Every day there’s more big job cuts at tech and games companies. I’ve not seen anything explaining why they all seam to be at once like this. Is it coincidence or is there something driving all the job cuts?
A few things happened pretty quickly.
During the pandemic, tech profits soared which led to massive hiring sprees. For all the press about layoffs at the big guys, I think most still have more workers than they did pre-pandemic.
Interests rates soared. Before the pandemic interest rates were ludicrously low, in other words it cost almost nothing to borrow money. This made it easier to spend on long term or unclear projects where the hope seemed to be “get enough users, then you can monetize.” Once interest rates rose, those became incredibly expensive projects, so funding is now much more scarce. Companies are pulling back on bigger projects or, like reddit, trying to monetize them faster. Startups are also finding it harder, so fewer jobs.
And of course, AI. No one is quite sure how much that’ll change the game but some folks think most programmers will be replaceable, or at least 1 programmer will be able to do the work of several. So, rather than hire and go through everything severance etc might entail, I think a lot of companies are taking a wait and see approach and thus not hiring.
I want to offer my perspective on the AI thing from the point of view of a senior individual contributor at a larger company. Management loves the idea, but there will be a lot of developers fixing auto-generated code full of bad practices and mysterious bugs at any company that tries to lean on it instead of good devs. A large language model has no concept of good or bad, and it has no logic. It’ll happily generate string-templated SQL queries that are ripe for SQL injection. I’ve had to fix this myself. Things get even worse when you have to deal with a shit language like Bash that is absolutely full of God awful footguns. Sometimes you have to use that wretched piece of trash language, and the scripts generated are horrific. Remember that time when Steam on Linux was effectively running
rm -rf /*on people’s systems? I’ve had to fix that same type of issue multiple times at my workplace.I think LLMs will genuinely transform parts of the software industry, but I absolutely do not think they’re going to stand in for competent developers in the near future. Maybe they can help junior developers who don’t have a good grasp on syntax and patterns and such. I’ve personally felt no need to use them, since I spend about 95% of my time on architecture, testing, and documentation.
Now, do the higher-ups think the way that I do? Absolutely not. I’ve had senior management ask me about how I’m using AI tooling, and they always seem so disappointed when I explain why I personally don’t feel the need for it and what I feel its weaknesses are. Bossman sees it as a way to magically multiply IC efficiency for nothing, so I absolutely agree that it’s likely playing a part in at least some of these layoffs.
So basically, once again, management has no concept of the work and processes involved in creating/improving [thing], but still want to throw in the latest and greatest [buzzword/tech-of-the-day], and then are flabbergasted why their devs/engineers/people who actually do the work tell them it’s a bad idea.
I’m pretty excited about LLMs being force multipliers in our industry. GitHub’s Copilot has been pretty useful (at times). If I’m writing a little utility function and basically just write out the function signature, it’ll fill out the meat. Often makes little mistakes, but I just need to follow up with little tweaks and tests (that it’ll also often write).
It also seems to take context of my overall work at the time somehow and infers what I’ll do next occasionally, to my astonishment.
It’s absolutely not replacing me any time soon, but it sure can be helpful in saving me time and hassle.
Those little mistakes drove me nuts. By the end of my second day with copilot, I felt exhausted from looking at bad suggestions and then second guessing whether I was the idiot or copilot was. I just can’t. I’ll use ChatGPT for working through broad issues, catching arcane errors, explaining uncommented code, etc. but the only LLM whose code output doesn’t generally create a time cost for me is Cody.
If you tried copilot at the beginning, it’s improved a lot since, now it’s using GPT-4.
A large language model has no concept of good or bad, and it has no logic.
Tragically, this seems to be the minority viewpoint - at least among CS students. A lot of my peers seem to have convinced themselves that the hallucination machines are intelligent… even when it vomits unsound garbage into their lap.
This is made worse by the fact that most of our work is simple and/or derivative enough for
$MODELto usually give the right answer, which reinforces the majority “thinking machine” viewpoint - while in reality, generating an implementation of&using only~and|is hardly an Earth-shattering accomplishment.And yes, it screws them academically. It doesn’t take a genius to connect the dots when the professor who encourages Copilot use has a sub-50% test average.
In my experience copilot for neovim is pretty useful if you
- Split the current window if you have anything like type declarations in a separate file
- Write a pretty verbose documentation, e.g. using Swagger.
