Adam Smith on employers rigging the labor market and wages..
https://www.milkenreview.org/articles/the-rigged-labor-market
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More than two centuries ago, Adam Smith, now widely regarded as a cheerleader for free market capitalism, raged that the market for labor was rigged. He argued that self-interested employers manipulated the labor market to drive workers’ wages below their competitive level. Smith warned that employers “are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labor above their actual rate.” And he ridiculed naysayers who denied that employers colluded to press their advantage against workers “as ignorant of the world as of the subject.” He further noted that “we seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of.”
As in many other areas, Adam Smith’s insights were spot on and prescient. The conspiracy that he warned us about is alive and well in the 21st century, and it still receives little attention from policymakers, economists or the media.
Much research in labor economics over the past quarter century has confirmed Adam Smith’s fear that employers routinely use anticompetitive practices to reduce pay and curtail worker mobility. Research has further expanded our understanding of how “frictions” in the job market, such as imperfect information or costs associated with changing jobs, can give employers anticompetitive advantages even in situations where many employers are vying independently to hire workers. New practices have emerged to facilitate employer collusion, such as noncompete clauses and no-raid pacts, but the basic insights are the same: employers often implicitly, and sometimes explicitly, act to prevent the forces of competition from enabling workers to earn what a competitive market would dictate, and from working where they would prefer to work.
This was clear in professional sports before free agency enabled athletes to earn what the market would bear. And it remains the case in many other less glamorous and lower-paying industries. Even professional economists have faced a rigged labor market. The heads of several leading U.S. economics departments used to regularly confer at the Annual Meeting of the American Economic Association to jointly agree upon starting pay and teaching requirements for assistant professors until the Justice Department started nosing around and raising concerns about the legality of the practice.
In one sense, this is encouraging news. It suggests that relatively simple corrective measures would improve the lot of many workers without undermining productivity, growth or job creation. Indeed, countering anticompetitive employer behavior could be a win-win for the economy, raising both pay and employment. But it would take a fundamental shift in perceptions of how labor markets work — one that is a hard sell in an America seemingly disinclined to look closely at how everyday labor practices undermine workers’ prospects for moving up the income ladder.
Now these huge firms seems to hve shifted to outsourcing the jobs to undermine workers. Workers whose presence in the country homes and literally everything depends on thir employers and getting sponsored for green cards are virtual slaves. They wont ever switch jobs or unionize. Isnt that obvious. So the trade ndeals that do this are the equivalent of droping nukes on workers and their lives.
Politicians build escape clauses into optics oriented laws, such as the WARN act which claims to require that businesses give workers a long enough warning to find another job, while they train their replacements to do their jobs.
They cant limit that if they send the jobs overses, where they are out of the US's jurisdiction. The WARN Act has a loophole large enough to drive a truck through. All employers need to do to outsource jobs to foreign countries is have employees train their own replacements over nine months, or more, and they completely avoid the Act's requirements. Its been declared titally legal and unstoppabe in a suit by Disney employyes replaced en masse, and they lost.
Also the job losses, no matter how many, even if we lose 40% of our jobs as one replication study by two Harvard students of (Princeton economist) Alan Blinders "How many US jobs are offshorable?". (which still left out all the public jobs that we KNOW are on the table under GATS and TISA)_ If "done right" as Indian IT firms put it, will remain totally invisible, not reportable as being due to trade agreements, an so off the radar the result of the intentional loophole put in the only anti layoff lae that exists here in the US, that is applicable to the replacement of entire departments problem.
