The U.S. economy is booming. So why are tech companies laying off workers?
(www.washingtonpost.com)
from L4s@lemmy.world to technology@lemmy.world on 04 Feb 2024 18:00
https://lemmy.world/post/11563376
from L4s@lemmy.world to technology@lemmy.world on 04 Feb 2024 18:00
https://lemmy.world/post/11563376
The U.S. economy is booming. So why are tech companies laying off workers?::undefined
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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.
Blame AI and share prices.
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.
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.
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.”
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.
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.
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.
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.
I’m old. These rates don’t seem high at all. It’s been higher for most of my life.
Congratulations on being old e ough to buy property when it was cheap.
For the rest of us, we all adapted to the low interest post-08 world. Now, we need to adapt to the higher interest post-21 world.
Since the vast majority of homeowners aren’t doing so with cash, the total cost of a home is the price over the lifetime of the mortgage. I’d be fine with the higher interest rates if the base price of the home was lower, or vice versa. However, the houses have gone up in price AND the interest rates have gone up meaning that the total cost has risen substantially.
Some of this is due to scarcity caused by the 2008-9 recession, people couldn’t afford homes, so the amount of new construction dropped and the workforce adjusted. Meaning that now we’re behind a few million homes from what we should have built by now, and that scarcity is driving prices up. Combine that with the high interest rates causing people to want to hold on to what they have instead of moving (so they can avoid the interest rate and housing cost jump) means we have even less inventory that normally.
I’ll probably have to move for work soon, and I’m not looking forward to swapping my mostly paid off 4% home with a more expensive higher rate one in a different area.
Oh, home ownership has been out of reach for me and everyone I know my age in my part of the country since before I graduated from University.
How’s it working out for Elon?
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.
<Brad Pitt through tears and a contorted face>
“What’s in the box?!?!”
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.
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.
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:-(.
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.
But, like, not yet? When will you declare it useful so I can go back to using AI in my daily life?
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.
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.
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.
All hail the Line!
I think that’s synonymous with “all hail the shareholder”
The line has spoken, it said “I am a line.”
I am a stick.
But you could be
firea green up-lineBut I am a stick!
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 call bullshit. That is not what anyone sees.
As a result, earnings have outpaced increases in prices such that real wages have increased since before the pandemic. Real weekly earnings for the median worker grew 1.7 percent between 2019 and 2023.[3] This means that one week of pay for the median worker now buys more than a week of pay did in 2019, despite higher prices. Furthermore, as shown in Figure 1, the increases in earnings are by no means concentrated at the top: in fact, they skew toward the middle class and the lower end of the income distribution. The 25th percentile of the wage distribution saw their nominal weekly earnings grow by $143, from $611 in 2019 to $754 in 2023. When adjusted for inflation, this amounts to a 3.2 percent increase in real earnings. Real earnings increases were particularly strong for the median Black and Hispanic Americans, who saw increases of 5.7 and 2.9 percent, respectively.[4]
Data doesn’t lie.
I think one problem with the “vibes” everyone is giving here is that most people aren’t as poor as they think they are. I suspect a lot of people on this site would not believe that one third of American households make less than $50,000 a year, and 8% of American households make less than $15,000 a year.. If you’re making $80k and struggling, it can be tough to hear that “the poor” are doing better because you think you are one of the poor.
I appreciate a data supported argument, and love that you actually linked sources.
One thing that I feel is missing in most of the linked analyses is that inflation has also hit unevenly, and the price of basic goods has increased significantly more than overall inflation. Which would explain why households still have less disposable income, also the mean debt burden is much higher leading to loan costs being more common.
“Real wages” takes that into account. The term “real” (as in “real wages”, “real earnings”, etc) means the increase in money minus the increase in inflation.
So for example the top paragraph says there’s been a “3.2 increase in real earnings”. That means there’s been a (pulling numbers out of my ass to illustrate): 7.5% increase in earnings, but also a 4.3% increase in inflation.
But price increases of cereals ( bread, pasta, grains, etc.) increased by about 7,5 % last year alone, which is more than the inflation, and more than the increase after inflation.
That’s where people might complain. They still can’t afford food, as food prices increase faster than overall inflation
That’s a fair criticism, and the Biden administration is looking into more specific action with regards to grocery stores. More work needs to be done to bring food costs to a reasonable level. I’d also support a revising of the CPI to better account for necessities like food and housing.
Data can absolutely be misleading. Liars, damn liars, and statisticians, as they say. And trying to produce one number that somehow represents everyone will never work, whatever economists want to think.
The fact is many of the super-poor are doing better because government benefits like social security are indexed to inflation, meaning they are actually keeping up.
Personally, my real earnings are down over $10,000 a year. My whole industry has stagnant wages. Don’t piss on me and tell me it’s raining.
Well it’s a good thing no one is attempting that?
You’re an outlier. Understand that you’re not the center of the universe, please.
Oh, what do you call a statement like “The US economy is booming?”
Are you going to tell me I am the only one struggling and not seeing wage gains? Do you want to tell me my experience does not matter?
Do you just not understand the concept of other people existing?
Yes. You apparently do not. So long as some people do good, everyone else that is struggling can fuck themselves, it seems.