If you expect it to whip out of thin air what you really need and not have you correct it in several places, learn to code without it first.
To add to this, at my company, we’ve received a mandate to avoid putting any code into an AI prompt because of privacy concerns. So effectively no one is using it here.
Yep as far as most companies should be concerned, using something like CoPilot means giving free license to Microsoft to all your trade secrets and code that you input.
We had the same. And you would have thought for a heavily regulated industry we’d keep it that way.
But no, some executive wonk from Microsoft flew over, gave our c-suite a “it’s safe, promise” chat over champagne and lobster, and now we’re happily using copilot.
a shit language like Bash
There’s your mistake, treating bash like a language and not like a scripting tool. Its strength is that it’s a common standard available on almost every machine because its older than most of us, its weakness is that it’s full of horribly outdated syntax because its older than most of us. If used to script other processes it’s great, but when you start using it as a language then the number of ways you can do something horrible that sort of works makes JavaScript look slick!
Are we great again yet?
I’m here to repeal and replace good things, and I’m all out of “replace”.
OMG I luv this:-) So, in your honor:
Let’s not throw the baby out with the bath water. AI had the potential to alleviate a lot of pressures of society, to free up much of our time spent doing tedious mindless tasks. We just need to make sure to use it for the benefit of the many rather than the profit of the few. I don’t want a union that wants to keep labor busy and well compensated, I want a union that keeps people safe, happy, and compensated properly
We’re like a century past innovation making our 40 hour work week into a 20 hour one
I fully believe we’ll get a standardized 60 hour work week before we get a 20 hour one. Hell, I’m pretty sure we’d relegalize slavery before we get a 20 hour work week. Your average American will bend over backwards for a chance to please “the boss” and actively rat on their colleagues for avoiding work because our cultural understanding of loyalty is functionally equivalent to boot licking.
Yeah, except there’s no way the owners would give up any of the profits for the betterment of society. Every technological improvement since the industrial revolution made productivity skyrocket, and yet the capitalists made sure working people were still hovering just above destitution. The only reason some of us have it better is because unions fought them, and that includes Luddites that would destroy the means of production.
A lot of technology problems and utilizing AI for the betterment of humanity could all be dealt with easily if we just removed a large chunk of the bloated administrative, management and ownership hogs at the top that contribute nothing, stall everything and constantly sabotage development with their politics, infighting and warring with competitors. If you remove the profit factor, corporate greed and economic shortsightedness in these situations, a lot of problems can be dealt with fairly easily and fairly quickly.
Unfortunately, we are greedy monkeys who want to rule the world and once you give power to one monkey or a small group of monkeys, they immediately try to overpower all the other monkeys and rule the jungle.
I completely agree, although I think AI is more likely to have impact marketing, communications, PR, creative and PM type roles (and there are a lot of those in tech companies). I suspect we will see a noticeable reduction in tech workers over the next decade.
Interests rates soared. Before the pandemic interest rates were ludicrously low, in other words it cost almost nothing to borrow money. This made it easier to spend on long term or unclear projects where the hope seemed to be “get enough users, then you can monetize.” Once interest rates rose, those became incredibly expensive projects, so funding is now much more scarce. Companies are pulling back on bigger projects or, like reddit, trying to monetize them faster. Startups are also finding it harder, so fewer jobs.
Note that this also impacted other projects that take a lot of capital up front, then provide a return over a very long term. There was a nuclear power plant project with NuScale in Utah that got shelved over this; with interest rates suddenly going from way low to way high, the economics get upended.
I’d bet that in general, infrastructure spending dropped across the board.
1 programmer will be able to do the work of several
This is true right now. If you know how to use AI tools, it’s not that hard to work 5-10x faster as a programmer than it used to be. You still have to know what you’re doing, but a lot of the grunt work and typing that used to comprise the job is now basically gone.
I have no idea, but I can’t possibly imagine that that’s having no impact on resource allocation and hiring / firing decisions.
Lol AI ain’t that good, bud.
Want to have a programming contest where speed is a factor?
I actually looked this up, and the studies seem to agree with you. That one says a 55% increase in speed, and another says 126%.
