Suit on Animator Wage Suppression Shows Another Face of How Capital Squeezes Labor

Mark Ames reports on the latest revelations in a major anti-trust case against Silicon Valley giants including Disney, Sony, Dreamworks, Lucasfilm, and Pixar. For tech titans, enough is apparently never enough.

The earlier chapters of this sorry saga exposed a long-standing scheme by which major tech companies including Apple, Google, Adobe, Intuit, Intel, Lucasfilm and Pixar colluded to suppress wages of an alleged one million workers. The collusion was agreed at the CEO level of all the participants and memorialized through written agreements.

A related private suit was filed last September by animator against nine movie industry heavyweights including Walt Disney Animation, Dreamworks Animation, Sony Pictures, LucasFilm and Pixar. It alleged similar conduct to the bigger Silicon Valley wage suppression suit. Among other things, the companies not just compared pay levels but agreed to fix them, and also signed agreements not to recruit from each other.

An amended complaint in the animator suit added two studios to the complaint and far more important, exposed that the wage-fixing scheme was far longer standing that previously thought. Key items from Ames’ story:

Among the claims in the amended complaint:

The wage-fixing conspiracy spread across the VFX industry earlier than previously reported.

Beginning in the mid-1990s, the heads of the top VFX human resources departments and their recruiters met yearly in secret to compare notes and discuss an industry compensation survey. According to the complaint, citing newly disclosed evidence, the studios being sued “understood that the [compensation] survey was used by each to ‘confirm or adjust our salary ranges.’” By 2007, the relationships between the competing animation studios’ HR heads were so tight that Pixar’s VP of Human Resources mass-emailed the other defendants to tell them “[c]hatting with all of you each day is really becoming a fun habit,” while her counterpart at Walt Disney Animation Studios wrote that she “hear[s] from you all on a daily basis.”

DreamWorks Animation’s role in the wage-fixing conspiracy was more far-reaching than first reported.

For example, in 2005, DreamWorks Animation asked Disney to provide “[a]ny salary information you have” on three positions. Disney reportedly responded the same day with pay ranges for the positions. In 2006, DreamWorks reportedly asked for Pixar’s “range of pay” for various employee positions, telling Pixar that DreamWorks “will be happy to share ours too.” …

The evidence of secret wage-fixing collusion between DreamWorks Animation and Pixar is particularly damning. The complaint cites an exchange taking place in March 2007: A new recruiter from DreamWorks made the mistake of contacting a Pixar employee. This prompted an email directly from Pixar’s Ed Catmull to the recruiter: “While we do not act to prevent people from moving between studios, we have had an agreement with Dreamworks not to actively pursue each others employees [sic]. I have certainly told our recruiters not to pursue any Dreamwork [sic] employees.” After which Pixar’s VP of Human Resources, Lori McAdams, wrote Catmull assuring her boss that she “know[s] [Dreamworks’] head of HR Kathy Mandato well, and she’s in agreement with our non-poaching practices, so there shouldn’t be any problem.” Then Pixar’s McAdams wrote to her Dreamworks counterpart, Mandato, to double-check that was “no problem with our past practices of not poaching from each other.”

Dreamworks’ HR chief responded:

“Absolutely! You are right . . . (my bad).”

When the situation was reversed and Dreamworks’ Mandato wrote to Pixar’s McAdams to make sure Pixar was also sticking to the wage-fixing agreement, McAdams responded:

“Argh, it shouldn’t have gone to anyone at our work or our competitors people [sic]. I’ll put a stop to it”

Pixar kept a list of competitors with which it had secret non-solicitation agreements.

The “Competitors List” detailed “rules” naming the studios which Pixar was directed “not to ‘recruit directly’ or ‘solicit or poach employees’” from: Blue Sky, DreamWorks Animation, Image Movers Digital, Sony Pictures Imageworks and Walt Disney Animation Studios.

There are two striking features to this case. The first is as with the Silicon Valley wage suppression agreements, these deals were remarkably brazen: conducted at the very top of these firms, so no attempt to shield the CEOs, well understood by all the HR departments involved, no effort taken to hide what was happening (as in regular use of e-mails). This is the conduct of an industry that thinks it is above the law.

