I'm surprised to see so many comments here taking layoffs personally, or talking about how layoffs are stupid.
Layoffs are not personal, and the corollary to that is that you should never treat your company as a friend. It's a company trying to maximize value.
Also, layoffs do work. Almost every large, successful company has done them at some stage. They are an expected, and necessary, part of operating a company and responding to changing market conditions.
Yes, it sucks. They are not nice. But it's expected and it's helpful to remember that.
When a company has embedded itself so deeply in public life - globally - it's reasonable to have strong feelings about its actions.
When we say layoffs work, are we considering the way the same companies overhired just a few years ago, harming the rest of the employment market? Do we remember this in later discussions when we treat these companies as prescient hiveminds, in spite of them using overtuned bang-bang control for their hiring? Do we remember it in discussions about workers rights and the things we tie to employment in the naive assumption that only those who deserve it lose their jobs?
I find it a bit hilarious that programmers feel entitled being employed for life in one company. Did you ever consider finishing the project? Getting it done and delivered?
My first paid job as a programmer was like that. We made an exam software for university, a complete package covering the process from authoring test questions to making reports.
We made it in 6 months and it was done. Finished. Working. There was some maintenance/improvement, but that was a separate deal. We did not expect university to employ us for life to maintain it.
Shouldn't that be a norm?
Like, yeah, obviously Google has a lot of projects, so they can allocate programmers to do something different after something is done. But they didn't promise employment for life, did they?
Obviously, people like being securely employed. But, perhaps, that should be addressed at societal level - e.g. unemployment benefits.
I'm suggesting that it's up to Microsoft management to decide what software they want to develop, and programmers should expect they are hired to develop a product. Downsizing should be considered a norm.
People came to assume that a total comp >$100k is a norm, but it's really not.
E.g. engineer working on research projects for INRIA in France might get up to $3000 gross a month. (And you might get better job security in France but it comes with a bit of total comp hit, as you see.)
That's the reality for most people on Earth. Salary >$100k should be considered an insane arb opportunity, not a stable job expectation.
Microsoft makes a shitload of money selling Windows to billions of people, and is able to pay a lot to devs? OK, good for those devs. But would that last? Uncertain.
These companies make a lot of money because of supply & demand. They pay large salaries because of supply & demand. They have layoffs because of supply & demand.
It's free market. Stop complaining unless you can propose something better.
I think what your parent meant was that, instead of just asserting that something is true, you provide some peer reviewed research or something like that which supports your assertion. For example, you might want to include a link to some article pointing to research which supports your assertion. For example, you can add something like
to your comment. Of course, this link points to two decades of research showing that your assertion is wrong, so you probably don't want to include this specific link in your comment, but you get the idea I hope.
>Of course, this link points to two decades of research showing that your assertion is wrong, so you probably don't want to include this specific link in your comment, but you get the idea I hope.
I think that the state of the telecoms industry will let you infer that I was being sarcastic and will also provide quite strong evidence that the study you cite is correct!
Mass layoffs work when there was over-hiring (management's fault) or there was a big revenue downturn (market forces). This time it was because of over-hiring at the COVID mania. People left safer jobs to join FAANGs tempted with higher salaries and a prospect of improving their CV. And now they are dumped back into the toughest tech jobs market in 20 years.
This is totally a fault of management and none of them are losing their jobs! People have a good reason to be pissed off.
had 99k employees in 2018, 119k in 2019, 135k in 2020, 156k in 2021, 190k in 2022, 174k in 2023.
and made $136b in 2018, $161b in 2019, $182b in 2020, $257b in 2021, $282b in 2022, $297b in 2023.
They basically doubled their headcount to double their revenue. How is that over-hiring??? Each person added as much revenue as the ones before them.
Over-hiring would have been if post-Covid business would have dropped, which, guess what, did NOT happen for FAANG. It was, in the worst case scenario, stable (even then, slightly growing).
Don't forget there are also hundreds of thousands of external people. Bodies bought from different vendors, doing pretty much the same job as internals but with lower pay and almost no benefits.
They've been cut a lot last year, but no news about it.
Also there are cuts in high cost of living locations. Why to keep people in California if you can hire in Warsaw and pay x0.25 of US rate there?
I suspect that more of these layoffs happen in the US, both because it's the most expensive location, has the most staff and has the least friendly redundancy laws (for employers, that is)
Revenue per employee is never a goal in itself. Only revenue, expenses, and strategic goals. If they can meet their strategic goals with less resources, they over-hired.
