Silicon Valley May Not Be A Utopia For Workers After All


The tech industry has a reputation for pampering its workers, offering perks like free shuttles to work, gourmet lunches, and office massage chairs. But 60,000 Silicon Valley workers may derail that image in a recently certified class-action lawsuit charging that some of the world’s most powerful tech companies conspired to suppress wages for years. The Ninth Circuit Court of Appeals ruled Tuesday that workers at Google, Apple, Adobe, Intel, and others could sue as a group, which lets them seek higher damages at a lower cost than if they pursued their cases individually.

The employees are suing over emails discovered during a Department of Justice (DOJ) antitrust probe, in which top executives, including Apple founder Steve Jobs and Google CEO Eric Schmidt, agreed not to poach each other’s employees. The understanding was meant to avoid “bidding wars,” according to Google executives, thus depriving coveted workers of leverage they could potentially use to extract raises from their current employers. According to the complaint, employers took the no-poach agreements so seriously that they would not even hire employees who applied from other companies. As a result, skilled workers had little choice but to stay at their current companies and work at lower wages than they could have in an open market.


The DOJ ultimately settled its case in 2009 and forced the companies to end the agreements, though there is speculation that the no-hire policy still exists informally. Because the DOJ didn’t ask for any financial penalty, five software engineers took up the case in 2011 and are seeking around $9 billion in damages for all the workers affected by the conspiracy.

The lawsuit may seem like insider drama between tech moguls and their already highly paid employees, but it reveals a glimpse into the highly stratified professional hierarchy that has made Silicon Valley a study in class divides. While Google, Apple, Intel, and Adobe have soared to world dominance status and senior executives have reaped billions of dollars, mid-level workers are seeing fewer benefits. The uber-wealthy tech industry has turned Silicon Valley into the least affordable metropolitan area in the country, even for Web developers and software engineers with astronomical salaries by the rest of the nation’s standards.

And while the tech industry is certainly robust, most of Silicon Valley’s projected job growth is expected to come from jobs paying less than 50,000 a year — nowhere near the salary required to afford an apartment in the area. The closely-watched 2013 Silicon Valley Index report found that while innovation and specialized services did see some job growth, it was dwarfed by the influx of low-paying jobs in health care, retail, and food services. Meanwhile, median incomes have dropped for all but the most highly educated workers, and middle income households are quickly vanishing.