So unless a policy helps literally everyone, you’re gonna say it’s not good enough?
So as long as a policy helps some people, we don’t have to try and help more?
Who says we’re not?
I see little policy effort besides what was already done. What proposed policies can you inform me of?
I don’t really know how to address such a mind-bogglingly stupid comment. You see the policies that exist, but you refuse to believe that any new ones are being proposed?
I’m gonna bet a billion dollars that you have never actually looked for upcoming policies. And now, because you haven’t seen them (because you haven’t looked), you steadfastly believe they don’t exist, and you demand I show them to you? What in the goddamn hell?
You take a room with 10 poor people in it. Joe Biden comes in and says to person #1, here’s twenty thousand dollars. Hope that helps. Then he leaves. Then he comes back in and says to person #2, here is twenty thousand dollars. Hope that helps. Then he leaves. Then he comes back in and says to person #3, here is twenty thousand dollars. Hope that helps. Then he leaves. Then you, person #6, get all pissy because clearly he is gone forever and will never give you twenty thousand dollars.
You’re like an infant.
I’ve looked. I’ve seen little. But you don’t seem to have looked, since you are so confident they exist but can’t name one. Instead you just call me names and resort to ad hominem attacks.
You seem to be under the impression I am supporting Trump or something. I despise him and every Republican.
But that doesn’t mean I’m not pissed when I see prices skyrocket while my pay only goes up 2% a year.
Well if you’re dumb I’ll call ya dumb.
Look, federal negotiations are usually kept quiet until a final deal is announced, but even some basic googling brings up a few examples of stuff that’s in the pipeline:
Increased child tax credit
Eliminating “junk fees” at colleges
Removing the loophole that allows banks to charge overdraft fees
Requiring Medicare and Medicaid to respond to prior authorization requests within seven days
The Biden admin is constantly working towards a variety of legislative deals and policy changes that help all kinds of people.
I have and will have no children
I’ve been graduated from college for 18 years
I’ve never paid an overdraft fee in my life
I am 24 years from being Medicare eligible
I don’t think I’m that unique. Your below policies will help many, but also will not make a difference for many. Sorry I am not pleased being in a perpetual donut hole. Too poor to be comfortable, yet too “rich” to get help.
I mean, I didn’t know any of that about you
Didn’t say you did.
I just want you to realize there are still a ton of us struggling, regardless of what the official numbers say. For a lot of us, or pay has not caught up with inflation, and there is no sign of it happening soon. Necessities continue to go up faster than inflation. I don’t care that TVs are cheaper, I don’t need a new tv, but I do need to eat.
It is more dangerous this November than people realize.
Now, I’ve upvoted some of your comments here but I’m gonna stop you on this one. Yeah, the economy should support literally everyone. Yeah, there should be change as long as there’s any poverty. It’s called having a floor and basic human dignity. Does every single policy have to be aimed at the worst off? No. But you came dangerously close here to saying that it doesn’t matter if only some people are suffering.
Well that’s fucking dumb. The whole point of what I was saying is that this mythical “make everyone not poor” policy doesn’t exist. Different groups require different solutions, and some are more politically tenable than others, and some have unintended effects that result in other groups being worse off.
Demanding every policy help everyone and saying it’s useless if it doesn’t is more stupid than I know how to put into words.
that’s what we’re trying to get you to do!
wat
At this point there are more people trying to reject data based arguments with that cliche than there are people making bogus cases according to it.
I’ve been in the 1/3 my whole 36 years I’ve been alive. To me the economy has failed.
Ah, I see. You are poor, therefore everyone is poor. Makes sense.
What is it with you people coming here and making the most absurd statements? Seriously fuck off back to Reddit along with your strawmen. You want to know why I’m poor? Graduated high school and studied to be an electrician,then the 2008 housing bubble collapsed so I went back to school to learn IT but nobody wanted a fresh out of high school no experience 20 something year old in an oversaturated market so all I got were shit, low paying jobs for 10 years. Now that I’ve been trying to learn programming to get out of my current dead end job for the last 18 months and the tech sector is firing off employees left and right. The economy failed. Pull your head out if your ass or stop being a corporatr shill trying to astroturf real problems away.
.
You can say that the economy failed for you. Not that, to you, the whole economy is a failure. That makes no sense.
$80k is a struggle salary where I live but only if you have the ambition to own property and raise multiple kids. The common narrative is that everyone could do that on manual labor wages back in 1950 but that’s definitely bullshit.
The real travesty is that my kids teachers are pulling down $25k - absolutely ridiculous.
Not only that: once, I went to take the qualifying exam for California teachers and the room was full of people yammering about that sweet $25k they were about to start making in just two short years when they get their credential. That’s poor.
horse shit. if you wanna play the twist the numbers game, do it in an article on your blog. booooring
I give data and sources below, but I’m sure that’s too booooooooooooring for your tiny little brain.
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.
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?
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)
Maybe because, I dunno, tech is not the whole economy, you self absorbed tech bro dumbasses??
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.
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.
Booming for the rich?
Because they hired too many
“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.
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.
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
…Searches for the word “union” in the article…
Yeah it’s propaganda.
Greed
Holy fuckballs. The economic illiteracy in this thread is shocking. We need civics and economics taught in highschool.