The U.S. economy is booming. So why are tech companies laying off workers?
The U.S. economy is booming. So why are tech companies laying off workers?
Google, Amazon, Microsoft and a raft of others fired thousands of workers in January, continuing a layoff wave that began in 2022.
The U.S. economy is booming. So why are tech companies laying off workers?::undefined
Using out of touch metrics that say nothing about how the median household is doing is not helpful.
On the other hand if you measure by how much the shareholders are getting richer, the layoffs are exactly why the economy is considered booming. Record layoffs lead to record short term profits for the wealthy few.
Combined with billions in weapons being ordered and produced, oil producing competition being crushed, while gimping Europs growth. The Chinese hurting from the Evergrande debacle and the lithography embargo.
Plenty of reasons for the US as an entity to celebrate.
Layoffs hurt GDP generally, but GDP doesn't really care as long as "value" is created elsewhere. Like you said, none of the measurements they use care about the median income. It's usually just generic measurements of "value" that don't mean anything for the people of a nation.
It’s pretty clear to me that many companies are jumping on the layoff bandwagon right now since so many others are doing it too (doesn’t look as bad if your layoffs are drowned out in the noise). Easy way to increase profitability (on paper) and not look quite as bad if “everyone else is doing it.”
Laying people off is a way to juice the stock price in the short term. So perhaps the "economy is booming" because of the layoffs?
Absolutely, layoffs are exactly why some tech companies can boast of record profits.
The stock market isn’t the economy.
The same reason everything costs more without there being inflation, greed and the never ending desire to make the line go up. At the end of the day that’s all a publicly traded company cares about. Line go up. They will do whatever they can legally, or hidden from legal scrutiny to make that happen.
The US Economy is only booming for rich people.
The past 40 years have shown me that no matter how well the economy is doing in the news, it doesnt mean shit for most Americans.
That does not explain it either
Wealthy shareholders and C-suite executives are trying to squeeze out as much profit as they can. Their boom leads to bust for the rest of us.
Actually the bottom 50% have seen the most wage growth.
I see, you forgot to say Union and corporate soulless husk. They can't be bothered to upvote you on just facts alone.
The job market is trying to correct but it's going to take a long time.
After a decent inflation push blue collar wages have to come up or people just starve to death and people aren't very fond of that.
Honestly some of that lower-end boost is probably work from home bolstering the job market is bringing white collar jobs into areas that are deficient.
What I haven't figured out yet, as hell New York City and San Francisco haven't managed to completely outsource all their work to Kentucky, Ohio and Tennessee. You should be able to hire developers out of there for less than half the big city rates.
The answer is that in this context "Economy" means the stock price of billionaires' vested companies, not the prosperity of a common citizen (a.k.a peasant)
I asked an executive this very question, and he said that the board was getting pressure from stock-holders to reduce headcounts, and justifying that pressure by pointing to other large companies who had already undertaken massive layoffs, and the resulting rise in their stock prices. In this way layoffs become a game of follow the leader -- or like a contagion. "Google just fired a third of their workforce, why are we doing that? We should do what they did, look how successful they are."
Executive decision-making is like ChatGPT, but even dumber.
Ugh well hopefully there will come a point when there's not actually enough people to layoff anymore. Then maybe the game of follow the leader will stop. Or maybe another one starts up where they start over hiring again, who knows
It’s important to remember that for tech companies, labor is the single biggest cost by far. In many cases it’s the only significant cost. Tech companies don’t buy raw materials and sell finished goods. They hire expensive people and sell finished goods.
So layoffs aren’t just show. They actually count. And in a speculative area of the economy that’s still largely held up by lending, and where interest rates are sky high, it is in fact truly meaningful to show that your primary costs are under control. There was also legitimate frenzy hiring because of COVID that a lot of tech companies have to face the music on now.
This isn’t all empty theater for rich people. It’s actual cost of doing business math.
Money isn't free anymore and they have a lot of debt
And
Elon broke the seal on firing huge swaths of a tech workforce to make your numbers look better.
