[m__]

This seems like a pretty poor strategy for the involved companies.

1) It makes other companies (not involved in the agreement) more attractive, as their salaries will be closer to the salaries offered by the companies involved in the cartel.

2) This means that the pool of potential employees is reduced due the agreement, which means that the companies involved in the cartel will have to bear higher recruiting costs.

3) These recruiting costs make a mistake in hiring more costly. It gets harder to "test" employees and let them go when they are a bad fit, because expenditures from your HR budget are shifted to the front (on the promise of savings down the line).

4) Further, when the cartel breaks (as it will, each company has an incentive to cheat on the other members) the payoff of this inflated recruiting "investment" disappears.

[asmithmd1]

Yes the free market can work - if the employee knows to discount an offer from one of the cartel companies because they will not be able to move to another cartel member.

[meric]

A hiring cartel basically acts like super-duper large company doesn't it? So by that logic we would discount offers from large companies compared to ones from smaller companies. Oh wait, we do, as large company pay > startup pay. ;) But is it for this reason?!

[sycren]

Perhaps for some small part this is why Facebook managed to poach from Google so successfully..