The U.S. economy is booming. So why are tech companies laying off workers? | Washington Post
The U.S. economy is booming. So why are tech companies laying off workers? | Washington Post
SAN FRANCISCO - The first time Julian Chavez got laid off from his job as a digital ad sales rep at web.com didn’t turn him off from the tech industry. Neither did the second time when he was laid off from ZipRecruiter. By the third time, though, Chavez had had enough. “I really loved what I did,” s...
The first time Julian Chavez got laid off from his job as a digital ad sales rep at web.com didn’t turn him off from the tech industry. Neither did the second time when he was laid off from ZipRecruiter. By the third time, though, Chavez had had enough.
“I really loved what I did,” said Phoenix-based Chavez in a text message. “But the layoffs got me jaded.” Now he’s pursuing a graduate degree in psychology.
Chavez is one of hundreds of thousands of tech workers who’ve been laid off in the past two years in what now seems like a never-ending wave of cuts that has upended the culture of Silicon Valley and the expectations of those who work at some of America’s richest and most powerful companies.
Last year, tech companies laid off more than 260,000 workers according to layoff tracker Layoffs.fyi, cuts that executives mostly blamed on “over-hiring” during the pandemic and high interest rates making it harder to invest in new business ventures. But as those layoffs have dragged into 2024 despite stabilizing interest rates and a booming job market in other industries, the tech workforce is feeling despondent and confused.
The U.S. economy added 353,000 jobs in January, a huge boost that was around twice what economists had expected. And yet, Google, Amazon, Microsoft, Discord, Salesforce and eBay all made significant cuts in January, and the layoffs don’t seem to be abating. On Tuesday, PayPal said in a letter to workers it would cut another 2,500 employees or about 9 percent of its workforce.
The continued cuts come as companies are under pressure from investors to improve their bottom lines. Wall Street’s sell-off of tech stocks in 2022 pushed companies to win back investors by focusing on increasing profits, and firing some of the tens of thousands of workers hired to meet the pandemic boom in consumer tech spending. With many tech companies laying off workers, cutting employees no longer signaled weakness. Now, executives are looking for more places where they can squeeze more work out of fewer people.
Maybe if the metrics say the economy is booming but nobody can afford anything, and we keep losing well paying jobs for slightly more lower paying jobs, maybe we need to reconsider how we're defining 'the economy.'
But maybe the capitalists who own news sources already know that.
We've selectively sampled like 5 metrics and carefully confused population averages with the median and can confidently say: yachts are more affordable. QED you're wrong.
/s
You can only cut away so much before you hit bone. A company cannot be all profit and nothing else. But none of these investors care cause they get theirs.
This is capitalism. It doesn’t care where it comes from or how the money comes in. But b***h better have my money.
This is why the country is going to hell. It can’t even invest in infrastructure anymore because there’s no short term profit in it.
Welcome to our late stage capitalist nightmare.
I got into tech partially because you can scale a product much further and much cheaper than conventional industries. I was able to create and sell two small tech products/companies I made by myself, and that's how I got into the industry.
I think in tech you can vastly cut jobs while keeping the product alive, but it's impossible to grow a product without a solid team who knows the product deeply. These current cuts save money now and companies aren't seeing the downside, but long term opportunities will become harder and harder to actually reach.
Having too many layers of hierarchy is bad because you can't coordinate teams and move. Having too few means your staff will need to acquire tech debt and you'll start seeing failures nobody understands.
This is short term gain for shareholders, long-term pain as companies will see lower growth and have to resort to more squeezing of existing customers.
You may have a case where you aren't going to get growth in certain product lines. Meta isn't going to see that much of an increase in Facebook or Instagram users. Google Search may see a decline as AI both provides better results and kills the ability to use the existing system.
At that point, why not just handle the managed decline of these businesses and accept these services will die?
Lol the economy.
When the economy is bad, we suffer and prices go up. When the economy is good, we suffer and prices go up.
Why should any of us give a single shit about the state of the economy when it only benefits the 1%
Because we all want the new G.I. Joe with the kung-fu grip
But it comes out and gets bought up by resellers and a select lucky few regardless of whether the economy is good or bad.
I buy it when it's on sale because they overestimated demand, or when someone is selling a used one at a lower price. Whether the economy is good or bad.
Why should I care about the economy?
Fk that! I want Maskatron, the bionic man nemesis who can wear different faces!!
It's called the rule of 40, and it's the metric that has tech executives acting like bipolar Chihuahuas. Grow, cut, expand, right-size, cross the chasm, reorg, polish the turd and cover the smell. If a tech company doesn't hit their rule of 40, their stock suffers. If they do, the stock soars.
% growth year over year + % profit margin should be greater than 40. 20% growth and 20% profit margin, or 0% growth and 40% profit margin, it doesn't make a difference.
That means if you have a 15% profit margin, your target growth is 25%. But if you only grow, say, 20%, you must make that 5% back by cutting COGS. Companies trying to grow will hire staff to build up sales and get more done. If the growth doesn't hit its target, those new hires are probably cheaper than the experienced people. Time for layoffs and outsourcing the veterans.
But why 40?
That's the fucking horror of it. There's no particular reason. Some stock analyst at some point said that 40 is a magic number that good Saas companies hit and not hitting that number is a death knell. But the market is far too complex and variable to boil it down to one metric.