>"And now they are dumped back into the toughest tech jobs market in 20 years."
Is this the consensus then that is really rough out there right now? I know that big tech has been hit hard the last year but is the outlook equally bad for startups, enterprise etc. as well?
We should be clear that this isn’t a uniformly held attitude. Before the recent layoff wave started in late 2022, losing your job, even for layoffs raised eyebrows and questions. This has definitely changed the past year but im not sure the stigma is gone just yet.
It is not the individual layoff which is the issue for the people. It is the general feeling that the little man get squeezed under the argument of cost savings and the rich man takes out even more than the year before, independent of the market and company performance. In the past the entrepreneur took the yearly risks and was rewarded or not for it.
The variation / risk on the (unrealistic) return is now managed on the backs of the employees. These layoffs are often bound to the goal to have a return like Apple and not like General Electric (company examples are educated guesses).
In the end, the employees have a miserable life and products of the company are a shit show.
It’s one metric: revenue per employee. In a more capital expensive market, such as our current one, this metric is the one corporate managers are focusing on.
Ultimately it’s about something called austerity, which is taught in mba-jargon filled economic theory as a way to keep the working classes inline. Since the 1920s, western countries have used a cycle of expansion and contraction to crush the working people’s power in the interest of controlling inflation (which is really largely the direct result of excess government money printing as a result of imbalanced spending), all the while consolidating more-and-more wealth in smaller and smaller circles of people. It’s an absolutely psychotic way to run a business cycle, and it kills a great many people directly:
The latest deleveraging of worker cries and demands for better conditions and pay comes as workers are asking for more work-at-home and flexibility, a more balanced work/life balance, and focus on similar health and wellness goals, as well as demands for salary raises to keep up with the ongoing inflation.
For three decades worker pay has been dropping. The gap between the growth of productivity and that of a typical worker’s pay has grown quite extreme, and continues to grow through the application of austerity principle:
While it looks like “inflation and interest rates are causing the problems,” it remains easily predictable economic theory that we would find ourselves here. People may not realize it, but since 2020, the US has printed nearly 80% of ALL US Dollars in circulation. To put that in perspective, at the start of 2020 we had ~$4 trillion in circulation. Now, there is nearly $19 TRILLION in circulation, a 375% jump in 3 years.
This of course causes “inflation,” which is in no small part what the news likes to call “excess corporate profits.” Basically inflation benefits those that hold real assets and are closest to the money printers, while crushing those who don’t and are the furthest (often the most marginalized).
Consider that the market rewards these companies handsomely for their layoffs:
- Amazon had $2.8 million in earnings (before interest, taxes, depreciation, and amortization – or EBITDA) for every staff member they laid off in January.
- Meta had $3.9 million in earnings for each of the 11,000 staff members they laid off in November. In response to Meta’s cost-cutting strategy, its stock price increased by 19 percent.
- Tech giant Microsoft had an EBITDA of $98.8 billion in 2022. This means they earned $9.8 million for each person they laid off in January 2023.
- Other companies’ layoffs weren’t as difficult to understand: WeWork ended 2022 with an EBITDA of -$824 million, and Spotify ended its fiscal year with an EBITDA of -$290 million.
So it’s unfortunately financially rewarding to lay people off, and it’s a measurable economic impact you can show the board and your investors…
Meanwhile there are some CEOs who have figured out how to keep everyone employed, and it points to the fact that this model isn’t the only possible way for businesses to operate:
There will come a day when the current management ethos becomes unfashionable and mass layoffs become a sign of failure and poor executive management, but unfortunately the market rewards it right now, and ultimately products and employee quality of life are secondary concerns to our rather sociopathic business cycle.
Forgive my diatribe. I have developed quite a passion for this issue over the years, as my training taught me all about layoffs and how to do them, but after running companies for a long while, I’ve become quite unhappy with “business as usual.” This system sucks, and it’s causing massive breakdowns in trust between employees and employers that ultimately cause irreversible harm to actual global competitiveness. The system people live and work in has to be in those people’s best interests to proliferate and ultimately needs to align profit with the best interests of society.
