This post is part two in the Great Paycheque Killers series. For part 1, click here.
We’re not crazy.
The man is making more and we’re making less. Vox found that industry consolidation (aka monopsony) “lowers wages below the value of the workers to the employer.“ Previously, we explored how non-compete clauses are one way to lower wages. This post explores a closely related issue: anti-poaching agreements that companies have in place that work to suppress the wage.
#3 Practice anti-poaching policies
Perhaps the most famous incident of anti-poaching agreements involved Silicon’s top companies. Apple, Google, Intel, and Adobe had to pay out $415 million for colluding against workers through such an agreement. As reported by CNET, the following emails were exchanged between Apple and Google:
"I would be very pleased if your recruiting department would stop doing this," Jobs wrote to Schmidt on March 7, 2007…According to the exchange detailed in the filing, Schmidt then sent the request on, saying "I believe we have a policy of no recruiting from Apple and this is a direct inbound request. Can you get this stopped and let me know why this is happening? I will need to send a response back to Apple quickly so please let me know as soon as you can."
No-poaching arrangements are also found in low-wage jobs.
According to the Washington Post, “80 percent of fast-food workers are constricted by no-poaching clauses”. The finding came out as part of 2018 investigation by attorneys general in 10 states and the District of Columbia, who sent letters “to eight major fast-food brands—Arby's, Burger King, Dunkin' Donuts, Five Guys, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen and Wendy's.”
The Washington Post article also notes:
“By limiting workers’ outside options, a no-poaching agreement reduces worker bargaining power,” Princeton University economists Alan B. Krueger and Orley Ashenfelter said in a 2017 research paper cited by the attorneys general. " . . . It might help explain a recent puzzle in the U.S. job market: unemployment has reached a 16-year low and job openings are at an all-time high, yet wage growth has remained surprisingly sluggish.”
How could Islam Economics Address this?
In Islam, it is illegal to pay someone less than what they are worth. Consequently, companies can’t conspire behind the scenes to artificially depress wages. The must the worker the rate of his work. As to how this is determined in the case of a dispute, the worker will take their employer to court and hire an independent expert. This expert will evaluate the wage and ensure that the worker gets their proper wage.