All I can really say is, I’d agree with the statement that a single 3-hour task isn’t real representative of the actual overall speedup, and my experience has been that it can be a lot more than that. It can’t replace the human who needs to understand the code and what needs to happen and what’s going wrong when it’s not working, but depending on what you’re doing it can be a huge augmentation.
What you’re missing is that 95% of programming projects fail, and it’s never because the programmer didn’t code fast enough.
Speed-up isn’t why I have a team instead of being a solo act.
There’s also the pure reality that, yeah, it’s easier today to get a project off the ground than ever before, and AI is good at that, but you know what AI is absolute shit at? Modifying ludicrously cumbersome, undocumented, brutally hacked together legacy code and addressing technical debt - the two most common tasks of most actual software engineers.
True.
Good thing most companies aren’t stuck with ludicrously cumbersome, undocumented, brutally hacked together legacy code bases. /s
I can’t even type that with a straight face.
the two most common tasks of most actual software engineers.
So true.
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Working with GPT actually helped me write better code, because it’s more familiar with good patterns in unfamiliar languages and frameworks and can write idiomatically. It got me out of one-language-centric habits I hadn’t known I had.
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Yes, it’s 100% true that the person driving the AI needs to have good design sense of what they want the final system to look like, and still work well with their team. You can fuck it up faster if you can code faster, absolutely that’s true.
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What you said, I know that. Do the people that run these companies know that?
What you said, I know that. Do the people that run these companies know that?
Yeah. Exactly. They did the same to various degrees when web frameworks first hit the scene, and numerous other advancements before and after.
But as you said, the new tech genuinely does make us both faster and better.
It just doesn’t fix the crap parts of the job that the CEOs always hope it will. (As someone else pointed out, it specifically doesn’t magic wand away decades of technical debt, haha.)
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I would say a 3-hour-task isn’t representative in the other way around. When you tackle a 1000-hour task, you’ll probably spend more than 1000 hours working out what the requirements even are. A significant portion of my workday are meetings, not coding.
And with a long-form task, you’ll go back reading existing code much more often than writing new code, too.
I love the speed-up. And I’m sure it factors into CEO and CIO decisions. But they’re on their way to learning, once again, that “code faster” never had anything to do with success or failure in efforts that require programmers.
Source: I sought great power, and I became one of the fastest coders, but it didn’t make my problems or my boss’s problems go away.
If you know how to use AI tools
Can you elaborate on this part? What’s your idea of proper usage?
So maybe I don’t know what I’m talking about. I will only share what I have experienced from using them. In particular I haven’t messed with Copilot very much after the upgrade to GPT-4, so maybe it’s a lot more capable now.
In my experience, Copilot does a pretty poor job at anything except writing short blocks of new code where the purpose is pretty obvious from context. That’s, honestly, not that helpful in a lot of scenarios, and it makes the flow of generating code needlessly awkward. And at least when I was messing with it there didn’t seem to be a way to explicitly hint to it “I need you to look at this interface and these other headers in order to write this code in the right way.” And, most crucially, it’s awkward to use it to modify or refactor existing blocks of code. It can do small easy stuff for you a little faster, but it doesn’t help with the big stuff or modifying existing code, where those are most of your work day.
To me, the most effective way to work with AI tools was to copy and paste back and forth from GPT-4 – give it exactly the headers it needs to look at, give it existing blocks of code and tell it to modify them, or have it generate blocks of boilerplate to certain specifications (“make tests for this code, make sure to test A/B/C types of situations”). Then it can do like 20-30 minutes’ worth of work in a couple of minutes. And critically you get to hold onto your mental stamina; you don’t have to dive into deep focus in order to go through a big block of code looking for things that use old-semantics and convert them to new-semantics. You can save your juice for big design decisions or task prioritization and let it do the grunt-work. It’s like power tools.
Again, this is simply my experience – I’ll admit that maybe there are better workflows that I’m just not familiar with. But to me it seemed like after the GPT-4 transition was when it actually became capable of absorbing relatively huge amounts of code and making new code to match with them, or making modifications of a pretty high level of complexity in a fraction of the time that a human needs to spend to do it.
