brockers i.e people who buy compensation data from companies. then set your pay based on what those companies are paying.
collusion in another name if you ask me.
Wow first we got our rents fixed, now we're getting our wages fixed. Awesome
Been going on for a while:
High-Tech Employee Antitrust Litigation is a 2010 United States Department of Justice (DOJ) antitrust action and a 2013 civil class action against several Silicon Valley companies for alleged "no cold call" agreements which restrained the recruitment of high-tech employees.
<https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...>
Using a rent estimate would be a brilliant way to double-check if you are overpaying salaries. /s
Lol try this here in EU.
It exists, many companies are using wage benchmarks to fix salary in EU.
Companies assume they don't need your approval to collect data on salary range for your position as aggregates are not directly pointing at you.
It smells awfully close to: https://www.justice.gov/opa/pr/justice-department-sues-realp...
The OP specifically mentions that.
Soon you need to waive your class-action rights when applying for a job.
Real pages is such a gross business
This was the exact thing that popped into my mind when I read the poster’s description.
Reading that, seems like RealPage could protect itself from similar problems if they simply avoid using the same sales rhetoric, and don't do explicit recommendations. "You are paying way more for this position than others... hmmmm."
Surely they are aware of the similarities and are strategizing.
Anything that keeps the code monkeys in line is legal.
> Pave is a YC-backed startup
This thread is getting removed from the front-page in 3... 2...
I understand why people assume we do that, but actually we do the opposite—that is, we moderate less when YC or a YC startup is part of a story. There is plenty of past explanation at https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu....
Note: we still moderate such threads. We just do it less than we otherwise would.
I thought this was a joke comment but I went back after reading the comments and it’s now on the second page already.
It was at #3 for me and then suddenly demoted to the second page. It's pretty common for these touchy-YC threads.
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I really, really hope they don't.
Aaaaand it's gone.
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It's legal the same way Airbnb and Uber are legal.
If you've ever worked for a YC or Sequoia company, you're in a secret database with who you worked and how much you made that is accessible to other founders. The additional context is critical for startups to make competitive offers to startup employees. I don't see what the big deal is. If a worker is working at a company A making $80k, and they try to get a job a company B making $90k, the owner of company B needs to know they were only making $80k at their last firm, so they can make a good offer of $85k. $10k would be too much.
> If a worker is working at a company A making $80k, and they try to get a job a company B making $90k, the owner of company B needs to know they were only making $80k at their last firm, so they can make a good offer of $85k. $10k would be too much.
I disagree wholeheartedly with this.
> secret database
> I don't see what the big deal is
Pick one... If there is no big deal, why would they want to keep the database secret? Also, do you have any source on that?
It doesn't really matter so much. Company B needs to know whether to beat an offer from company C for $95k or only $80k. Your salary history only affects employers that aren't trying to compete effectively, because what you made then isn't what you could make now.
And the end of the ZIRP-driven shortage is telling us that what we used to make is not locked in forever.
I am not a Lawyer, or a US resident but I highly suspect this behavior is completely illegal in Europe (and rightfully so in my mind).