Ask HN: Why is Pave legal?
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?
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[ 3.3 ms ] story [ 338 ms ] threadInformation symmetry doesn't prevent fixing. E.g., rents are all public information.
If it is public, won't employers still have access to the salary ranges for free? The very thing Pave is giving them at a cost?
They don't need to officially twirl their mustaches and laugh evilly while telling each other how they're definitely fixing wages. They just need to share data on wages with other companies in the same or a similar business with the intent of decreasing wages. That is already illegal, because they're colluding with competitors to keep wages low.
They’ve had that product (with various names) for years.
It’s all very boring and above board.
If companies choose to talk to each other to suppress salaries, they’re not using our tooling to do it.
There are also firms that will do all this work for you especially if you lack enough people in your own offices for an internal benchmark. If you’re building a CAD tool you can tell them (paraphrasing) to pretend you’re just like Autodesk and ask how much you should pay a UI designer.
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.
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?
It's possible the purpose of wage benchmarking companies is to allow bosses to say they pay the 95th percentile - which is useful to be able to say, when someone at an all-hands Q&A asks about raises and bonuses.
Then the benchmarking company simply has to define 'comparable roles' broadly enough to give the customer the result they want.
"I want to sell my water at the upper end and market it as a gourmet brand"
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 always ask myself, as to the legality or ethics, would this survive review by a jury of my peers...
you are not allowed to tell anyone how much you make so you might be in trouble if your found out but the companies share this info without your consent. From my POV make it all transparent.
It's not like Glassdoor is restricted to employees, they even offer specific services to employers.
(Got the link from a comment on another recent HN post, IIRC.)
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.
What is alledged is that they did that. And if they did, they would have violated the law from my understanding.
> And what this claimed to have happened is not what is happening here.
That might be, but that's not entirely clear to me. I don't know if what Pave is doing is legal or not, but it seems to me that the line is quite fine and it would be fascinating to see this play out at court.
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).
> Pave: We turn your Google Analytics data in actionable insights + reports with our data science AI algorithm.
https://www.ycombinator.com/companies/pave
I'd say "if you work in a company like this you're a bad person", but sociopaths, sorry, Wharton graduates won't give a shit anyway.
Even price sheets that we would consider very rudimentary today were part of that.
Surely they are aware of the similarities and are strategizing.
And regardless of whether it is legal or not, the problem has to go beyond a handful of small startups for the DoJ to get involved. RealPage is used in 80%+ of multifamily rental buildings in the US. What is Pave's market share? How many employees are affected by their practices?
Complaint: https://www.justice.gov/opa/media/1364976/dl?inline=&utm_med...
more readable Press release for DoJ on RealPage: https://www.justice.gov/usao-mdnc/pr/justice-department-sues...
This thread is getting removed from the front-page in 3... 2...
@dang, can you comment on that? I appreciate your integrity.
p.s. @dang is a no-op - I only saw this thread because I was doing our standard review of the flamewar detector. If you want guaranteed* message delivery, hn@ycombinator.com is the only way.
* Well, mostly guaranteed. I assume there are a few that fail to get noticed in the spam bin, though we check that pretty carefully.
Annually HN sees about 150k active users, 400k stories, and 4m comments:
<https://whaly.io/posts/hacker-news-2021-retrospective> (2021 retrespective by Whaly.io).
It has one public-facing moderator (and apparently a few others who don't post publicly on the site). HN's own mods see very little of the total site content. Automation and member votes, flags, and vouches, as well as emails to the mods, are what keep HN humming. Not perfectly, but quite frankly one of the better-run online discussion sites, and one whose quality has remained remarkably steady over nearly 20 years.
If you see something you think isn't right (bad content not flagged, good content flagged, whatever, email the mods, and they'll take a look. I do this a lot myself, usually with positive results.
Note: we still moderate such threads. We just do it less than we otherwise would.
Companies assume they don't need your approval to collect data on salary range for your position as aggregates are not directly pointing at you.
High-Tech Employee Antitrust Litigation is a 2010 United States Department of Justice (DOJ) antitrust action and a 2013 civil class action against several Silicon Valley companies for alleged "no cold call" agreements which restrained the recruitment of high-tech employees.
<https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...>
To be competitive you need to be paying more than others not the same as them. This is why FAANG got themselves into a fix of paying 500k for people they would have paid 200k for a year or so beforehand.
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.
(Background: In Germany not so many companies pay competitive wages for their software engineers, especially not, once you worked for some years and are no longer a bloody junior. So I calculate it would result in a wage increase for me, since everyone says I am underpaid for my experience.)