In my mind, the long term concequences of the current system’s breakdown of trust is devastating to everyone involved and counterproductive to lasting global competitiveness (which requires cooperation, teamwork and a growth mindset these adversarial conditions cannot foster), and yet we happily pedal along as if everything is fine.
what do you mean by “earnings per staff member laid off”? are you dividing their total earnings by number of staff laid off? if so, then Apple earning 100 billion while laying off 10 employees would be “earning 10 billion per staff laid off”, or am i misunderstanding?
- The google metric doesn't make sense. In fact, the graph tells sort of the opposite story. Revenue per employee shot up and then they did layoffs in response... huh? My guess is that this graph is missing the forecasts that are being used to make these decisions. Google likely has a similar chart, but one that goes out 5-10 years and is showing a concerning trend (that was certainly the case when I worked there).
- Austerity is a government thing. I'm not connecting the dots between deficit reduction and corporate layoffs...
- I thought the money supply calculations changed recently which is why the metric shot up in recent years.
- How are you getting Microsoft was rewarded with 9.8M per employee for their "layoffs?" They cut 10k people, so wouldn't this mean if they had laid off 1 person, they would have earned 98B per layoff? This metric doesn't make sense.
- The "other CEO" you link to runs a company with 200 employees. I'm not sure this is comparable to a company the size of Google.
Companies aren't charities. Just because they can afford to hire or keep an employee doesn't mean they should or have to.
You're also forgetting that raw dollars are not how companies are viewed. Every company is viewed on how it performs agains the risk free return rate. The rate going from 0 -> 5+ means companies must now generate returns in excess of the RFR in line with their generally accepted risk. This is the ultimate outcome of raising rates to reduce inflation - across the board layoffs lowering averages salaries.
"since 2020, the US has printed nearly 80% of ALL US Dollars in circulation" - I've seen this notion repeated and I assume it's a reference to M1 as published by FRED: https://fred.stlouisfed.org/series/M1SL
The actual story, as far as I can tell, is that money that had previously been considered as M2 (=less liquid) is also counted as M1 due to rule changes regarding savings accounts.
To see this is the case, you can plot both together. If in fact, new money was printed, you would expect M2 to have the same jump as M1, as M2 is M1 + more stuff. However, you see a much smaller jump:
Agreed. As a legitimate inventor and innovator, these management teams are signaling to me that they are not worth working for. The rest of talent that creates actual value, whether in engineering, sales, management, or otherwise, should seriously pay attention and do the same.
I guess we'll see if this turns out to be true. If it does, they'll realize their mistakes, and the competitors that didn't let people go should outperform them. If it doesn't, then it'll show that many tech companies simply overhired, which I think we all know they did over the past few years.
I myself work at a telco where business has stagnated over the past decade, due to market saturation and new, cheaper competition. We've had layoffs each year since I started since that's the only way to keep increasing profits. One day it'll probably hit me, but oh well. I know our company has fat to trim and if I'm actually not making any real impact, then I'm fine with looking for a job where I do. Efficient companies are important for a healthy economy.
It's not about killing experiments. It's about things that were advertised as the next big thing with fanfare to not be properly maintained and eventually killed even though they had a lot of users. That's the problem.
This isn't the right way to view it -- it's not necessarily about a dollar amount. People making 6 figures and people making 5 figures are not enemies. The segmentation is between those tho provide work and those who perform it, with the former profiting off the surplus value provided by the latter
Are you insinuating that the workers (or the public) have the ability to self-determine through share ownership? You are aware that Alphabet stock is split, with the class B shares being owned by the founders, right?
Do you think FAANG SWEs aren't in the top 10% of Americans?
Investors aren't some distinct class, we're mainly talking about pension funds and the 401ks of similarly well-compensated professional-managerial workers.
> Research has long shown that layoffs have a detrimental effect on individuals and on corporate performance. The short-term cost savings provided by a layoff are often overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation — all of which hurt profits in the long run. To make intelligent and humane staffing decisions in the current economic turmoil, leaders must understand what’s different about today’s larger social landscape. The authors also share strategies for a smarter approach to workforce change.
Unions make sense if the employers have the ability to exploit the workers. By forming a collective bargaining position the workers can prevent that from happening. With the tight labor market there are very few places where employers are able to exploit anyone, people can just move to another job. And in many European countries there are already strong worker protections in place through legislation. (I would argue too much, where I live).
So unions are of little use anymore, except for perhaps using the power they have to exploit employers. I think being a member of one signals to an employer you may want to exploit them, rightly or wrongly, at least where I live it's often understood membership will hurt your chances of getting higher up in the organisation.