Elon broke the seal on firing huge swaths of a tech workforce to make your numbers look better.
Don't give him too much credit, it's hardly the first time the tech sector has gone through this cycle. Elon had to do it because he massively overpaid for Twitter. The fact that his layoffs came at the front of this wave is probably just coincidence.
I wouldn't say coincidence. I'd say the others were wanting to do the same, but held back because of bad press. After Elon did it, they had an excuse that took the heat off.
I really think a lot of this is "the other popular kids are doing it" and boards and VC saying basically the same thing to the c-suite.
You need more upvotes.
High interest rates are here, and it's likely to be some time before we get back down to the 1% interest rates we saw during covid (or even before).
Companies are shifting either to real or imagined pressures of the stick market. And those pressures are less about chasing unlimited growth and want to see some return.
Ergo. Layoffs. Meta producing dividends.
If interest rates stay high, I'd expect to see large megacorps shift more and more to profitability over growth.
How’s it working out for Elon?
Booming for the rich?
- Companies value short term gains not long term projects
- COVID overhiring
- Salaries are too high for peons, they are trying to readjust
- Market is spooked due to the interest rates and SVB collapse
- New product offerings are not exciting consumers
- The belief AI developments can offer performance improvments
- The belief AI developments can weather regulatory scrutiny
"The stock market is booming". Fixed the first part of the title for you.
As for why all of the layoffs? Because in the short term it usually causes the quoted bit above.
It's a bunch of stuff.
The big companies all seriously upped their hiring game when COVID sent everybody work from home and all of a sudden a nice, cheap, workforce opened up all over the place. It's not that they're overstaffed at this point, but now that they can say look they're doing it over there too! The market's rough! A lot of big places have decided it's a good time to shed souls. They now have the opportunity to cut the more expensive people and the underperforming people, at the same time they get to increase their margins and improve their stock performance.
Interest rates are up so money's not free anymore (for the time being), advertising on the internet's getting harder due to legislation and public sentiment. SEO is getting harder. Everyone's dumping every available dollar they have into AI hoping to win big at buzzword bingo. Wages are starting to catch up to inflation they're paying more for what people they have. And honestly it's just an easy time for them to grab an extra couple of bucks.
A great number of the big guys probably are about to take a bath in corporate real estate.
There's also a another possible recession sitting around the corner. I believe there's already talk of the feds cutting rates again for a bit to try to side step it.
Honestly most of the stuff isn't really that new. But when Microsoft decides to do it, Google says hey that's a good idea let's do it! Everybody else is going to jump on board. Three - six months from now (assuming we're not mid recession) they'll probably be taking out billboards and reengaging bring a friend incentives again.
And honestly it’s just an easy time for them to grab an extra couple of bucks.
This is what it is. You didn't have to say more than this. The soulless husks that we know as directors want more money for themselves.
Tech needs to unionize. The only way to fight this is just to have the entire workforce walk out.
I've said this for years but my colleagues are all hooked on chasing payrises for themselves and won't work collectively because they think it'll hurt them doing that.
Because they’re greedy cunts and they want more profit.
because capitalism is not about the workers, not about the quality of the product, and not about helping anyone. It doesn't give a shit about anyone except whichever monkey is on top, and would argue vehemently against the suggestion that it should.
I'd go so far as to say that what it IS about, is not being human. Perhaps it's about becoming a dragon? but even that implies some degree of personality. Capitalism is unrelenting, banal evil, for the sake of being evil, with an endless litany of specious lies to justify its utterly retarded bullshit.
I've always said capitalism and corporations are anti-social. They make society worse for profit.
The layoffs are precisely why the “economy” is “booming”.
Nah, reducing costs in one relatively small sector doesn't affect the GDP or other national-level metrics.
I could see how you might think that if you're really bad at math and clueless about how our economy works. Unemployment is only 3.7 percent, nationally.
Schrodinger’s economy
You have to open the box to find out if the economy is alive or dead.
I'm told the box once belonged to Pandora.
**
“What’s in the box?!?!”