The second is that the early inception and extent of this conduct puts paid to the prescription regularly served up to American workers, that they need to get more skills so they can compete in the global marketplace. Animators have highly developed technical skills. If they weren’t particularly valuable and in relatively short supply, they wouldn’t have been targeted so early by employers. And they hold a special place not just domestically but internationally. The only other country with a large pool of animators is Japan, and language and cultural issues limit fungibility both ways.

So professional who fit squarely in the supposed employment sweet spot, STEM, have their opportunities limited, both in terms of pay and career advancement. And one of the most serious ways is the least obvious. Forbidding poaching on the other major employers of animation talent means that any startup or small player would be raided at disproportionate rates. The wage fixing pact thus had a side effect of entrenching the already-dominant position of the industry leaders. Venture capitalists recognized how they’d been victimized by the Silicon Valley wage collusion/non-recruiting agreements. They understood after the fact why so many of their startups had been plagued, and sometimes wrecked by regular raiding by the industry giants. The big firms made sure they had nowhere else to go.

Mind you, these practices also constitute a form of wage theft. It’s not as easy to calculate the losses as when a Walmart pressures employees to work off the clock, but there is no question wage levels in these jobs would have been higher over time had these wide-ranging practices not been implemented.

The message is clear: acquiring skills is not all that it is cracked up to be when companies seek to organize themselves so as to treat workers as disposable, and when they can’t do that, to contain their bargaining power. The advantaged positions are ones where you’ve attached yourself to capital, either directly, by controlling resources, or being a key advisor to a person or organization in that position. Any other place is precarious.

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  1. jjmacjohnson

    “The only other country with a large pool of animators is Japan”

    You forget Korea. Such shows as Simpsons has been sending outwork there since its inception.

        1. hoops

          Korea is where almost all traditional 2D TV animation is produced, has been since the 80’s. Feature animation and now CGI feature animation is produced here in the States. The big talent pools for Feature CGI animation are Canada, the US, France, Japan, the UK and Ireland due to the early establishment of animation schools in the 70’s and 80’s. Up until the 90’s the only schools in the world teaching classical Disney Feature animation were Cal-Arts, Sheridan College and Ballyfermot College. Now there are a bazillion schools teaching animation. Probably the best ones are Gobelins in France. Cal Arts, Savannah, Sheridan (with various spinoffs in Vancouver), and the online ones like Animation Mentor.

          Most VFX CGI has fled California for Vancouver and other lower cost venues.

  2. Sam Kanu

    Meanwhile every time these purveyors of greed ratchet up CEO and board pay yet again (now 350x the wages of the average worker)…they spend a huge amount of time claiming they need to be overpay themselves because they must be “leading in the battle for executive talent”, “get the best in a competitive market” etc.

    What a bunch of lying hypocrites…

    1. TG

      Yup, that’s the ‘free-market’, Neoliberalism-style.

      Darwinian competition for workers, socialism for the rich.

      Open borders for companies moving their plants to low-wage countries, closed borders for individuals trying to buy goods (pharmaceuticals, DVDs, blue jeans) at the best price. Because ‘free trade’ includes the freedom of the rich to restrict trade when it suits them.

      Low taxes are good when applied to the rich, because they stimulate economic freedom, and unburden the economy. High taxes are good when applied to the working classes, because they encourage thrift and ensure strong government finances.

      If people make bad investment choices they should suffer the consequences. Unless they are rich, they get bailed out with public funds.

      The government can’t pay for welfare because that would be interfering with the free market. Oh, but American industry deliberately chose to forget how to make rocket engines, so we have to give them billions of dollars for free so they can relearn what they chose to forget, and then sell us rocket engines at 4X the Russian price.

      We can’t sanction goods that are made with slave labor, because that would interfere with the rich’s freedom to choose to own or employ slaves. Freedom to choose!

      I could keep this up all day.

  3. Jesper

    Will there be consequences for any of the people who instigated and maintained this illegal practice?
    Or will it be as with banks, people get bonuses and the shareholders pay the fines…

  4. thepanzer

    Also, this practice is illegal correct? I assume so but our system is so broken and I’m not a lawyer.

    It’s mentioned as an anti-trust case but I thought that was more monopoly power of a single corporation. Or it covers this as well? are there other laws broken?

    Any lawyers in the house who could give some detail would be appreciated.