I wonder if it might be the specific type of work that you do that allows for this. I don’t pay for ChatGPT, so I wouldn’t know the quality of the code it outputs with GPT-4, but I personally wouldn’t blindly trust any code that comes out of it regardless, meaning I’d have to read through and understand all the generated code (do you save time by skipping this part maybe?), and reading code always takes longer and is overall more difficult than writing it. On top of that, the actual coding part only accounts for a small fraction of the work I do. So much of it is spend deciding what to code in order to reach a certain end goal, and a good chunk of the coding (in my case at least) is for things that are much easier to describe with code than words. So I’m still finding it hard to imagine how you could possibly get anything more than a 1.5x output improvement.
The main time savings I’ve found with generative AI is in writing boilerplate code, documentation, or writing code for a domain that I’m intimately familiar with since those are very easy to skim over and immediately know if the output is good or not.
I actually got curious about it specifically because of this thread, and earlier today did a little experimentation with Copilot’s Cmd-I feature as compared with copying and pasting to GPT. I’m actually pretty convinced now that the issue is that Copilot using a cheaper model for reasons of computational cost. Giving Copilot the exact same task I was giving to GPT, it struggled to create code that could even compile, even after multiple rounds of me trying to help it, where GPT-4 was able to just give output and its output worked.
I think the assumption that it’s being set up under is that people will be doing a ton of queries throughout the work day, more so than the average GPT-4 user will type into the chat interface, and so they can’t realistically do all that computation on people’s behalf for $20/month.
(Edit: And this page makes some statements about “priority access” to GPT-4, indicating that they’re throttling access to the more capable models depending on demand.)
In practice, the majority of the time I’m carefully looking over diffs anyway before committing anything, since as you mentioned the vast majority of work time is spent modifying existing code. So the times it messes up aren’t a real serious issue. But again I think (after some pretty minimal experimentation today) that the real issue you’re seeing is just that GPT-4 is way more capable at this stuff than is GPT-3.5 / Copilot.
But this is guessing based on some pretty minimal experimentation with it. I sounded real confident in my initial statement but now that I’m looking at it maybe that’s not warranted.
Do you work in a technical role? I’ve dabbled in using AI to help out when working on projects, but I would say it’s hit or miss on actually helping, as in sometimes it helps me move a bit faster and sometimes it slows me down.
However, that’s just for the raw “let’s write some code part of the work”. Anything beyond that in my roles and responsibilities doesn’t really intersect with what AI can currently do, so I’m not sure where I would get a 5-10x speed-up from.
Honestly I’m not sure if I’m taking a wrong approach or if everyone else is blowing things out of proportion.
It’s interest rates.
Loans are more expensive, but critically, so are eggs.
Tech workers like eggs, and see no reason to buy fewer, so they’re asking for more money, unionizing, or hopping jobs to increase their salaries.
Notice how the big players are releasing press releases each layoff? No attempt at secrecy. No payouts to NDA the laid off employees. It’s an intimidation tactic.
It’s working at the moment, but tech workers get over their job change discomfort fast when there’s a 100% raise on the table. The market rate vs curent pay gap just creates pressure to change jobs until they do, even if they’re scared.
And the shareholders are all fucked.
Every tech layoff is a lottery ticket toward a company ending event. And then every employee who leaves because they realize the company is incapable of loyalty. Then every worker who leaves because their suppressed wages aren’t keeping up with their expenses or hobbies. Another chance to end the company. Nobody knows which perl script is the lynchpin of their company, or which random person will leave with all knowledge of it.
The CEOs are positively aggressively collecting chances to bankrupt their shareholders.
But the CEO will get a nice payout next quarter. So that’s nice.
Every tech layoff is a lottery ticket toward a company ending event. And then every employee who leaves because they realize the company is incapable of loyalty. Then every worker who leaves because their suppressed wages aren’t keeping up with their expenses or hobbies. Another chance to end the company. Nobody knows which perl script is the lynchpin of their company, or which random person will leave with all knowledge of it.
Plus, as this happens the first/second/third time to new employees, they lose any sense of company-loyalty they might have had at their first job. The next time anything goes wrong, these people are already writing applications, and then quitting the moment they get an offer somewhere.
This behavior by company trains people to associate fuck all with their current job. Which is a good attitude as a worker, but usually not something a company would have wanted, historically. A privately held company would usually want to aim for high worker loyalty, allowing them to endure bad market times without immediately shedding most of their workforce.
Modern shareholders+C-suites behavior reinforces this, however. Everything goes in the name of saving the quarterly report and making it look good and paying out your own bonuses.
