ive here. We were not alone in saying that the Fed’s attempt to tackle this inflation with its sharp interest rate tool was destined to hit workers when an increase in the cost of labor would not result in overall economic price pain. This is happening now in a visible way. It is no longer the hourly workers and the less skilled white collar employees who are in harm’s way. From Business Insider:
Barely three weeks into the new year, tens of thousands of employees of major tech companies are staring down the barrel of unemployment.
Microsoft said it will lay off 10,000 workers over the next few months, while Google will lay off 12,000 employees. Meanwhile, Amazon has begun its biggest cutbacks ever, with plans to lay off 18,000 this year.
In all, more than 55,300 employees from more than 154 tech companies were affected by layoffs in 2023, according to layoffs.fyi, a site that tracks layoffs.
To justify the job losses, CEOs like Google’s Sundar Pichai and Salesforce’s Marc Benioff have reiterated reluctance to slow the economy, viewing the layoffs as a necessary rollback after over-hiring two years ago.
The Wall Street Journal also reported on the undue enthusiasm of Davos CEOs for productivity gains, which is a fancy way of saying “squeeze employees.”
As for the panic about Mr. Market applauding corporate downsizing, we long figured in a 2005 conference board review article, The Incredible Shrinking Corporation, that executive fixation with stock prices (which has been an increasingly large part of their pay packages) rewards cost. Cut off investment and discourage it and risk taking.
Written by Sonali Kolhatkar, award-winning multimedia journalist. She is the founder, host, and executive producer of “Rising Up With Sonali,” a weekly radio and television show that airs on Free Speech TV and Pacifica stations. Her next book is Rise Up: The Power of Narrative in the Pursuit of Racial Justice (City Lights Books, 2023). She is a Writing Fellow of the Economy for All Project at the Independent Media Institute and Editor of Racial Justice and Civil Liberties at Yes! magazine. She serves as co-director of the nonprofit solidarity organization Afghan Women’s Mission and is co-author of a book Afghanistan bleeds. She also sits on the board of the Justice Action Center, an immigrant rights organization. Produced by Economy for All, a project of the Independent Media Institute
Alphabet, the parent company of Google, has announced that it will lay off about 6 percent of its global workforce. Google CEO Sundar Pichai sent a letter to his employees warning of impending layoffs and telling them how “deeply sorry” he was. He offered workers to “feel free to work from home” for the day in order to address the difficult news that some 12,000 of them will soon lose their jobs.
That was roughly the same number of new employees Alphabet courted to join its workforce last quarter. According to Investor Business Daily, the company added 12,765 employees, which was higher than Wall Street’s estimate.
Pichai has been upfront about why he had to fire so many people. In his letter, he acknowledged that the company had a “huge opportunity” thanks in part to “Google’s early investments in artificial intelligence,” and that to “fully seize this opportunity,” he would need to “make hard choices” such as cutting 12,000 jobs. Surely his laid-off employees could understand?
Wall Street thanked Pichai for his ruthlessness, with CNBC reporting that “Google shares rose more than 5 percent in early trade after the news” of the layoffs.
It’s a familiar story elsewhere in the tech industry – once considered the most lucrative sector in terms of secure, well-paying jobs. Microsoft plans to cut 10,000 jobs. Amazon will lose more than 18,000 workers. Meta, the parent company of Facebook, laid off 11,000 workers last November. And Twitter will lay off more workers than it initially laid off when Elon Musk first took over the company in 2022.
In response, stock values rise. Wedbush Securities, a major investment firm, expects a 20 percent increase in technology stock values this year alone, directly as a result of job cuts.
Les Leopold, executive director of the New York Institute of Labor, wrote in an op-ed for the Los Angeles Times about the “long-term social devastation” that results from mass layoffs, citing research on worsening health effects, psychological trauma, and even an increase in suicides.