(see A Replication Study of
Alan Blinder’s “How Many U.S. Jobs Might Be
Offshorable?” by
Troy Smith and Jan W. Rivkin, of Harvard Business School. they concluded:
"Abstract: In a 2007 working paper, Alan Blinder assessed the “offshorability” of hundreds of
U.S. occupations and estimated that between 22% and 29% of all U.S. jobs were potentially
offshorable. This note reports the results of an exercise in which members of Harvard Business
School’s MBA Class of 2009 collectively attempted to replicate Blinder’s study. Overall, the
MBA students’ assessments of offshorability matched Blinder’s well. Across occupations, the
correlation between Blinder’s offshorability rating and the students’ was 0.60. The students
estimated that between 21% and 42% of U.S. jobs are potentially offshorable. Echoing Blinder,
the student data suggested a positive correlation between offshorability and education. The
student data also revealed a positive or inverted-U relationship between offshorability and wage level, where Blinder found no correlation. While Blinder found a slight wage penalty for the most offshorable jobs, the student data exhibited no evidence of wage depreciation from job
contestability due to offshoring" (but this study was done quite some time ago before the offshoring really had begun in earnest, now outlooks for workers in some difficult, highly skiled and stressful and demanding job categories are completely changed due to massive offshoring of skilled jobs)
It also makes it clear as day that politicians can lie as muchg as they want. And how to do it in a way they cant be punished for. This should make it plain as day that they dont care a bit about the destroyed lives of workers outside of major metro areas. The ones whose jobs are leaving the fastest. When these closures are announced often overnight their main investments can sometimes lose most of their value. Instantly. Creditors also are fast to start demanding payment, expecting thet debtors are now likely to default on loans that have been extended to them. Even if they have paid all bills on time their entire lives, suddenly they are a bad credit risk. Its as if they have suddenly been condemmed to death, financially. This may make it impossible for them to get the money to move elsewhere so they can get another job before they are deemed "long term unemployed" by the system. At that point they may never get a job again.
Even if all the jobs in the US are outsourced, if done over nine months they haven't been officially, If they use the nine month technique. or in their words, "if they do it right" the RIFS remain totally invisible and the US still looks good, because the papers never cover this. So thats what they do. Its all kept off the radar. This kind of treatment is because the government kept workers in the dark about trade deals for decades so they wouldn't ask for more benefits, knowing that their careers were likely to end earlier than they would in any country that had not signed these deals to trade peoples jobs away for other concessions like fewer life-saving generic drugs. We use US workers jobs, like a special kind of dirty Monopoly money thats used for various unsavory things, fairly consistently. Its like a magnet for corruption and corrupt politicians.
This scheme is incredibly stressful for workers.
No wonder the politicians are hiding what they are doing with trade deals under under these most fragrant and disgusting bullshits imaginable.
Let’s Make a Deal
Adam Smith could not possibly have anticipated Buzz Lightyear, Nemo or Dory, but the animated movie industry provides concrete evidence of the conspiracy that he warned about. In early 2017, the Walt Disney Company and its subsidiaries Pixar, Lucasfilm and ImageMovers, became the last of the major film companies to reach a settlement in an antitrust suit brought on behalf of movie animators. Along with Sony, Blue Sky and DreamWorks, they agreed to pay $169 million to settle charges that they conspired to suppress compensation by agreeing not to solicit each other’s employees, to take special procedures when contacted by each other’s employees, and to coordinate compensation policies through direct, collusive communications.
The evidence against the film studios, captured in emails, internal documents and sworn testimony, suggests that it was business as usual to conspire to avoid bidding away employees from competitors and to coordinate on pay setting to keep a lid on compensation costs. The conspiracy apparently began with a “gentleman’s agreement” between Pixar and Lucasfilm to avoid bidding wars over employees. George Lucas testified that, as a matter of policy, Lucasfilm “would not actively go out and recruit from other companies.” Emails from Lucasfilm human resources personnel indicate that the company even withdrew job offers to Pixar employees whom Pixar deemed “essential.”
For its part, Pixar refused to be drawn into bidding wars with its competitor. In an internal document, Pixar stated it would “never counter if the candidate comes back to us with a better offer from Lucasfilm.”