But then investors like a simple metric, because it means they can anticipate what the dead money day traders will think, and bet the trend rather than the stock. If you can anticipate the market, you can make money regardless of what it does.
And executives know the rule, and serve the shareholders. So they move heaven and earth to maintain the magic number, even if it means destroying the lives of fungible employees.
So the rule becomes the prophecy becomes the rule because the prophecy said the rule would be the prophecy and the people making money like having rules because it allows them to be prophetic.
It's an ourobouros of bullshit, where the rich get to ride the snake as it turns, and the employees all eat shit and are in turn consumed to provide the motion.
Because MBAs don't math good.
20% looks too small, 60% might look too much like a bubble ready to burst.
The more you learn about numbers, the more arbitrary you realize they are.
Work in tech, I’m so fucking overworked lately that it’s massively cut down my productivity.
I can’t keep jumping from short deadline high priority to short deadline high priority and still do the baseline work needed to be efficient. So what ends up happening is I’m doing way more throw away work now than I ever have.
If I had more staff on my team we could balance the work out and get stable foundations to work from, but that doesn’t let leadership pretend we’re all better off now than a year ago and that the institutional failings of the org are all solved because they expertly threw the right people in the trash via randomly firing people.
I have a friend who's in exactly your same position, and a spouse who was randomly fired away from a team run by someone in exactly your same position. It's eerie how consistent and systemic these problems are across the entire sector.
It's the exact position I'm in as well. Short deadline high priority projects without the staff needed to actually get it done.
My buddy was working in a well-known purveyor of fruit-named products. His boss and entire team was canned around him and he was a team of one reporting to his former skip.
That didn't last long. A few months of Herculean effort wasn't enough to keep ahead of the arbitrary workload and he was done too.
So what ends up happening is I’m doing way more throw away work now than I ever have.
so fucking true
we need to move quickly, just do it and we'll come back and refactor later
let's spend more time writing shit that will 100% change just so we can meet a fuckin date. Give me a fuckin break.
refactor later
And you know they mean "rewrite" because they haven't nailed down a spec by hack time.
This is why experienced (software) engineers are different from coders: they'll balk at the waste if their job isn't at stake. (If it is, you talk to your skip, right?)
Tech engineers need to unionize. Many probably feel guilty of even considering such things because the salaries are insane compared to other jobs, but it doesn't matter. Being treated like shit is being treated like shit regardless of how much money you make.
The psychological abuse tech companies regularly push on engineers is unhealthy, and then the constant layoffs that literally play games with peoples' lives just to make a family of yachts a little happier. It's disgusting. Sad thing is, some tech workers may not even notice how far down the well they've traveled with the constant pressure the companies try to apply to their staff.
The constant goals of annual tech releases and huge profit gains were never sustainable. Tech bros think they're being so "disruptive" but they're just playing a grift with lipstick on at the expense of thousands upon thousands of lives that shouldn't be as stressful as they are. All while creating mountains of ewaste to help push the planet towards being uninhabitable.
Am union. Can confirm better work-life balance, way more off time (47days) during which no one reaches out without justification, and no wildcat layoffs.
Pay is 15% low but the pension plan is kickass. And isn't that what you want?
Our union contract says 100% remote. I hope that continues to be a valuable goal as contracts come up for renewal in 4 more years. Since our hiring has been primarily across the country for retiree replacement (no one quits, just retires), I'm confident in its continued enshrinement.
U.S. based employer?
Publicly traded companies are like a monkey with a gun. The gun has been going off a lot lately.
Don't work for a publicly traded company. They're not interested in you. If you want to "climb the corporate ladder", sure. Go for it. Live that hell, baby.
I don’t know, last year I worked for a private firm that offered me a shitload of stock options then diluted them after I started.
You’re fucked unless you’re the boss.
Yup. Employee ownership is the way to go
I wonder if any of this is punitive for push-back on RTO or union efforts.
It's almost just a function of business at this point. Since engineers aren't unionized, companies have become lazily complacent to use layoffs and rehires as a mechanism to manage each quarter's budget. It needs to stop.
That's part of it, plus salary rebalancing of junior roles. These roles aren't being eliminated. Engineers should unionize.
I don't remember if it was Apple or Microsoft who started it, but the strategy is to hire more than you need and then fire the bottom performers = those who don't suck enough corporate dick.
It's a sign that these companies are too big.
Microsoft has about a quarter million employees.... doing what? They have about 12 products. All of which have open source alternatives done by .. 500-1000 people? Yes, sure they operate world wide and services are definitely needed both internally and externally, but come on, it seems kind of excessive doesn't it?
Not to be a Microsoft apologist, but they have hundreds of product lines, and legacy products they still have to maintain like very old versions of Windows running ATMs and airplanes and industrial systems across the planet. They also have some consumer hardware lines, the video game arm, and so on.
That being said, they still manage to make Windows 11 something you pay for that is more noisy, unwanted-app-sideloading, in your face, naggy, and terrible with every release, so if # of employees is a metric for productivity, they will need to hire the entire planet to make W11 not a pile of junk.
firing your workers makes the green line go up
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well, it's a lie. for one.
It's not for the tech industry. The whole industry pretty much relied on cheap debt to function, and when that debt stopped being cheap, tech companies started struggle.
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🤡 🌎
Most of these companies are tech companies that offered services during covid, and now that covid is over the changes they did during covid is not profitable post covid