> Unions make sense if the employers have the ability to exploit the workers.
This is an overly narrow definition, so I label it is largely incorrect.
Think of it this way: society involves dynamically-shifting power balances. To the extent the goals of a society include:
(a) standardizing certain rights and norms
(b) providing checks and balances so the powerful have less temptation and ability to exploit the less
We don't want to rely on only one mechanism to achieve (a) and (b). Sure, we want healthy markets and skilled workers. We also want workers who have enough flexibility to change industries and to move geographically. But we also want effective regulation. And we ALSO want organizations that can directly advocate on behalf of workers.
> So unions are of little use anymore, except for perhaps using the power they have to exploit employers.
This statement is silly and ignores the realities I've seen. Sure, a union left to its own devices might be tempted to push too far. But given the dynamic one tends to see in western economies, there is always some kind of negotiation with the associated corporation. Such negotiation is quite similar to parties in the legal system hashing it out. Both may start off far apart but the negotiation tends to lead towards compromise. In the United States, unions that push to far face public backlash and even Presidential action.
I'm not making any dogmatic claims here. I'm simple rejecting overly simplistic arguments against unions. I will readily accept that unions are not silver bullets and there are documented cases of corruption and misaligned incentives. But the solution is not to argue that the notion of a union is useless. The intellectually honest solution is to seek achievable solution in the mess that is the real world. I laugh at people who aren't even trained economists who interpret their models as some kind of reality -- or worse, some kind of normative specification.
Very few dogmatic claims pro- or anti- union survive contact with reality.
> But the solution is not to argue that the notion of a union is useless. The intellectually honest solution is to seek achievable solution in the mess that is the real world.
You can say that about any topic, but what specifically are you proposing? Or do you just want to talk about stuff?
> We don't want to rely on only one mechanism to achieve (a) and (b). Sure, we want healthy markets and skilled workers. We also want workers who have enough flexibility to change industries and to move geographically. But we also want effective regulation. And we ALSO want organizations that can directly advocate on behalf of workers.
Ultimately we need a cohesive strategy to convert your wishes and desires into actionable legislation and policies and consensus building around those - which is the hard part. It seems to me, few people want to take crack at that.
You were kinda wishy washy in your response. I'm bringing the conversation back on track. Sorry, didn't know you were so sensitive to language. I'll try to calibrate my responses to you.
I see your desire to "bring the conversation back on track". On your terms, it would seem. It came across rather heavy handedly. This is a request you can make, not something you can impose.
By "wishy-washy" do you feel like... I'm being indecisive? Not taking a firm stance? Changing positions?
Here's how I see it -- I often intentionally don't "hit people over the head" with my particular positions. It doesn't mean I don't have a stance; instead, I often prefer to frame the issue first. I consider this a starting point, not an ending one, so feel free to continue the conversation.
You see this through a very American lens. I think you are trying to paint my statement as "anti union", it is not intended as such. What you describe is much better solved with government legislation and trade bodies. There is a reason union membership in some Northern Europe has dwindled from over 80% to less than 5%, they have simply outlived their usefulness.
Unions have the wrong incentives. They represent employees and have no incentive to think about future employees, employers, customers or anyone else. There are simply better ways to organise society.
How does it make sense for Google to keep laying off people (many of them skilled overperformers) while continuing to hire? It seems they have alienated a large part of their workforce with these decisions. Plus they are running into legal fights in Europe where it's not so easy to randomly fire employees.
I would truly like to understand this, but I haven't heard an explanation of why the actions make sense for the organization as a whole.
The people they are hiring are probably cheaper than the people being laid off. The costs of the layoff are massive in morale, lost know how, missed opportunities, etc. But to the finance people, that's just as well because it's not their problem to deal with.
I understand it might make sense for specific managers who meet some goals and get bonuses, etc.
But I'm asking for an explanation of why it would be reasonable for the organization as a whole and for its shareholders (the ones who understand what's going on).
Managers are basically never consulted on layoffs. At a high enough level in the organization, you might find out a week or two before everyone else and mark some people as critical, but that's about it.
Basically every company I've worked at can be roughly divided into the finance side and the business side, and IME all the important shots are called by the finance people. The business side has to justify itself in terms the finance people set, not the other way around. As for how it makes financial sense, I can't speak to that, but things do tend to work out the way the CFO predicts. That's hardly surprising, because the other finance people working on Wall St. are looking at the same spreadsheets and following the same economic theory.