    1. Yves Smith Post author

      Price fixing and price collusion are violations of the Sherman Act. Serious enough violations are criminal. Executives of Archer Daniels Midland went to prison for a lysine price fixing scheme:

      We argued that the violations in the broader tech wage-fixing case warranted criminal prosecution, but this Administration would never do that to the likes of Eric Schmidt or George Lucas:

      1. bmeisen

        is there consensus that under the sherman act wages are prices? like panzer i am looking for the crime here and am betting that the class action will focus on the defendants’ attempts to deny certain rights to the class, the right for example to a better livelihood.

        is this just another good example of the cognitive dissonance inherent in the “american way of life”? in other democracies labor and management agree to fix wages across industries – for periods of time and not just for union members, for all workers. it’s only too likely that animators, aerosolized by individualism and daubed with gaudy “freedom” rhetoric that is essentially anti-labor and extractive, have failed to organize themselves to the extent that they can successfully sit at the table with the representatives of capital in this industry and obtain agreements that are tenable for all.

        how many of the animators are freelancers working from home? do they have a professional organization by which their interests become a platform? and which should have been protecting its members from this danger?

        1. tastysharksnack

          I was working in the animation industry at one of the mentioned big studios roughly 10 years ago, and the state of labor organization was mixed. Some studios were unionized and some were not. Some studios were mostly full-time staff employees, and some tended to staff up for projects with contractors and let them go when the project ended. Offshoring of projects and grunt work was becoming more common at the time, so that didn’t exactly inspire people to make noise.

          I was certainly unaware of the wage-fixing back then (I was also younger and far less cynical in those days) but the “no-poaching” agreement seemed to be commonplace in regards to recruiters. Some companies required employees to sign non-complete clauses, but being in CA, they weren’t taken very seriously. Heh, I actually heard a story of one woman who wanted to break contract and go work for a competitor. The company’s lawyers threatened to bring legal action, but given that she came from a wealthy family, her family’s lawyers essentially said “bring it!” and then the company’s lawyers backed down. Good times.

          I’m actually surprised Sony was listed among the companies in the suit, because it was widely regarded that Imageworks tended to pay more than the industry standard. On the technical side, working in VFX is known to pay less than “standard” tech jobs because of the glamour factor and the army of young graduates trying to break into the field.

        2. Wayne

          First off, Prosecutors are the only ones who can bring criminal charges. Class actions would only be brought for civil relief and not by a prosecutor. Section one of the Act forbid agreements in restraint of trade. antitrust law forbids all agreements among competitors (such as competing employers) that unreasonably lessen competition among or between them in virtually any respect whatsoever. See, e. g., Paramount Famous Lasky Corp. v. United States, 282 U. S. 30 (1930).

          Section two specifically calls out that a monopoly can be prosecuted as a felony “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony”

          As Yves pointed out above, breaking Antitrust laws can lead to jail time. I think your focusing on price is what is throwing you off. It is not the ‘price’ but the fact that a bunch of competitors got into a room together to lessen competition amongst themselves. Also, as the article points out, smaller companies are not able to compete in the market because of this group of larger players got into a room together to fix the ‘price’ of work.

  5. kappiti

    When the case came out against Google, Apple and the rest, a comment was made that the big tech companies had probably learned not to leave a trail of e-mail. So it seems that they have now switched to non-compete clauses, that put STEM workers out of work for a couple of years if they want to move from one company to another. They have taken it to a federal level, with a bill passing in the House.

  6. Ulysses

    “The advantaged positions are ones where you’ve attached yourself to capital, either directly, by controlling resources, or being a key advisor to a person or organization in that position. Any other place is precarious.”

    Indeed! Even people who have made their career out of helping corporations drive down wages– through systematic outsourcing and union-busting– are in a precarious position now that so many jobs have already been destroyed or crapified. Those who haven’t been clever enough to structure deals– that allow them to amass a personal fortune– will find that their last duty as hatchet-swinger will be to give themselves a pink-slip!

  7. Jay M

    three mopes at Jumbo’s Clown Room:
    Mouse: Minnie was all over me today, “you’re such a big rodent, why haven’t you got a raise since 1980”.
    Dog: They told me I was lucky to have a job being such a goof.
    Coyote: I just sent presents to all the studio HR departments from the ACME catalog I got today. They should have a blast with the gifts.
    Mouse: Gifts? Did the bird get a raise, too?

