Recession to the wealthy just means everything is on sale. They can't make as much money with slow and steady growth. They want to buy on the dip they engineered.

The whole objective here is to create a recession. That is how this administration is going to tackle inflation. It's about the only card left to play. You need desperate workers with little cash to drive wages down and thus costs and thus cost of goods.

It would not surprise me if the powers that be in government have gotten in cahoots with the powers that be in industry and said, "Hey, now would be a good time to start trimming some fat from your payrolls."

It's about capital allocation and using record profits to make leveraged corporate buybacks while there's a volatile market. Now interest rates are up and bills are due.

It gives them a pass to hire for less and retain others who are underpaid and unhappy. They don't need a recession to drive down employment costs, they just need to make people afraid to leave, and willing to accept less for the same job.

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> In Silicon Valley, the new year began as the last one ended — with tens of thousands of tech workers losing their jobs. Just a few days into 2023, Amazon Chief Executive Andrew Jassy announced that there would be 18,000 layoffs across the company. Within weeks, Microsoft revealed it was slashing its head count by 10,000 and Google said that it was terminating 12,000 employees. IBM looks to be next, with nearly 4,000 workers on the chopping block.

>This follows 2022’s bloodbath, when tens of thousands of jobs were lost at Meta Platforms, Twitter and Salesforce. According to an industry layoff tracker, the tech sector has eliminated some 220,000 jobs since the start of last year. If the laid-off tech workers formed a city, it’d be one of the most populous in the United States, bigger than Des Moines or Salt Lake City.

>The question is: Why have many of the most profitable companies of our generation — most of which are still very much profitable — announced staggering rounds of layoffs, one after the other? And why now?

>A common refrain from analysts and reporters is that the companies are “tightening their belts” after profligate pandemic hiring sprees, in order to streamline operations. The executives overseeing the cuts, for their part, cite adverse economic circumstances. “We hired for a different economic reality than the one we face today,” Google CEO Sundar Pichai said in his layoff announcement. Jassy wrote that “Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so.” Microsoft’s Satya Nadella noted that “some parts of the world are in a recession and other parts are anticipating one.”

>No recession has yet hit the U.S. or its tech sector. Inflation hurts, but the U.S. economy added hundreds of thousands of jobs last month. Still, certain shareholders have been vocal about their desire to see head counts trimmed — and trimmed further still.

>To that end, critics argue that simple greed is driving the layoffs; they point to the tens of billions’ worth of stock buybacks the tech companies authorized last year. The Verge’s Liz Lopatto spoke with industry analysts who said that tech companies are evaluating their bottom lines differently, and concluded that they’re doing layoffs mostly because everyone else is, even though layoffs actually often cost a given company money. And the fact all these layoffs are happening in such rapid succession gives the companies some cover — making them seem elemental, inevitable.

> Company bikes sit outside an office building on Google's Mountain View campus. TECHNOLOGY AND THE INTERNET

>So what’s really going on here? The answer may actually be pretty simple.

>“Controlling labor costs via periodic layoffs is like breathing for Silicon Valley: cyclical, necessary for life,” Malcolm Harris, author of the forthcoming book “Palo Alto: A History of California, Capitalism and the World,” told me. The layoffs, Harris says, have “very little to do with long- or even medium-term strategy except as it pertains to cultivating an insecure workforce.”

>That tracks with the economic reality we do face today, as a tech CEO might put it. Because while a recession has not yet arrived in any meaningful form, there is another economic indicator pointing to the desirability of layoffs, from a large employer’s perspective: a growing effort to organize tech workers in an unusually tight labor market.

>Tech employees’ salaries have skyrocketed over the last two years, and their bargaining power has begun to grow too. Over the last half-decade, workers in the tech industry have agitated for changes that executives have found increasingly inconvenient.

>At Google, they’ve spoken up against gender inequalities and pressured the company to drop a lucrative defense contract. At Amazon and Microsoft, they’ve protested lackluster climate policies and spurred those companies to make pledges to reduce carbon emissions. At Facebook and Twitter, workers rallied against content moderation decisions around keeping former President Trump on the platform after Jan. 6, 2021. A subset of Google employees formed the Alphabet Workers Union with the Communication Workers of America union, Amazonians founded the Amazon Employees for Climate Justice, and at Microsoft, employees at a video game subsidiary, ZeniMax, formed the first certified union ever to be recognized by the company.

>The concrete gains won by organizing tech workers so far may be relatively small, but the rising salaries and growing organizing capacity threaten the tech giants’ bottom line and the brand of executive sovereignty that’s prized in Silicon Valley. Elon Musk’s mass firings at Twitter last year, and his public demand that only “hardcore” coders dedicated to his program remain at the company, are instructive here, not least because other tech executives have said his approach was an inspiration when culling jobs at their own companies.

> Twitter headquarters is shown in San Francisco, Friday, Oct. 28, 2022. Elon Musk has taken control of Twitter after a protracted legal battle and months of uncertainty. The question now is what the billionaire Tesla CEO will actually do with the social media platform.(AP Photo/Jeff Chiu) BUSINESS

>Workers in an industry that had long been famously union-agnostic at best had been forming bonds, organizing and developing solidarity. Layoffs of this scale and suddenness can be a blow to that process.

