Young college graduates used to think they had to make a choice: they could get rich but miserable in an investment bank or law firm, or they could live without a huge salary but have a little more fun. Then came the big tech companies. Suddenly it was possible for someone with certain skills to have fun and get rich at the same time.
The tech companies seemed to represent a less hierarchical world of work, where everyone wore jeans and t-shirts and performance was paramount. Salaries were high and stock options were plentiful. If you’re lucky, your employer will also take care of the boring side of life, doing your laundry, cooking for you and taking you home in the evening. This year, technology companies made up five of the top 10 best places to work in the United States, according to Glassdoor employee ratings.
Politicians and economists soon came to view tech workers as the archetypal winners of the 21st-century economy: stuck at the “nice” end of the growing gap between “nice” and “lousy” jobs.
When some workers in the industry tried to unionize, the response from companies and investors was often that these were already dream jobs, so what was the point? As an investor put itTech workers who attempted to unionize “appropriated the language of exploited coal miners while enjoying the most privileged white-collar work experience in human history.”
That story has been punctuated by a series of mass layoffs by tech companies in recent weeks. Meta laid off 11,000 workers, or 13 percent of its workforce. Elon Musk, the new owner of Twitter, has halved the group’s headcount. Amazon plans to cut about 10,000 jobs, while Stripe, a private payments company, eliminated 14 percent of its workers. It was a brutal experience for the staff.
In most cases (Twitter is a slightly different story) the job cuts are the reverse of a recent hiring frenzy. Tech companies had been betting on the continuation of an unusual macroeconomic environment that was indeed about to end. Consumers are no longer confined to their homes and can only spend their money on e-commerce. Interest rates are no longer at their lowest point.
It’s hardly the end of these companies. Meta still has more staff than last year. But the mass layoffs offer some lessons.
The first is that many tech companies are very autocratic, whether everyone wears jeans or not. It was striking – and refreshing – to see CEOs taking personal responsibility for the layoffs. But it was also a reminder of how much power they have.
At Meta, for example, investors became increasingly frustrated with how much money CEO Mark Zuckerberg was dumping in the “Metaverse.” But Meta’s dual share structure allows it to control more than half of the votes, with 13 percent of equity.
“I have made the decision to significantly increase our investments,” Zuckerberg wrote in a memo to employees last week. “I got that wrong, and I take responsibility for that.”
The speed of layoffs from these global companies has also struck a chord with labor law in the UK and Europe.
“In many countries in Europe you have to warn public administrations, works councils or unions, even if the company is not unionised, you have to have a plan to mitigate the social impact of your decisions,” says Valerio De Stefano, professor at Osgoode Hall Law school in Toronto. The idea of these laws isn’t to prevent companies from making layoffs, he says, but to ensure they’re done fairly and with reasonable warning. “We’re having a very rude awakening now, it’s happening without any control or advice, just someone saying, ‘I’m sorry, it’s my fault’.”
For workers, the experience underscores the fact that benevolent dictatorships can seem good to the point of not being so benevolent. Even people who have kept their jobs are seeing some benefits change. Musk announced on Twitter that everyone must work at least 40 hours in the office, turning lives upside down for people who had planned to work remotely.
Unions hope the layoffs will help them argue that unions are not just about improving poor working conditions, they are about having a real voice and a seat at the table. Mike Clancy, general secretary of UK union Prospect, says the union has some members on Twitter and hopes to hire more in the tech sector. “There’s often a progressive tinge — we’re all techies together,” he says. “[The] The whole ambiance is one of ‘We offer a different job offer’ – no, you don’t do that when it comes to laying off workers, do you?”
The other lesson is not to get too carried away with selfish words about the “war for talent” that has been pervasive in the tech sector until recently. There are talented people in all walks of life. Payment is a matter of supply and demand. Low earners in the US have received large nominal wage increases this year. Nobody calls this a “war for talent”; They call it a “labor shortage”.
Tech companies may have offered amazing perks, but people don’t need dream jobs as much as they need jobs that treat them decently. The thing about dreams is that they go away when you wake up.