For decades, Americans have been promoted the lie that stock values are an indicator of economic health. The popular syndicated radio program Marketplace every day faithfully broadcasts the values of the Dow Jones, Nasdaq, and S&P 500 indexes right up to the break, playing happy, sad, or ambivalent music correspondingly. The music explains that the community should celebrate when the numbers are higher than the day before, and mourn when the numbers are down. In other words, Marketplace indirectly urges us to be happy that thousands of people have lost their livelihoods.
There is a good chance that some of the tens of thousands of people losing their jobs in the technology sector will kill themselves in response.
But we’re supposed to be celebrating because stock values are going up.
Among those whose futures are now suddenly tenuous are countless immigrant workers, lured to the United States by technology companies with H-1B visas. We don’t know how many foreign workers are affected because, according to The New York Times, “employers have not disclosed how many workers on temporary visas have been let go.”
Asians, and Indians in particular, are a disproportionate part of the tech workforce in California’s Silicon Valley. According to the Silicon Valley Institute for Regional Studies, an analysis of the most recent US census figures found that Indian nationals make up more than a quarter of all college-educated residents in Santa Clara and San Mateo counties who work for technology companies.
Their immigration status is linked to their employment through the H-1B visas they likely arrived in the country with. Now, if they are among the unlucky people facing unemployment, they have just two months to find new work – or risk overstaying their visas.
What do US economists say in response to the social devastation of mass layoffs? A Harvard Business Review writer advises recently unemployed tech workers to “reshape your mindset” and create a “job-hunting schedule.” Perhaps there should have been another suggestion: “Try not to kill yourself at the grim prospect of leaving a country you think is home.”
Another consultant, also writing for the Harvard Business Review, offers ways to “manage your emotions after a layoff,” which includes a suggestion: “Consider starting a side hustle.”
But just a few months ago, Americans were told that the “labor market” was “tight” or “hot” (the economist’s talk of plentiful jobs and fewer workers), as well as being warned of the potential for inflation. There was widespread speculation that this meant that workers had more leverage and that they could use it to bargain for higher wages. Now, with mass layoffs in at least one major industry — technology — seen as central to the economy as a whole, is the job market “cold”? It’s hard to say. Workers are expected to live (or die) at the whim of the market.
If the purpose of an economic system is to ensure the well-being of the people within that system, then the American economy seems to be doing the opposite, bemoaning workers’ influence and wage growth, and celebrating layoffs. In other words, the values of our economic system are at odds with human welfare.
We do not have to accept such an inhumane economy.
Congress could pass a bill that removes country-specific restrictions on work-based visas and other impediments to permanent residence applications so that foreign workers whose lives have been upended by a volatile economy have leverage to remain in the United States if they wish.
We can do what people do in other countries. For example, in France, more than a million people protested against the government’s proposal to raise the retirement age. They brought the country to a complete standstill, making it clear that the economy is working for them, and not the other way around.
Similarly, in Spain, striking taxi workers make it clear that there will be no business as usual if their well-being is eroded. In the United Kingdom, where a new Conservative government is trying to weaken workers’ power to strike, thousands of people have demonstrated in protest under the slogan “Enough is enough”.
Replicating this in the United States would mean an exponential increase in union membership. The US Bureau of Labor Statistics released a recent report that found that despite strong union activity in the past year, and a pro-labor president, unionization levels fell to a record low, largely because most of the new jobs being added are nonunion. Higher levels of union membership could mean more job security and more pressure on the economy to ensure workers’ rights.
Another option, especially to face mass layoffs, is to ask the government to intervene to hire the unemployed. A new campaign led by 10 economic justice organizations called Full Employment for All calls for a “targeted federal program of subsidized employment” that “can create jobs and economic growth.”
The campaign is inspired by the ideas of Rev. Dr. Martin Luther King Jr., who delivered his famous “I Have a Dream” speech 60 years ago this year at the March on Washington for Jobs and Freedom. Note that the word “jobs” came before “freedom” in the title of the march. The demands of the march included[a] A massive federal program to train all unemployed workers—black and white—in meaningful, dignified jobs at adequate wages.”
We do not have to accept layoffs as the price of economic growth. Instead of “reshaping our mindset” in search of new jobs, we can demand a new economy that works for us.