[tony.destro]

Recently it has been discovered that there have been collusion among the CEOs of Apple, Google, Intel, Adobe, Intuit, and Pixar to suppress the wages of their tech staff.

http://www.counterpunch.org/2014/02/06/the-cartels-of-silicon-valley/print

“If we find that a recruiter called into Intel, we will terminate the recruiter.”

“if I tell Steve [Jobs] it’s open season (other than senior managers), he will deliberately poach Adobe just to prove a point. Knowing Steve, he will go after some of our top Mac talent…and he will do it in a way in which they will be enticed to come (extraordinary packages and Steve wooing).”

I’ve seen explanations regarding monopoly price of goods (ie: Rothbard). But I haven’t seen any direct response to this incident from a free market economist. My intuition is that eventually someone will break up the cartel, or an outside competitor will enter the market place, and the attempt will fail. Or that wages are still rising regardless. The counter argument to that is that tech upstarts “don’t have money trees” and can’t come close to the salaries the cartel would provide. What is the austrian response to this?

[jmherbener]

First a few facts. The story by Mark Ames claims that 100,000 tech workers were affected by the cartel. The Bureau of Labor Statistics list 3,456,500 workers in “computer occupations” in America. Of those 3.5 million 1,397,870 are “software developers and programmers.”

http://www.bls.gov/oes/current/oes_nat.htm#15-0000 Scroll down to occupation code 15-0000.

Also, wages for tech workers are high and rising. The BLS calculates $80,200 as the average annual wage of “computer occupations” and $90,470 for “software developers and programmers” in America in 2012. The median income of a family of four is around $51,000. The average annual wage of “computer and mathematical occupations” in 2000 was $58,050 and in 2012 was $80,180.

http://www.bls.gov/oes/2000/oes_15Co.htm

http://www.bls.gov/oes/current/oes_nat.htm#15-0000

Moreover, the tech industry is worldwide. Samsung, not Apple is the world’s biggest tech company. Therefore, the market for tech workers is global. No silicon-value cartel could suppress their wages. If a small, local cartel did suppress wages, then it would create a profit opportunity. Either workers would leave for market-level wages elsewhere (and haven’t we been told ad nauseam that tech workers can do their work from any location that has a internet connection) or capitalist would fund non-cartel companies to hire them away from the low paying cartels. No matter how big a cartel becomes in a single industry, it will always be dwarfed by world capital markets and destroyed by capitalist eager to earn profit created by a successful cartel.

Take a look at Dom Armentano’s book, Anti-trust and Monopoly and his work, Anti-trust: the Case for Repeal:

http://library.mises.org/books/Dominick%20Armentano/Antitrust%20The%20Case%20for%20Repeal.pdf

[Author]

Posts