>Affected tech workers told me that they were struck by the randomness of the firings; senior members of staff in good standing, brilliant colleagues with sterling performance reviews, all shown the door, with little rhyme or reason. Many seemed to wonder why they were spared while their peers weren’t.

>Alejandra Beatty, a technical program manager at Alphabet subsidiary Verily, told me it was “very much a surprise” when she was laid off this month. For one thing, she had known herself to be in good standing at the company. “I was high performance, considered one of the pillars of the local community in the Boulder, Colo., office. Now I’m not even allowed to go back in, not even as a visitor,” she said. Beatty was also struck by how many of those let go were performing functions crucial to keeping “core products” working.

>If there’s one thing that firing people in a large-scale and seemingly random way accomplishes, it’s instilling a sense of precarity, even fear, in those who remain.

>“It’s completely devastating,” said Skylar Hinnant, a senior quality assurance tester at Microsoft’s ZeniMax subsidiary, “both to the people who are laid off and their families, and their colleagues, who felt, for that day and will feel it a long time after, that they’re at risk.”

>Hinnant said he knew plenty of people who lost their jobs across Microsoft — everyone does. “You can be the most important engineer at your job, you can be an awesome programmer, at the end of the day if the algorithm wants you gone you’re gone.”

> In this Sept. 24, 2019, file photo, a woman walks below a Google sign on the campus in Mountain View, Calif. Google is in the crosshairs of U.S. antitrust regulators who accuse it of wrongdoing similar to charges Microsoft faced 22 years ago, when Google was starting out in a Silicon Valley garage. How Google grew from its idealistic roots into what regulators describe as a cutthroat behemoth is a story shaped by unbridled ambition, savvy decision making, technology’s networking effects, lax regulatory oversight and the pressure to pump up profits. (

>“I think it’s waking people up to some realities of what the industry is really like,” Alejandra Beatty said. “We are workers. Even though we have benefits and we are highly trained — we’re still workers. We can still arbitrarily lose our jobs like anyone else.”

>Beatty had been a visible member of the AWU, advocating in media interviews for reproductive rights in the workplace. She was always civil and constructive, she says, and felt her suggestions had been well-received by management. Now she thinks a lot about whether her termination was retaliatory. Ultimately, she decided the layoffs were too large, too automated to have targeted her directly. “I think I was yet another number in whatever crazy algorithm the consulting company used to figure out the cuts,” she said.

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12ft.io/add-paywalled-url-here

NGL, commenting “paywalled” in an article about mass layoffs is quite meta.

Here is the non-paywalled version

https://12ft.io/proxy?q=https%3A%2F%2Fwww.latimes.com%2Fbusiness%2Ftechnology%2Fstory%2F2023-01-30%2Fcolumn-how-big-tech-is-using-mass-layoffs-to-bring-workers-to-heel%3Futm_source%3Dreddit.com

Unions might help but I honestly dont know how this will play out.

They arent exactly workers in the traditional sense.

"As in you unionize? Fuck it I'll just hire someone from India or Estonia to do your job. Still want to unionize?" Then throw in the typical "I'll make sure you will never work in this town ever again!" except instead of town, they might say something like industry because of how irrelevant location is.

The current democratic government literally stepped in to crush a union.

And how do unions prevent layoffs?

I’m a dev and I won’t join a union. Two years is the maximum I would work at a company - big Google or tiny startup, on average it is 2 years per company (for me). It is quite common in the tech industry. I don’t want to be bound by salary ceiling based on seniority, like so many other unions work. I don’t want to pay union dues. There probably other reasons as well. Like heck, if you got canned, really what seems to be problem here? There are lots of job for techies out there. It probably won’t as much as Google did, but that’s fine, still it ain’t like there aren’t jobs out there.

They're also trying to compete with AWS and a number of other cloud services - they would have been hiring a lot regardless

It is and it isn't, since it wasn't the new hires that got fired exclusively.

The correction is happening in the market. During the Trump era companies converted tax money into buy-backs, and did other things that inflated the price with no real growth to back it. But everyone did it, and the interest rate was low, so investors felt ballsy and went with it. In 2020 it got even worse, and a recession hit everything, except the market, because everyone was doing it, and the interest was low so investors felt ballsy and went with it.

Then in 2021 the economy lurched again, and things started moving. The interest rates were low and the investors felt ballsy, so the market stayed waaaay overinflated. But investors refused to believe it was their fault. The market reacted by, rather than lowering the market, making everything more expensive until the market was effectively cheaper. But it couldn't be the investors fault, so people assumed that supply was limited due to issues with the distribution. But as distribution and supply improved, the inflation kept, but it couldn't be the investors. But something had to be done, and so interest rates went up. When interests rates went up, investors weren't able to leverage their investment against loans as effectively, so they started feeling less ballsy, their coke waning, and so they started selling, which lead to a snowball effect. The investors couldn't have done anything wrong, so it couldn't be a market only correction "the recession is coming" said Chicken Investor and everyone said the same. The prices kept falling, but the rest of the economy was doing just fine.

