Lessons from Silicon Valley

USA Today points out that it's good to work in the tech industry:

If you haven't been to the company spa, arcade, bar or bowling alley, you probably work outside of Silicon Valley. 

Technology companies are lavishing employees with perks here at a time when much of the nation is experiencing just the opposite: job cuts, belt-tightening at the office and the strains of a generally sour economy. 

...Free massages, hair cuts, laundry services, shuttles, gourmet meals and snacks galore are only some of the treats showered on employees. The list goes on. Google's success years ago allowed it to set the bar on comforts. Now it's looking like a perk playground on steroids in tech. 

...Facebook is transforming its new Menlo Park headquarters into a Silicon Disneyland. The former Sun Microsystems property underwent a makeover that tore down office cubicles and put in shared work tables, couches, bars, cafes, eateries and even pubs. 

Philz Coffee, a popular local chain, serves drinks made to order, but they're not free. People work outside at cafe tables. Nearby, there's a new outdoor barbecue shack with seating. 

The kitchen staff puts out food carts that offer hot dogs, pizza or tacos along the main walkway. And Facebook has two main eateries to feed its staff -- Epic Cafe and Cafe 18 -- which can seat hundreds of the young, T-shirt-clad, smart and pretty people, most of whom are under 30. All food is free, day and night.

So why are Silicon Valley employers so nice? Did the programmers and techies form a union? Did left-wing politicians pass regulations mandating free food and access to spas and bowling alleys? Are employers in the tech industry just nicer and more generous than you average corporate titan? The answer to all of these, of course, is no. In fact, the tech industry is almost entirely union-free, the sector does not face especially onerous regulation (certainly compared to other sectors such as finance and health care) and it is not obvious that tech CEOs are particularly nice. 

Rather, employers in Silicon Valley must compete in order to attract talent, and therefore strive to make the working experience at their firms as pleasant and attractive as possible. As the article notes:

"In this market, particularly in Silicon Valley, you've got to take extraordinary measures to stand out from the crowd" as an employer, says John Reed, executive director of technology job placement firm Robert Half Technology. 

...The need for software engineers is so great that companies are willing to pay $20,000 in finder's fees to employees who drag in the right people. 

"People with these very specific skills are in high demand," says Jason Schloetzer, assistant professor of accounting at Georgetown's McDonough School of Business.

While this blog frequently points out the boon that competition is for consumers, overlooked is that it is also the best friend of employees. Just as merchants do not offer the best quality product at the lowest price out of the goodness of their hearts but rather fear consumers will go somewhere else, business owners are incentivized to offer their employees just enough so that they do not depart for greener pastures. 

If politicians truly have the best interest of the country's workers in mind they will cease entertaining ridiculous legislation such as the Orwellian-named Employee Free Choice Act, mandating how much employees must be paid or other measures nominally meant to boost employee welfare. Rather, the best thing government can do to assist workers is provide the conditions for a dynamic economy with the most competitive labor market possible. The more employees are competing for workers, the better the pay and conditions that will be offered. In other words, stay out of the way and let the free market work.