Tech layoffs teach us a lesson about the ‘war for talent’

©James Ferguson

Once upon a time, young college graduates thought they had a choice: They could become rich but miserable at an investment bank or law firm, or they could live without a huge salary but do something more fun. Then came the big tech companies. Suddenly, it was possible for someone with a certain skill set to have fun and get rich at the same time.

Tech companies seemed to represent a less hierarchical world of work where everyone wore jeans and T-shirts and credit mattered most. Salaries were high and stock options plentiful. If you’re lucky, your employer also takes care of the boring parts of life, doing your laundry, cooking your meals and driving you home in the evening. This year, technology companies accounted for five of the top 10 jobs in the US based on employee reviews on Glassdoor.

Politicians and economists soon came to see tech workers as the archetypal winners of the 21st-century economy: firmly at the “lovable” end of the growing gap between “lovely” and “lousy” jobs.

When some industry employees tried to unionize, the response from companies and investors was often to argue that these were already dream jobs, so what was the point? Like an investor put ittech workers seeking to unionize were “appropriated the language of exploited coal miners while enjoying the most privileged white-collar work experience in human history.”

That story has been interrupted by a series of mass layoffs by tech companies in recent weeks. Meta laid off 11,000 workers or 13% of its workforce. Elon Musk, the new owner of Twitter, has cut the group’s headcount in half. Amazon plans to cut around 10,000 jobs, while Stripe, a private payments company, has cut 14% of workers. It was a brutal experience for the staff.

In most cases (Twitter is a somewhat different story) the job cuts are the reversal of a recent hiring binge. Tech companies had bet on the continuation of an unusual macroeconomic environment that was in fact about to end. Consumers are no longer confined to their homes with only e-commerce to spend their money on. Interest rates are no longer at their lowest.

It is certainly not the end of these companies. Meta has even more staff than last year. But mass layoffs offer a couple of lessons.

The first is that regardless of whether or not everyone wears jeans, many tech companies are highly autocratic. It was surprising – and refreshing – to see CEOs take personal responsibility for layoffs. But it was also a reminder of how much power they have.

In Meta, for example, investors have grown increasingly frustrated with the amount of money CEO Mark Zuckerberg was sinking into the “metaverse.” But Meta’s double shareholding structure allows him, with 13 percent of the capital, to control more than half of the votes.

“I have made the decision to significantly increase our investments,” Zuckerberg wrote in a staff note last week. “I made a mistake and I take responsibility for it.”

The speed of redundancies by these global companies has also clashed with the spirit of employment law in the UK and Europe.

“In many European countries it is necessary to give warnings to public administrations or works councils or trade unions, even if the company is not unionized, you must have a plan that mitigates the social impact of your choices,” says Valerio De Stefano, professor at Osgoode Hall Law School in Toronto. The idea of ​​these laws isn’t to stop companies from making layoffs, he says, but to make sure they happen fairly and with due notice. “Now we have a rude awakening. It’s happening without any oversight or consultation, just someone saying, ‘Sorry, it’s my fault.'”

For employees, experience underscores the fact that benevolent dictatorships may seem fine until they are no longer so benevolent. Even people who have kept their jobs are seeing some benefits change. On Twitter, Musk announced that everyone must work at least 40 hours in the office, upending the lives of those who had planned to work remotely.

Unions hope the layoffs will help them argue that unions are not just about improving poor working conditions but also about having a real voice and a seat at the table. Mike Clancy, general secretary of UK trade union Prospect, says the union has some members on Twitter and hopes to recruit more into the tech sector. “There’s often a progressive veneer: we’re all techies together,” he says. “[The] the whole vibe is of “we offer a different job proposition” – no, you don’t when it comes to firing jobs, do you?

The other lesson is not to get too carried away with the selfish “war for talent” language that was ubiquitous in the tech industry until recently. There are talented people from all walks of life. What matters for pay is supply and demand. Low-wage workers in the US got big pay raises in nominal terms this year. No one calls it the “war for talent”; they call it a “labor shortage.”

Tech companies may have offered tremendous perks, but people don’t need dream jobs as much as they need jobs that treat them decently. The beauty of dreams is that they disappear when you wake up.

sarah.oconnor@ft.com

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