There are laws around how layoffs have to be communicated. Secret layoffs at large companies aren’t a thing.
NDA’s occur at the start of employment. When someone is laid off, there is typically a severance that includes a separation agreement, these may have an NDA clause.
The rest of this I agree with. This is being pushed by the shareholders. The scare tactic is an added bonus.
Unionize.
Secret layoffs at large companies aren’t a thing.
Yeah. They aren’t supposed to be a thing.
I’ve seen periods when a bunch of colleagues used to work for XYZ, and then didn’t, and were real quiet about why they left, and “didn’t have any hard feelings”. (And remodeled the bathroom the same month they stopped working at XYZ.) So I assumed they got an illegal NDA and a fat goodbye bonus to keep them from questioning it.
I guess I’m technically just making assumptions as deeply cynical person.
Edit: and I imagine the lawyers involved set the whole thing up so it’s technically not a secret layoff, by strict legal standards. Smelled like one, though. :)
Edit 2: Could also just have been a company below some legal size cut-off, I suppose.
eggs?
I read it as an allusion to the price of everything going up. But yes, eggs.
Eggs.
Spam.
Removed by mod
Eggs, eggs, spam.
eggs?
Eggs.
Weirdly, my first thought was eggs as in trans people who don’t know it yet. I really didn’t expect eggs in the literal meaning in that sentence…
Is that a real metaphor that people use? I’ve never heard of it referring to trans people before. But that’s not my community.
Yeah! We use it to lovingly refer to those of us who haven’t come out to ourselves yet. Their shells haven’t cracked yet.
The memes out of egg_irl are pretty fire if queer memes are your thing
The memes out of egg_irl are pretty fire if queer memes are your thing
I’m a cis-(mostly)het guy and absolutely agree. I get a special kind of joy from people discovering themselves and being accepted.
Yes it is. For example, /r/egg_irl was a fairly popular subreddit.
The Federal Reserve raised interest rates in order to cause layoffs. The capitalist class wanted to enlarge the reserve army of labor so that workers would be too worried about losing their jobs to demand raises.
‘You Are Gambling With People’s Lives’: Warren Rips Powell Over Job-Killing Rate Hikes
This is a thing that sounds like some crazy uncle bullshit but it is actually completely true and non-controversial.
The scariest thing to a central banker when it comes to inflation is that wages might start to go up. When that happens the inflations is basically permanent.
People need to understand that the Federal Reserve is the cartel of the US private banks, and that they have captured the US Treasury as well, which is the US sovereign fiat money printer. Just look at the history of people in executive positions at the Treasury and the Fed. It’s a revolving door between those positions and the executive positions at major US banks and corporations.
Here is an alternative Piped link(s):
Piped is a privacy-respecting open-source alternative frontend to YouTube.
I’m open-source; check me out at GitHub.
Bitcoin solves this. Clear, unambiguous, unchanging monetary policy that doesn’t constantly increase the supply and take a portion of your dollar’s value to give to anybody else. It is not aligned with any country or even block of countries and is truly the first international currency in that sense. No politician or even national or supra-national government can force Bitcoin do do anything that isn’t part of its protocol because it’s so decentralized.
It has been running 24/7 365 for 15 years without a single major security issue in the protocol or a single hour of downtime. With lightning network upgrades, transactions confirm in under a second internationally with fees 1000x less than credit cards, often under a single cent.
It is accessible to anybody in the world with a cell phone and internet access, including the billions, with a B, who don’t have access to stable banking infrastructure or local currency. No credit checks, no needing six forms of ID, no overdraft fees, no bank holidays, no middlemen, no nonsense. And it does this with less electricity than you’d think, less than 1% of global electricity usage, mostly from renewable sources as miners chase the cheapest electricity and the cheapest electricity is from renewables and over-provisioned grids.
For anyone remaining in the world who still believes cryptocurrency nonsense, I have a bridge to sell you.
I agree this has got to be the root reason. They are scared.
Which is ironic because one of the Fed’s chartered purposes is to maximize employment. I guess maximizing profits is more important, even though it’s not on the list.
