Silicon Valley’s Labor Unrest

April 28, 2014

Silicon valley labor disputeMultiple legal cases are now underway alleging that some of the technology industry’s leading companies conspired to keep employee wages artificially low and to limit the ability of technology professionals to change jobs. The cases include a class action lawsuit in federal court in the Northern District of California, as well as investigations by federal and California state law enforcement authorities. These actions have the potential to alter profoundly the labor relations practices of the American technology industry.

The class action lawsuit alleges that leading technology companies including Apple, Adobe, Google, and Intel unlawfully conspired to take advantage of their technical employees. The suit claims that the companies agreed not to “poach” important technical professionals from each other.  The lawsuit also claims that the companies coordinated their compensation programs in an effort to cap the wages of their technical employees.

The United States Department of Justice and California state law enforcement authorities are investigating similar claims against technology companies including Intuit and eBay.  All of these cases revolve around claims that it was a common practice in the technology industry for competitors to coordinate with each other in order to reduce labor costs associated with their technical employees.

If these claims are accurate, they suggest a systematic effort to take advantage of technical employees.  The allegations are serious and the practices they highlight can have a significant adverse impact on the technology sector.

Traditionally, technology professionals have been viewed as some of the highest paid and most in demand of all American employees.  If these cases have merit, then it appears that the opportunities and wages for those professionals would have been even greater, but for the alleged illegal collusion.

The relatively high salaries and substantial additional benefits received by technology professionals have been a source of tension in communities where residents who are not part of the technology sector often believe that their more affluent technology professional neighbors have substantially contributed to dramatic increases in the cost of living.  That tension may increase as cases such as those currently underway publicly illustrate that the technology professionals may actually have been entitled to even greater compensation.

These cases will likely provide important information regarding the economics and the sociology of the job market for technology professionals.  That information will be useful as the United States attempts to encourage and foster a larger, better trained workforce of technology professionals.