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Tech layoffs: Are they a necessary evil or a control tactic for bosses to regain power?

As employers slash perks and order remote workers back to offices, job cuts are seen by some as part of an insidious message: Do what we say or you’re next.

Tech layoffs: Are they a necessary evil or a control tactic for bosses to regain power?
[Source photo: Getty Images]

Tech companies laid off more than 108,000 people in the past two months, amid an economy marked by severe labor shortages that for the past two years put employees firmly in the driver’s seat. Now some workers speculate that the job cuts could be a veiled power grab in the employer-employee relationship.

The suggestion has percolated among industry-watchers and in online forums: “They’re trying to take back control,” writes one user on this Reddit thread about the topic.

Mark Zandi, chief economist for Moody’s Analytics, sees a more upfront reason for the layoffs: Tech companies experienced a dropoff in demand for online shopping, streaming, video games, and social media, which had initially soared during the early pandemic and now have come back to earth. Tech stock prices reflected this shift, and higher interest rates reduced the value of growth companies like tech, he says.

“All of this has forced the tech companies to be less aspirational, and thus rein in their workforce,” says Zandi. “The employer-employee dynamic is shifting, but this is a reflection of the shift in the realities facing the tech companies.”

Since the pandemic, employees have commanded higher salaries and more flexibility, remote work, and more focus on mental health, wellness, sustainability, and inclusivity in the workplace. But beginning late last year, multiple waves of mass layoff announcements at high-profile tech companies have brought into question whether some of those benefits, including well-being and flexibility, will be on their way out.

For instance, Google’s head of mental health and other members of its well-being department were among the 12,000 people laid off at the tech giant. A number of companies, including Twitter, Apple, Salesforce, and Snap, have also pulled back on remote work, requiring employees to return to the office either full-time or part-time.

If companies are asking people to come back with no particular reason—or with no evidence that in-person work improves productivity or creativity—then they may in fact be trying to flex their muscle, says Mikaela Kiner, CEO of Seattle HR consulting firm Reverb. “It feels a little heavy-handed then, like they’re seeing the balance has shifted, and they’re going to take advantage of this.”

Dan Schawbel, managing partner of research firm Workplace Intelligence, agrees. “I do think it is partially to create fear,” he says.

The early layoffs, he says, created a domino effect across the industry. “It gave permission to other companies to do the same without any fear that it might come off the wrong way,” he says. “Now, anyone who still has a job is not going to exert their power in the employee-employer relationship for fear of losing their job too.”

A recent survey by ZipRecruiter found that 60% of job seekers now value job security more after being laid off—more than money and flexibility. “It definitely has an impact on how people are thinking, but I think it’s the unintentional consequences of layoffs,” says Sinem Buber, lead economist for ZipRecruiter.


The economy still rests in a precarious place. Small businesses are on edge, lenders are skittish, and many indicators suggest a recession is ahead, says Zandi. “Economic recessions are ultimately a loss of faith,” he says. “Consumers have not lost faith in the economy, but they’re wavering.”

This, despite persistent low unemployment (3.4%) and 11 million unfilled jobs.

The United States cannot keep up with the demand for workers: An estimated 10,000 baby boomers are retiring each day, U.S. deaths are exceeding births, there are fewer women in the workforce, and immigration has dropped in recent years. “Labor shortages are here to stay,” says Buber.

While Big Tech companies aren’t hiring, tech jobs still appear to be abundant elsewhere. In fact, tech career site Dice found that job postings for tech-focused roles were up 25% last year, and nearly two-thirds of those jobs were in other sectors like healthcare, consulting, defense, and banking.

Across the board, tech CEOs who announced layoffs have said they over-hired for consumer demand that didn’t last. In some cases, recruiters say employers paid $40,000 and $50,000 above normal salaries in a fast scramble for workers.

A reset is underway in the employee-employer balance, says Schawbel. “Things went too far in one direction, and they’ll ultimately meet in the middle somehow,” he says. “But when the economy and labor market improves, employees will have the upper hand again.”

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