Monopsony-A debate of minimum wages in Silicon Valley

Do you know that employees from giant companies in Silicon Valley are paid in minimum wage? Apple, Google, Intel, Adobe, Intuit, and Pixar signed a secret contract by agreeing to pay the same wages for employees. By sharing the wage information with one another, companies decide that none of the parties will offer higher wages, avoiding the competition of hiring employees. In class, we discussed monopsony is a market structure with a single buyer. We talked about Major League Baseball teams conspired to not give any offers to players under free agency, forcing elite players to sign the contract with own team. There is no freedom for baseball players but force to accept whatever their team manager said, unable to join the game if they said no. In today's Silicon Valley, there is a similar situation where companies are the sole purchasers of labors, having the power to determine amount of wages for employees.

Steve Jobs, the founder of Apple, once said, "if you hire a single one of these people [workers from the other companies] means war." Capitalists like Steve Jobs know that the best way to maximize profits or minimize costs is to pay workers the minimum wage. In the system of monopsony, big companies like Apple never worry about insufficient labor market. There is a large pool in Silicon Vally where people study computer science and want to get a job related to computer science.



As the population of those who study computer science continuous to grow, the companies have more power to select the "best" employees with relatively low costs.



References:
https://equitablegrowth.org/monopsony-market-power-labor-market/

https://newrepublic.com/article/116608/silicon-valley-labor-scandals-prove-minimum-wage-hikes-dont-cost-jobs