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 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/
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.
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
The only way this stops is when people return the favor (on the spot, without a notice period).
#sad #speakingOfMonopolies
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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.
IMO this type of information should be illegal to sell or request.
To communicate a freeze request, send an email to the address below requesting a Freeze Placement Form: TWNFreeze@equifax.com
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.
https://www.pave.com/blog-posts/announcing-paves-series-c-an...
How does this ultimately not end up having a depressing impact on salaries?
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Gosh, that’s awful.
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?
* 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.
- 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.
If they were aware of market rates, they could avoid making potential candidates laugh at them.
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.
I certainly don't trust that this doesn't hold wages down overall, particularly in the boom hiring market we had until recently.
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.
If they had limited themselves to simply reporting the numbers, and letting landlords make their own decisions they would probably be legal.
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.
If it were public, employees and job seekers would also have the information.
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.
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.
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.
Even price sheets that we would consider very rudimentary today were part of that.
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?
With a few exceptions, I've found that companies that talk about transparency are transparent with everything but employee salary
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.
No, not at all. Unless applicants/employees get full access to the same information.
That's the point of these systems. If it's not illegal, then it should be.
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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.
DOJ Withdraws “Safety Zones” for Information Sharing and Other Collaborations https://www.crowell.com/en/insights/client-alerts/doj-withdr...
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.
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...
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.
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 want to sell my water at the upper end and market it as a gourmet brand"
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?
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.
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).