This is the best summary I could come up with:
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.
And where we can find efficiencies and do more with less, we’re going to do that as well,” Amazon Chief Financial Officer Brian Olsavsky said in response to a reporter’s question during a Thursday media earnings call.
Unable to get back to the showstopping revenue growth of years past, tech executives are opting instead to put a positive spin on things for Wall Street by continuously cutting high-paid workers instead.
Even with several years of experience in software engineering, data science and manufacturing, including at Microsoft, laid-off Amazon contractor Jennifer Pearl said landing an interview has been tough.
For a former Meta user experience researcher in the Bay Area, who spoke on the condition of anonymity to avoid hurting her future employment prospects, the job hunt has been tough since her layoff last April.
The original article contains 1,321 words, the summary contains 225 words. Saved 83%. I'm a bot and I'm open source!
I can summarize more. Greed.
Because they hired too many
This corporate cycle isn't likely to change anytime soon right?
Top tier corps, boards, Cs, ultimately care about share price and growth right?
Isn't it tied to their pay incentives? To keep their contracts and incentives, they have to grow or reduce costs.
They make bad choices or bets among the way, no problem, just reduce costs and still meet the metrics. Only people who pay seem to be the workforce, right?
Or am I oversimplifying?
Even the state of the economy is spun these days. Who even knows at this point, depending who you ask and what factors you look at.
Let us also not forget that AI does not work. They made internal promises to themselves about how it was going to radically transform everything, within the next couple of quarters it seems, and when those "promises" did not materialize... the workers are the ones holding the bag (not "blamed", yet jobless all the same). So much irony at every single level. Like AI really will transform everything, but dayum give it a second will you?
In short: everything is performing fully normally, more's the pity:-(.
Let us also not forget that AI does not work.
Only someone who has never touched one would claim AI literally doesn't work. So I have to assume that's just for the sake of hyperbole because Lemmy hates AI. You probably just mean it doesn't live up to the marketing hype? Okay, thats... That's just how marketing works.
AI really will transform everything,
But, like, not yet? When will you declare it useful so I can go back to using AI in my daily life?
...Searches for the word "union" in the article...
Yeah it's propaganda.
Tech is a cost center (in most cases) not a revenue center so despite us being an invaluable resource, IT jobs are generally the first cut when investors need to be paid
I wonder if it isn't a symptom of things going from high competition environment between new internet services and older stuff like cable to more established systems of revenue which don't have as much incentive to compete for workers or market share. So maybe that's the end result of approaching monopoly.
They overhired during the pandemic adding to already bloated teams which could be made cost efficient during low prime-rate times. The tech job market is correcting back to proper levels. Schools and programs churning out new tech workers are contributing to this massively over populated job space.
Literally downvoted for the truth about the cuts. They're still above 2020 head counts.
However, there is still a huge shortage of tech workers. Just because huge companies do layoffs doesn't mean the overall hiring demand is down. Those handful of companies aren't the entire economy.
Except the overall hiring demand IS down and it has been since December.
You know it's bad when across the globe, IT systems administrators aren't even getting hit up by RECRUITERS.
In the U.S. at least, it's been a continually "in demand" field since we recovered from the U.S. housing market crash of '08-'09... right up until before the New Year.
Now I'm hearing the same thing from people in the field worldwide and that is that there's been an uncharacteristic hiring stall in a historically consistent field of IT infrastructure.
The same is supposedly true in other portions of infrastructure as well, likely because companies still view infrastructure as a cost center instead of a force multiplier.
It remains to be seen if the hiring silence will extend to full stack devs/programmers if this heavy layoff follow the leader garbage goes on much longer, but if it hits "revenue generator" departments, I'm afraid we'll start to see other companies tech stacks failing like Twitter's current functionality has.
Greed
Holy fuckballs. The economic illiteracy in this thread is shocking. We need civics and economics taught in highschool.
Blame AI and share prices.
Maybe because, I dunno, tech is not the whole economy, you self absorbed tech bro dumbasses??