By the way, I don't think this is a good way to run companies. But it's the way I think almost all of them are run.
people are constantly job hopping, Google has to always be hiring just to negate attrition.
Second, there isnt a single budget for hiring that interviews everyone and ships them out everywhere. certain groups/products can be growing within google while others are shrinking. should the chrome team not be allowed to grow because google+ was in the trash can?
third, not every employee is exchangeable, you cant just shuffle everyone around the company. You cant just take someone from the google maps team and have them start working on nexus phones.
all of these things are fairly obvious if you thought about it for more than 30 seconds, so its somewhat concerning you find this topic so perplexing.
> third, not every employee is exchangeable, you cant just shuffle everyone around the company. You cant just take someone from the google maps team and have them start working on nexus phones.
True, but even so, you can train the employee for the new role. You need to do the same anyway for a new, external candidate (and it's even worse because they will need to familiarise themselves with internal tools and processes that the Maps employee would already be familiar with).
Google has been hiring people into the same roles and teams where they have laid people off.
> all of these things are fairly obvious if you thought about it for more than 30 seconds, so its somewhat concerning you find this topic so perplexing.
For me this is very offputting and definitly makes me move faster out of that system.
I can either work for the next 30 years 40h a week and create some 'value' for companies like google and have nice holidays, etc. OR i don't.
And yes i can afford a very basic version of not working anymore already or at least no longer playing the game in some companies.
Wasn't there some Gen X/Z meme about quite quitting? Guess what could incluence this? Having an appreciation for your company and your companies management style.
A lot of people here have never worked in an economic downturn, and workers WANT to believe their job is more than a job. Why else would they devote so much time and energy to it? It may just even represent their self-worth.
If the alternatives are not working at all, or working at a company that might have problems paying their employees , I think many will take the risk of working at a large tech company that does regular layoffs but gives generous severance
For me it is the cycle of over hiring and layoffs that make me mad. Executives bear no consequences for their decisions instead the consequences are borne by the lower level employees.
What I would like to see is senior and executive management (Director+) bonuses cancelled for the year a layoff occurs. If they aren’t willing to cancel bonuses company wide then a layoff is really just stock manipulation. By making sure they bear some of the consequences maybe they will make better choices in the future.
If you don't want to be laid off, don't get hired. It's just part of the process. Or get a government job. I hear people can last dozens of years in those.
I think you're arguing against a strawman. Nobody says layoffs are stupid because they're not a very "nice" thing to do. They say so because the statement "it's a company trying to maximize value" is contentious.
The long term objective of a company is not to save as much money as possible. It's to spend money toward endeavors that generate more money.
If the layoff is because of an efficiency improvement, that's justified - like a factory replacing labor with newer cheaper robots. However, that's not what the tech layoffs were about. Tech companies are basically saying we want to do less work. It's not an efficiency improvement, it's a downsizing of their business activities, and it's not clear-cut whether that's a good business strategy for companies that are wildly profitable and growing.
a company can have multiple products that are at different stages in the business cycle. If Microsoft never did layoffs in their entire history they would still have a dev team working on Zunes, and 95% of the company would be working on desktop windows
Most of the tech companies generate their revenue from their core businesses. For Google it's ~80% from ads, and probably even more of their profit comes from Ads. The history of companies being able to generate abnormal profits in other business lines is not favorable overall. I think experimenting and trying to find new sources of revenue makes sense, but the flip side of that is you have to kill those projects if they aren't going to pan out. It makes sense to shutdown even profitable businesses (or sell them) if you can make more by reinvesting in your core business.
It's naïve to think that frequent layoffs at the periphery of their business (itself not true - there were layoffs in Ads, Search and other similar "core businesses") won't affect their core business. Google loses a bit of its brand value every time it does a big public layoff. At some point, the Google brand will be most associated with the word layoff and nothing else. It affects morale for existing employees and makes the whole company culture just a little more selfish and paranoid.
Associating your company with unhappiness and strife does not come without a cost.
Layoffs are not personal, and the corollary to that is that you should never treat your company as a friend. It's a company trying to maximize value.
Also, layoffs do work. Almost every large, successful company has done them at some stage. They are an expected, and necessary, part of operating a company and responding to changing market conditions.
Yes, it sucks. They are not nice. But it's expected and it's helpful to remember that.
reply