The collusion encompassed other major filmmakers as well. An email from a Pixar executive to Steve Jobs, for example, noted that Pixar had an “agreement with DreamWork[s] to not poach their people.” And a 2006 list of Lucasfilm’s “gentleman’s agreements” stated that Lucasfilm would not “recruit actively or passively from DreamWorks … for any positions.” Emails also documented that Pixar, Disney, Lucasfilm, Sony and Blue Sky had gentleman’s agreements to not recruit each other’s employees.
The court ruling that certified the animation workers’ class action suit against the film companies concluded: “In addition to the documentary evidence that defendants agreed not to recruit from each other, the documentary evidence supports plaintiffs’ allegations that defendants colluded on compensation policies through industry surveys including the Croner Survey, annual closed-door in-person meetings, and emails.” Lucasfilm’s president, Jim Morris, once invited Pixar’s president, Ed Catmull, to participate in a salary survey because he knew Catmull was “adamant about keeping a lid on rising labor costs.” Not unlike the economics department chairs, the film company officials often met during industry conferences over meals to discuss compensation issues. At one such “intimate dinner” in 2006, human resources officials from DreamWorks, Disney, Pixar, Blue Sky, Sony and Lucasfilm collectively agreed on average salary increases. Human resources officials also routinely shared their employees’ salary ranges with their counterparts at other companies.
The antitrust action on behalf of the film animators had its roots in a well-publicized Department of Justice investigation of antipoaching practices used by the tech companies Adobe, Apple, Google, Intel, Intuit and Pixar. That investigation revealed some colorful evidence. For example, after Google’s co-founder Sergey Brin tried to hire a programmer from Apple’s browser team, Steve Jobs wrote in an email, “If you hire a single one of these people, that means war.” When Intel’s chief executive, Paul Otellini, was asked by a recruiter about the no-raiding agreement his company had with Google, he responded in words that would ring familiar to Adam Smith: “We have nothing signed. We have a handshake ‘no recruit’ between Eric [Schmidt of Google] and myself. I would not like this broadly known.” The Justice Department complaint was quickly settled in 2010, with the tech companies agreeing to avoid “pressuring any person in any way to refrain from soliciting, cold calling, recruiting or otherwise competing for employees of the other person.”
Subsequently, a separate class-action civil suit was brought on behalf of more than 64,000 software engineers and other employees of Adobe, Apple, Google, Intel, Intuit, Pixar and Lucasfilm. The evidence that the tech companies colluded to restrict labor market competition was overwhelming. Before going to trial, the various parties settled. In an unusual move, Lucy Koh, the judge hearing the case, ruled that the initial cash settlement was inadequate. The lawsuits were eventually settled for a total of around half a billion dollars in 2015.
High-tech employees are not the only ones to have won civil suits alleging anticompetitive conduct by employers in recent years. Several suits have been successfully brought on behalf of nurses against hospitals, for example. On Sept. 16, 2015, the Detroit Medical Center became the last of eight major Michigan hospital systems to reach a settlement in a suit alleging that the hospitals colluded to reduce their pay. The hospitals apparently endeavored to share information about nurses’ salaries and pay increases. With pay pushed below competitive levels, the hospitals often turned to temporary staffing firms to hire workers (at salaries above those of existing staff) and made do with vacancies.
Similar cases are in various stages of resolution in Albany, Chicago, Memphis, San Antonio and Arizona.

Comments
Adam Smith quotes
Having worked in high tech man do i know this.
But it happens to all types of industry and workers. In particular employers use immigration laws to change labor markets to drop wages. Aspen a while ago had to increase worker wages for resort and hotel workers to attract workers. They then switched to using basically captured seasonal labor which was then shipped out during lulls in the ski seasons.
There will be huge pressure on any administration now to ease up on immigration enforcement so undocumented workers can be used to lower salaries in fast food, hotels, grocery, etc. Twenty a hour for fast food workers--such things cannot be tolerated.