    1. jrs

      They do. But with all the guilds in Hollywood they probably stand a better chance than Silicon Valley of that, which has pretty much no history of unionization.

      The animators probably got when they came for out of acquiring skills, as in they probably have good middle class jobs. That’s all most people hope for out of the “acquire skills” bargain (and doesn’t that profession take not *just* skill but *talent*?). But unionization could provide a lot of additional leverage in getting higher wages.

  8. kevinearick

    What you learn with your talent as a guide is that you can do the make-work jobs of those vested in empire, but they cannot do yours, and the farther up the spy tower you go, the more arbitrary the skills and pay. At the community level, you build a circuit through the event horizons, with those sufficiently intelligent to recognize the need for talent, who will discount your path accordingly.

    That’s a hard lesson to learn for the critters that believe that what they see on empire media is anything more than the common. Changing the channel is a quantum event only relative to the manufactured majority, of 10%, one way or the other, at the divide and conquer root, which can only travel backwards, because the empire assumption, that an irrational market can outlast all individual investors, disconnects it from cause and effect, until their money is worthless.

    Empire technology defines productivity to suit itself, and the bank prints, right up the curve of diminishing returns, always looking for another ship of fools, which is how the market is structured, surprise, and everyone involved loses, purchasing power on depleted resources.

    The empire hasn’t increased productivity in 300 years; it has increased the efficiency of natural resource exploitation, substituting cheap, disposable crap for life, new world order always the same as the old. The only thing that changed with American Government was the dress, the media narrative. It’s still accounting garbage in and accounting garbage out, junk food begetting junk.

    The majority measures itself only relative to others, imprisoned for the purpose, which is why enough is never enough and the prisons are always overflowing. The critters may or may not fix a bug, with another bug, but they will never examine what caused it. Facebook is a sad, but true joke, as is The Cloud it feeds.

    Only in a closed system does a computer tell a human what to do, and only in its derivative does a computer replace a human. Comparative advantage in a prison of prisons is the illusion of empire, thinking that the short-cut gets you to the future.

    Peer pressure hiding behind a bully has always and everywhere been a scam. Prosecuting a few bankers as scapegoats isn’t going to change anything, because any moron can discharge a battery in a duration mismatch, and get stupid to follow along.

    Contract marriage breeds fear, reproduced and leveraged by public education. Don’t hand your kids over to feminists and homosexuals, employed by chauvinists in the FILO bankruptcy queue, as thoughtful as they may be, without any tools, and expect a happy outcome. That’s Disneyland.

    Funny, the call center script designers can’t fix their own elevators, let alone get me a part in time to make a decision, but they expect me to feed them before I feed my own family, based on extortion, and my phones keep falling down the shaft.

    If you let the empire set prices and wages, you get what you get, positive feedback inflation, between monetary and fiscal authority, equal outcomes, in a hierarchy of prisons within prisons. There’s nothing going on in those offices that my wife cannot do far better, which is why she is worth every penny of $150/hr.

    Don’t go out of your way, one way or the other, and the bully will come to you, in a spacetime convenient to you, along with a crowd assembled for the purpose. Unless you have nested flags on your licenses, they should be available, from a community judge.


  9. Sally

    I well remember in the 1980s all the the Thatcherite and Reaganite supporters carrying their Adam Smith books and quoting the invisible hand theory. ” the good worker has nothing to fear from the market. The skilful, hard working worker will be in demand. The capitalist will pay top wages for their skills.” Only the lazy worker will lose out.

    What a pile of horse manure these theories are. The capitalist class joins together and forms a collective. In effect a union for the bosses. And then uses restrictive practices to stuff the worker. Oh the irony. Of course these people never read the chapter where Smith warns that left to their own devices the capitalist class will rig the system for themselves. Adam Smith is seen as too wimpy these days. The believers have all become Rand loyalists now.

    1. jrs

      Most of the economic theories on competition assume enforcement of anti-trust. So the problem isn’t really with the theories on that one, beyond them being naïve. And well a lot of things are naïve like “representative democracy” and “constitutional government”. Like the representatives are really going to represent us, and like the constitution will really restrain anyone.

  10. kevinearick

    “You’ve got a real problem of a weakening economy, declining prices at a time when monetary policy is close to being disarmed and fiscal policy is contractionary.”

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