Comment by mcntsh
5 months ago
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.
> Alleged doesn't mean illegal
What is alledged is that they did that. And if they did, they would have violated the law from my understanding.
> And what this claimed to have happened is not what is happening here.
That might be, but that's not entirely clear to me. I don't know if what Pave is doing is legal or not, but it seems to me that the line is quite fine and it would be fascinating to see this play out at court.
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!
There's also a more cynical explanation.
It's possible the purpose of wage benchmarking companies is to allow bosses to say they pay the 95th percentile - which is useful to be able to say, when someone at an all-hands Q&A asks about raises and bonuses.
Then the benchmarking company simply has to define 'comparable roles' broadly enough to give the customer the result they want.
Not necessarily, if everyone's wages (except 5%) were set at minimum wage then the 95th percentile would be the minimum wage.
Yeah, it seems more like they'd all shoot for 45th percentile and say "We pay competitive wages" instead, slowly driving the wages down.
2 replies →
Which is... exactly what the software industry has seen over the past 30 years?
> 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"
But in this case you're not selling, you're buying.
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!
https://www.ftc.gov/business-guidance/blog/2024/03/price-fix...
ChatGPT did it!
unless you collude with other companies, doesn't seem like it is.
That is the entire basis for the RealPage lawsuit. The point is that if the effect on pricing is indistinguishable from price fixing, it doesn't matter if the act of colluding is abstracted into and laundered through a 3rd party with an algorithmic system responsible for setting prices.
3 replies →
unless disclosed to employees and applicants this seems like de facto colluding.
I always ask myself, as to the legality or ethics, would this survive review by a jury of my peers...
9 replies →
> 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).