Yup. From an article I linked to in another comment:
The Federal Reserve Board’s ostensible policy aim is to manage the money supply and bank credit in a way that maintains price stability. That usually means fighting inflation, which is blamed entirely on “too much employment,” euphemized as “too much money.” In Congress’s more progressive days, the Fed was charged with a second objective: to promote full employment. The problem is that full employment is supposed to be inflationary – and the way to fight inflation is to reduce employment, which is viewed simplistically as being determined by the supply of credit.
So in practice, one of the Fed’s two directives has to give. And hardly by surprise, the “full employment” aim is thrown overboard – if indeed it ever was taken seriously by the Fed’s managers.
I actually think it’s just bandwagoning by a bunch of cowards.
We saw this same phenomenon early last year too: Facebook laid off a bunch of employees, then Apple announced the same, then Microsoft, then Google, then Salesforce, then the infamous Twitter layoffs.
I think big tech is so sensitive to negative press that they all just wait and lay off folks at the same time so no single company takes all the bad press.
It doesn’t even have to be Illuminati-level coordination, either. All it takes is for some exec at Tech Company B to see that Tech Company A is firing people. Then Tech Company B decides to clean house too. The cascade is just a bunch of morons deciding to hop on the “let’s fuck over our employees to help our balance sheet” train.
Apple did not announce any layoffs last year. It’s been news worthy because some many of the other tech companies have had multiple rounds
Definitely agree it’s not an Illuminati cabal meeting in hoods and masks.
But it’s not not that either - there’s lots of overlap on boards of directors and VCs invested in these companies. They’re in the same circles and probably play golf together. Or, they hang out on the tarmac before their Davos keynotes on saving the world.
I live in Silicon Valley and I’ve heard that there’s a WhatsApp group with a bunch of “big tech” CEOs and CTOs in it and they chat and share memes with each other 👀
“They’re just like us!”
It’s more devious than that. If company A lays off 1000 people due to “legitimate” reasons (e.g. twitter generally doing poorly), that’s 1000 people looking for new jobs. Company B, C, and D can then take that as an opportunity to lay off 1000 people each that aren’t immediately vital to the success of the company. Company A might not have the funds or desire to rehire right away, but the other three will slowly start building back up. You end up with 4000 people competing for 100 open positions. Many may not be willing to accept a pay cut, but some percentage will, and gradually the rest will be slowly starved down to accepting less pay.
Software engineering is notoriously a high paid career path, and executives at these companies hate that, so any opportunity they get to suppress wages, they’ll jump on. Especially if you know every other big company is doing it to, so they won’t be able to turn that into an advantage against you
Employees aren’t afraid anymore so companies are trying to reinstate fear.
Yes, it is a concerted effort to create a glut. This is like the wga strike, they want to starve you a little so you’ll come back begging for a job before you lose your home.
They know the next 20 year will be a shortage of labour and stagflation. They’re just trying to start this lean period with the upper hand.
It’s an easy win for the balance sheet. Their products are still sellable, the services should be more or less unaffected (for the next few quarters), so they’ll continue to get the same revenue. But their costs just decreased, so they look more profitable.
It looks good on quarterly calls. It’s a good way to juice a stock.
Short-term profits in exchange for long-term damage!
Tech is hard, leaders aren’t always technical. AI is great at bullshitting, and it’s swooned many CEOs into thinking it will 10x (make them 10x more efficient than they previously were) existing employees / replace the need for programmers. Lots of leaders just look to what other leaders at companies are doing - some see what elon does at twitter as proof that downsizing drastically won’t kill your company.
Programming is like editing a book with many chapters. New developers need time to learn the story line of the book before they can begin editing anything. If the book has been around and edited continuously for over a decade, it’s going to take some time for those developers to understand the book well enough to start making meaningful contributions. Lots of these tech companies have multiple books each with many chapters, and one thing leadership either doesn’t realize or doesn’t seem to factor into the equation is that maintaining these books and all their story arcs and character development gets harder and harder over time. Truly in the tech industry, it’s more expensive to train a new hire than it is to promote an existing hire.
But again, leaders are listening to folks like elon musk…
Lots of tech companies saw huge growth during covid thanks to everyone having extra money to spend (see crypto and NFTs if you want clear examples that we just had too much laying around).
Many of these companies then saw their revenue and userbase increase month-after-month and thought the growth was going to continue forever (or, more cynically, they knew it was going to crash but acted like it was going to continue). This led to a bunch of hires to “drive growth.”
