The U.S. economy is booming. So why are tech companies laying off workers?::undefined

  • RubberDuck@lemmy.world
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    9 months ago

    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.

    • Cethin@lemmy.zip
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      9 months ago

      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.

    • podperson@lemm.ee
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      9 months ago

      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.”

  • VubDapple@lemmy.world
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    9 months ago

    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?

  • notannpc@lemmy.world
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    9 months ago

    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.

  • eskimofry@lemmy.world
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    9 months ago

    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)

  • sundray@lemmus.org
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    9 months ago

    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.”

    • grue@lemmy.world
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      9 months ago

      Executive decision-making is like ChatGPT, but even dumber.

    • ramblinguy@sh.itjust.works
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      9 months ago

      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

    • scarabic@lemmy.world
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      9 months ago

      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.

  • OldWoodFrame@lemm.ee
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    9 months ago

    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.

    • CountVon@sh.itjust.works
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      9 months ago

      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.

      • Wrench@lemmy.world
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        9 months ago

        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.

    • grabyourmotherskeys@lemmy.world
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      9 months ago

      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.

    • Goodie@lemmy.world
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      9 months ago

      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.

        • Goodie@lemmy.world
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          9 months ago

          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.

          • thejml@lemm.ee
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            9 months ago

            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.

          • sin_free_for_00_days@sopuli.xyz
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            9 months ago

            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.

  • linearchaos@lemmy.world
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    9 months ago

    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.

    • ipkpjersi@lemmy.ml
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      9 months ago

      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.

    • ferralcat@monyet.cc
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      9 months ago

      Tech needs to unionize. The only way to fight this is just to have the entire workforce walk out.

      • KᑌᔕᕼIᗩ@lemmy.ml
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        9 months ago

        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.

  • kingthrillgore@lemmy.ml
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    9 months ago
    • 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
  • flop_leash_973@lemmy.world
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    9 months ago

    “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.

  • unreasonabro@lemmy.world
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    9 months ago

    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.

    • PilferJynx@lemmy.world
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      9 months ago

      I’ve always said capitalism and corporations are anti-social. They make society worse for profit.

    • Telodzrum@lemmy.world
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      9 months ago

      Nah, reducing costs in one relatively small sector doesn’t affect the GDP or other national-level metrics.

    • AtmaJnana@lemmy.world
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      9 months ago

      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.