Now investors don't use economic models, that is they are not based on theory and science to be proven to actually describe the way things work. Instead they use financial models, which play it a bit more loose and are more of general guides on how the economy works. So we have a model where companies decide how much of a company's valuation is real and how much speculative. That is if you buy a $100 stock, it may be that if the company folded right there and then you'd get, at most, $80, and the other $20 were bets on the future (that didn't pay off). They use a model that goes backwards, they look at the revenue and profits the company makes, they look at the capital they have, the number of employees, etc. and from it create a base valuation. When the stock price is higher than valuation, that means there's speculation, how much investors are willing to do depends on how ballsy they feel. When the stock price is at-price it's considered "a safe bet" basically a good place to put your money that will have some returns and is good as a backup. When the stock is worth less than the minimum valuation, people assume that the company is imploding, losing value and worth getting pennies on the dollar, and therefore will be worth even less in the future. When the economy is doing well this model is very good, it basically is about company size vs how people feel about betting on it, a clash between reality and observation. But it doesn't capture all cases. Like using a barometer to find out how high above sea-level a boat is and realizing that if it lowers that means the boat is sinking, unless it's just the tide going down. Same here, the model doesn't capture cases where there's a large market correction, and it really doesn't work well in these cases. But that would be admitting that the investors got greedy, and the investors did not do a mistake, it must be the employees that got it wrong!

And so companies do layoffs. There will be those that try to make excuses, to say this is a solution to a real problem, which is absurd because there isn't. They will say that the companies over-hired and are losing money for it. But the profits and information doesn't show that at all. The companies did over-hire, and therefore should set a period of internal-optimization with low-hiring rates, and a focus on performance and project analysis. So by the time the market stabilizes and the correction is over, the companies would find themselves roughly where they should be. The need for mass-layoffs is only to keep investors happy with their arcane (at least to them, many don't seem to understand the logic behind them) models. But of course, this would mean that it's the investors who are being too greedy, and they can't be wrong. The thing is this won't prevent the hit to investors for the next quarters. It doesn't mean that investors won't get their money, we were just 4 months ahead of schedule. This is like getting your May paycheck deposited on February by accident and then withdrawn. It just isn't their money yet but it will get to them. But the investors can't be wrong or impatient in their greed. People will argue "lowering the amount of employees will result in lower prices", except, of course, we already had very low levels of unemployment way before COVID, and inflation wasn't hitting hard. Sure there was overhiring in 2020, but this itself was a symptom of over-valued companies, no the source of the problem. And even then inflation was driven a lot by companies demand, based on their high prices. As long as companies are not reducing their demand on products and services, we won't see this go down. The other thing is that employee expenses are pretty small compared to other day-to-day sources of costs, yet we are not seeing a rush to cut on those down (because those actually harm the company's profit in the short-term). That is, once you look at the bottom-lines, the same problem of limited profit growth (while revenue has been booming) is still there. The reality is simple: you hold the boat, keep it slow, and rake in the huge increases in profit from just internal optimization.

Companies are not really making an effort to reduce the impact on the long-term, and this solution won't quite make it work. Markets reach equilibrium really well, but they can do this in all sorts of fashion, and will destroy everything in their path. But hey, the investors do not get greedy, and this isn't their mistake. Somehow it's all for us right? Either way, at least I can say this (being one of the many people laid off) this too shall pass. It's just the flow of things.

The media has really been pushing the corporate agenda hard and it's embarrassingly transparent.

Social Media is only amplifying the message. So many tech subs are parroting the same buzz words we see in headlines.

Meanwhile the comments are mostly "glad im safe" and "my employer has plenty of openings still"

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How many of those jobs can match the salaries that these tech companies had? Tech hiring largely froze last summer. Sure, developers will find other jobs, but there are many people who will struggle to replicate what they had.

Pretty much, though as someone who has worked in tech since 2006 I'm seeing something different now: lots of foreign contractors.

We've always had a big cohort of talent in India working alongside us as longtime employees but now I'm also seeing a ton of contractors from places like Brazil, Argentina, Poland, Mexico, etc.

At my company we're told this is our new way of doing business which means reduced US hiring for the extended future. A bunch of my US peers are experiencing the same thing.

Contractors are taking roles in analytics, UX, project management, change management, media production and some product management roles. Development is mostly staying in India.

My manager said the business English proficiency of foreign contractors has vastly improved in the last decade and the company is going to be saving a ton of money.

I dunno. From my lowly position it seems the winds of change are picking up.

To be followed by the great student loan debt default. The student loan asset backed securities scam makes home loan asset backed securities scam of the early 2000s look like a walk in the park

Lol at 1/4 the salary before taxes

Welp...

Traditionally tech always seemed like a safe harbor compared to other industries. Its also a sign of recession when the tech bubble pops, if late 90s/2000s are anything to go by.

There is also something to be said to hold onto good workers if you think you will need them in the near future. Treating highly skilled workers like seasonable mall Santas is not good either.