I wouldn’t be surprised if there was an element of this here.
To be “fair”, investment banks are also in the middle of layoffs and the Stanford GSoB article is actually by a professor less interested in the ‘psychology of business decisions’ than in the psychological impact of layoffs on the workforce. IE, his axe to grind is the social cost of the layoffs, rather than the necessity of the layoffs, and his position is that, very handwavily, layoffs are generally not necessary.
When your money quote is “layoffs kill people”, you’re probably not going to get a lot of traction. I’d be more about the broader at-will business culture in the US vs some EU countries, that effects not only hiring and firing but also promotion and advancement - maybe it’s just me, but companies seem to more frequently promote out than promote up (though this is just a gut feeling and not based on data). At-will business completely changes the social dynamics of a career.
As long as it’s consensual.
There was a real lack of citations in that part of the article that kinda bugged me.
Layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors, with companies paying the contracting firm. Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. Layoffs do not increase productivity.
I’d really have like to have seen the numbers there, because that’s exactly what the “other side” will argue - that it is a strong motivation for C-suite execs for short term gains. He could very well be right, but an academic should “show their work” instead of making assertions without evidence.
There were many other nice references for the harm that is caused to workers that I did appreciate!
I get the impression that the US tech sector has fallen into a pattern of overhire → layoffs → overhire → layoffs. There’s even an argument that it helps you get a higher quality workforce, albeit possibly a lower morale one.
Layoffs certainly aren’t a necessity for most of these companies, but neither is this a sinister scheme - it’s simply the way they manage their workforce. It seems synchronised because it’s all driven by the same economic indicators and the desire to avoid having to report margin drops in earnings call when revenue misses targets.
I dont know what a healthy model looks like, because there needs to be some way of trying to get genuine poor performers out. Layoffs are a very blunt, survival of the fittest, creative destruction type mechanism to do it though. But it does chase the metrics wall street is looking for so that’s why things are the way they are.
I don’t think there is a repeating pattern here. Google and Facebook never had layoffs before. Microsoft last had them 14 years ago, when they were a company less than half their current size.
Well Adam Smith laid it out a long time ago. The whole point of a system where the majority of people sell their labor in the marketplace is that those needing that labor can adjust their workforce to align with their needs. That means hiring and firing at will; it was in contrast to the historical patterns of people tied to the land, lords responsible for their serfs, slaveowners having to maintain their slaves, etc. Take all those once bound workers who by now were flooding into growing cities, quantify their labor as a form of capital, and have them offer it up for sale in a free market for people who had physical capital but no means to work it to bid on.
Of course, there was also a hell of a lot more labor than there was need for it, so the system was most definitely skewed one way, but the basic outline has not changed since then. Layoffs are not an aberration, rather, capitalism does not work without them. Which should tell you a hell of a lot about capitalism and why it sucks in so many ways.
This Tom Warren tweet was looking at that big picture too, I think.
https://twitter.com/tomwarren/status/1615745289020751872?s=20&t=uxGadYW8n9fJ8d0IAga1Cg
Spotify cutting 6% why not everyone else is doing it
From what I gather, the income in the Big Tech world is very lucrative and thus compensates a bit for the risk of the hire & fire world.
That example is an average of 112k for a JUNIOR position at apple. Thats almost double what I get as a senior engineer with over 20 years experience with a big european broadcaster. Due to the laws here, I have a more stable job but alas I earn a lot less.
I realize we’re all stuck in these systems and we’re all out to get the most money and don’t want to give up any advantages, but in a market place where there is basically ZERO security, I’d make damn sure I don’t actually spend that big pile of cash and set aside a huge chunk of it for times like these. So, though I’m sympathetic for anyone losing their jobs, I reckon they are well compensated to live with that risk.
(guess the bottom line is I’m just jealous and would love to earn salaries like that! But then I’m VERY happy to have my secure position and wouldn’t want to live in a hire & fire market…)
Have to keep in mind that the cost of living out that way is really damn high as well, when looking at the salaries.
Yeah, I don’t know the specifics of where you live, but over here (Madrid, not exactly cheap by Spanish standards) salaries can be stretched twice or more than in a US high-cost-of-living area. For example, SF is 70% more expensive than Barcelona, without rent, but rent is 3x as expensive (and Barcelona is the most expensive Spanish city to rent)
That said, 55k€ for a junior position (assuming halved cost of living) is very high over here too, but not so absurdly so.
Out of curiosity, what is rent for a typical 2 bedroom apartment in Barcelona? Here in Portland you would be pretty much looking at $2000+, more for downwtown, but in many places around Silicon Valley you would be looking at 3 or even $4k a month.
Average would be about 1.000€ (500€ per room), but it will vary a lot depending on neighborhood. Some of them would be much more expensive, of course.
For Madrid (cheaper, but I know it better) you’ll be looking at 800€ on average in the city. If you want to be in the city center, but not in super expensive or cool neighborhoods, likely 1200€ for a nice place (clean, good state of preservation, relative modern appliances…).
Even where I live, outside of Burlington, Vermont, which has very little real industry and where average incomes are not high, you can expect to pay over $1500/month for a one-bedroom apartment that probably won’t include utilities. A two-bedroom place, which is probably going to be a house at least, might run you well over two grand a month to rent. My mortgage for a small (less than 1000 square feet in the non-basement actual living areas) three-bedroom one bath house is around $1700/month, a comparative bargain.
Thanks Juan!
@Cormac tnats why. Here you couldn’t even get a studio apartment 20 miles outside of city limits for $800, and you’re going to be 45 minutes from the city for one for $1200. Even Chicago, where I grew up and far cheaper, and other midwestern cities you would be out of luck for anything less than $1000. That’s what studio apartments in the further suburbs start at.
In Silicon Valley that salary you make wouln’t even cover rent over an hour from the city.
In cheaper smaller cities here (100k people, but provincial capitals, not outskirts) rooms go for 200-250€, studios (there are very few) 1.5x that and 2 bedrooms for 400-500€.
Spain is cheap though. London is more comparable to SF/Portland in terms of housing costs, and the last one-bedroom place I rented, which was not nice, albeit relatively central (zone 2 for people who know the city), was £1,400 a month 8 years ago. Yet the mean salary is £42k and the median is £32k. It’s not a job market I’m directly familiar with but a quick google search suggests it’s not much higher for programmers.