The Tech Layoffs

There has been a lot of news about the tech layoffs, especially the dehumanizing way the layoffs were conducted. Last year with the inflation eating into everyone’s budgets and pocketbooks – and some suspicions that corporations were using the inflation as a pretext to raise prices greater than the inflationary effects to generate greater profits – there was talk of slow down due to everyone trying to cut back or due to the rise in the Fed interest rate. Recession fears loomed its head last year.

And with the recession fears came expectations of layoffs.

Which came at the end of 2022.

But I also read that some of those companies were actually still profitable and were just doing proactive layoffs on fears of a looming recession. So, another instance of companies failing to find ways to cut expenses elsewhere before touching employees. Kind of disappointing that no creativity was deployed to find fewer damaging ways to improve the business. It was basically shareholders over employees here.

Some companies apparently did suffer price declines in the stock market. I can’t tell whether the price declines are due to losses, declining profits, declining markets. I’m under the impression the story is mixed. Again, these tech companies used the damaging method of laying off people rather than trying to find creative ways to improve the business.

Lastly, I have read a few articles where the layoffs were suspected to be due to investor pressure. The story was those investors felt the headcount were excessive due to the looming recession and pressured management to “right” the headcount. According to their idea of the right size headcount.

I’m getting the sense that last year or the year before, during the time when companies were frantically trying to hire people because they could not find talent. During those days, many companies were on a hiring spree just as a way of obtaining talent in the midst of labor shortages and to get ahead of everyone else.

In addition, wages were going up as a way to retain employees and to attract the hard-to-find talent.

Both of those two elements – hiring spree and rising wages – probably didn’t appeal to the investors because they in effect divert money away from the investors to the working people.

Shareholders are not your friend. It’s their pocketbook before yours.

For some employees, their time in the tech industry might be at end – at least for a while. I’ve been reading that for some employees, they had only worked for a few months at some “unattainable” dream job when that job was unceremoniously terminated. They fear they may never get another dream job again.

Then yesterday, the jobs report came out with a surprise. Despite the building layoffs in the fourth quarter of 2022 and January 2023, the January job report was way better than expected. The payroll increased to 517,000, way better than the market estimate of 187,000. The unemployment rate fell to 3.4%, a number last seen in 1969 – over 50 years ago.

I’m confused. Has there been a mistake? I’m going to have to check in a few months to see if those numbers get adjusted, but the Labor Department usually updates reported numbers as more information comes in.

So how is the labor market still holding up?