I am not a lawyer, but I believe the fundamental issue with RealPage is that by entering into a service agreement with them, you agree not to violate their price “recommendation” and so you are centralizing actual pricing power into a single entity.
I believe RealPage has some way to negotiate out of this standard deal but it’s not common.
Companies likely insist on staying within certain pay bands for a whole host of legal and HR reasons but they aren’t getting a specific salary from Pave that they are contractually obligated to use in their offer.
2) VCs are often the vector by which this all happens. They ask their portfolio companies to pull together the info for their employees, presumably submit it into the companies aggregating everything, and then the startup gets a copy of the recent data.
3) Even done the old way (Excel), the data was incredibly detailed. You can slice and dice by startup stage (series A vs series B vs seed), employee count, region, sector, etc to determine if you're paying market rates or not. This is particularly useful for growing startups, where the founders have no idea what to pay, say, a VP Marketing at their pre-revenue mobile gaming startup in Helsinki.
4) Obviously whether or not this is bad for employees themselves is debatable, but I think people are missing the point that these surveys are ALWAYS skewed UPWARDS due to the much higher volume of data from the large tech companies (because they have far more employees and tend to be offering significantly higher comp). So in practice, the impact is likely to RAISE wages at earlier stage startups who are competing for the same talent as later stage tech.
There are so many variables at play too that it turns into a negotiation like everything else. Say an employee wants a big raise because they are having their first child are heading towards a higher cost base at home. Say the employer simply says "the salary data shows that your current pay is at the market average".
Well, is the employee truly "average"? Perhaps they're a high performer. Does the average number take into account not only the company dynamics (stage, domain, funding, revenue level, etc)? Not perfectly.
But then on the other side, just because an employee wants a higher salary due to a higher cost structure at home doesn't mean they are automatically entitled to it, right?
Then on the startup side again, the manager is looking at the data and thinking about all the time and cost of replacing this person and realizing it's likely more than the cost of just granting the raise.
Then the HR person comes in and says the salary grid -- whose whole purpose is to provide in theory tight constraints on these conversations -- rules this all out, there's no budget or wiggle room. When the Manager suggests the grid hasn't been updated in a few years, HR takes it personally and tells the person to take it up with the CEO.
So then the CEO gets involved. She knows the employee has a unique view on the technology and market direction and considers them Tier 1 can't-lose-them. She knows the grid is out of date. She looks at the data and thinks that she can justify to herself and the financial plan that it'll be OK to do it, with fingers crossed that this doesn't happen across the board because then their runway will shorten considerably.
So the raise happens.
My point is just that the salary information asymmetry is just one relatively minor aspect to this whole negotiation and in the end I'm not sure it advantages the company all that much.
How am I ever going to realistically negotiate salary vs a company that has this level of information (even during performance reviews)? And frankly something that worries me is, what level of data are they getting? If it’s tied to your HR system, does it get anonymized performance reviews? If every company can perfectly profile me and place me in an expected salary, I as the employee give up all my power. That’s strictly bad for me
You're missing a lot with your second point though. If a company has excellent salary data and can put in you a band, then it also means that you have better grounds to argue for raises when you gain experience, or argue if you are underpaid, or even find jobs at companies who intentionally pay a higher percentile to market as a way to attract better talent.
In contrast, if we all operate 100% blind with no data, as many here seem to want, it would lead to all sorts of unfair wage situations with people doing equivalent jobs earning vastly different amounts. This sort of environment is biased towards more aggressive people who have strong social skills when it comes to negotiation. In fact, you see exactly this when companies choose not to buy data like this to set their bands.
On the second point, I would argue that you have very little ability to determine when you’ve gained enough experience as an employee to argue for a raise. Whereas an employer with access to Pave has a _ton_ of ability to determine whether you have or have not. Yours is based entirely on personal experience and feel, plus maybe talking to a few coworkers. Theirs is based on aggregated data from thousands of employees
Mistakes get made and not all managers are the same, but believe it or not there are companies where senior management does try for consistency and fairness in how they set compensation. These companies also often have internal studies run that check for biases or oddities in compensation. E.g. which departments are above the standards, which are below, which are not progressing juniors enough. Without data all this is impossible. You can't build a fair, objective, and especially not transparent system without data.
Pave user here. Absolutely not. It's anonymised comp data. Essentially salaries and job titles only.
Whilst I do agree with your point that data like this should be publicly available, I'm not sure I understand how it gives employers a negotiation advantage?