But obviously, pandemic spending habits have mostly stopped, and the money faucet is being turned off. Companies can’t afford all the workers they hired, so they’re “let go due to market downturns.”
TL;DR Companies either thought they were going to have unrealistic growth and made dumb hiring decisions, or knew the growth was going to end and thus made cruel hiring decisions.
The correction I would make is that they can afford the workers. But the leadership needs to continue the growth. All they have left is to cut expenses, and the easiest way to do that is layoffs.
Add something about the federal funds rate exceeding 2.5% for the first time since 2008 and you’re on the right track. I think interest rates affect startups more than Google so bigger tech firms were hoarding talent to prevent new competitors from having those workers.
I think interest rates affect startups more than Google so bigger tech firms
Definitely. Google has lots of cash already, whereas startups are often in need of more money.
The other thing that’s happened recently is that businesses used to be able to write off (deduct in their tax return) all their R&D expenses in the year they were incurred, whereas now they need to be amortized over five years. This has a huge impact to startups because a lot of their initial work is R&D, and now they have much larger tax bills than they used to have. https://www.axios.com/2024/01/20/taxes-irs-startups-section174
Many people got hired during Covid.
Grow isn’t as expected, so now they are firing again.
But on the bright side, most of those companies still employ more people than pre-covid.
A company hiring 19000 people isn’t going to get as many clicks as a company firing 1900 people.
Overhiring during covid is definitely a major part of it, combined with a slight investment bubble bursting
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Yeah, here in Germany, workers have stronger protections, laying them off isn’t as easy, and I feel like the layoff waves have largely not occurred here, because companies didn’t hire so much during the pandemic.
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Another factor was the PPP and other “totally not bailouts” that were part of the COVID relief spending.
Of the roughly $800 billion dollars from PPP which was provided as uncollateralized, low-interest loans 66-77% went directly to companies and ~92% of those loans were completely forgiven.. In other words an ~5-600M bailout predicated on keeping positions open long enough to maintain plausible deniability that is what the goal was.
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Late stage capitalism
Finally. Thanks.
One factor I haven’t seen mentioned is that because of rising interest rates, tech companies have had to shift from being focused on growth to actually turning a profit. Because of this, companies are having to shed employees because they over hired in anticipation of that continued growth. People are expensive so that’s an “easy” way to try to get the line closer to positive.
This is kind of a rough overview and I’m by no means an expert on economics. Just someone who works in tech and so has been following things closely.
Michael Hudson, Jun. 2022: The Fed’s Austerity Program to Reduce Wages
To Wall Street and its backers, the solution to any price inflation is to reduce wages and public social spending. The orthodox way to do this is to push the economy into recession in order to reduce hiring. Rising unemployment will oblige labor to compete for jobs that pay less and less as the economy slows.
It also takes time to realize the costs of shedding workforce, and by then you might have a different CEO. As long as it’s next quarter, it’s fine.
This plus the changes to section 174 meaning R&D costs have to be written off over five years instead of all in the year they’re incurred. That’s hurting startups a lot and many have had to switch from building new stuff to licensing/selling their existing stuff, and firing some expensive engineers/developers, to be able to afford to stay open. https://www.axios.com/2024/01/20/taxes-irs-startups-section174
Overinvestment and strong labor demand led to very high salaries. Investors hate high salaries. Firing people they can replace at a discount now that supply is increasing
It’s this.
With inflation, everyone deserves a higher salary. And programmers are able to command it.
CEOs hate this, so they’re playing chicken.
They’ll all get fired and pull their golden parachute in the next three years, when the shit hits the fan because they decided they could get by without XYZ critical skill.
Then they’ll go to the next place and evangelize about how “you’ve got to invest in talent”.
And soon they’ll be surprised the employees are less and less loyal and blame it on the new generations.
Okayokayokay, this isn’t the point, I know… but those are some really shitty, ill-fitting suits. They look like crap.
I’m assuming they were provided by the photography company taking the stock photos
Actually… I see your point.
Are they made of leather, or just… super fake looking low quality fabric?
The latter, probably, given that they look identical. At first I thought: “AI”, but the fingers are pretty good. I think they’re just generic prop suits.
Tailoring makes or breaks a suit. They don’t tailor suits for stock photos.
Greed. They are making more profit than ever
