What’s Really Behind The Tech Layoffs?
Much has been made recently of the apparent disparity between layoffs in the tech sector and some of the most robust labor market data in US history. Job cuts are piling up at a veritable who's who of tech firms. At this point, I've personally lost count, but suffice to say at least 100,000 people have been impacted by the decisions, which, generally speaking, were the result of over-hiring during the pandemic. It was tempting to extrapolate COVID-related trends, which is precisely what tech e
9 thoughts on “What’s Really Behind The Tech Layoffs?”
So investors are to blame for layoffs? CEO’s know that laying people off will cause a rally that they can convert into income for the business so they are giving the market what it wants? As in, as much as we (the voters) complain about the government not making sure that there are enough good paying jobs for everyone, we (the investors) actually incentivize job cuts.
Seems like announced layoffs are becoming the new share buybacks. May be time to tax them too.
I would imagine that most of the tech layoffs will have no trouble finding jobs elsewhere. There may be some adjustments to the new income, but that’s to be expected.
My daughter has spent the last ten years working for the tech division of a digital ad agency, a division which develops, stores, and distributes data to the company’s agency clients. The firm was acquired a few months ago. The acquirer messed up the data services piece and so it is essentially eliminating it and laying off the staff. I’ve seen this with other tech companies as well. Layoffs are not just a matter of cutting a percent of employees in an area, it’s often knocking out whole areas and generally cleaning house and/or trimming the portfolio. My daughter has never had trouble getting a worthwhile job before but as one hits that age with a five in it and has held a higher level position (managing six teams), the market is much tighter. Right now she has severance and has said it’s time for a sabbatical. Her big decision coming up is that it is time to be a VP and she has said she is not sure about that idea. Me, I had tenure and an endowed chair to the end.
What were you a professor of?
This is all about placating the shareholders/investors and reducing the size of the employee resource high tech companies have been accumulating over the past 2-3 years. A real layoff would be 20-30% of the workforce and most of the announcements are 5-10%. I would watch for additional layoffs in the coming quarters in high tech.
I think you are close to right. Equity institutional investors like to see bodies falling out of windows. Bond investors like it considerably more…I haven’t done a study, but I imagine you would see a pretty strong correlation between stock price decline and layoffs going back to the seventies…I see institutions having a shorter horizon with each passing year since 1979..(when I started)
Check out #10 on this list: https://www.youngmoney.co/p/11-things-0-interest-rates-caused
When you hear tech exec’s talk about return to office and increasing productivity it makes you wonder how much of this was going on. Especially with a post-Covid “YOLO” workforce, it may explain why spending has been holding up as it has.
I think companies appreciate Wilson’s margin compression outlook more than investors do.