> I really get the feeling that many companies are just blindly doing whatever other companies do.
A social contagion if you will. It doesn’t seem rational at all at this point.
Hopefully some of the more naive people in the industry learn something from this. Your employer would happily kill your if it were legal and they made a cent more doing so, let alone something less like fire you.
Layoffs are rational and are common in downward cycles.
I get the feeling that a lot of the shock and awe here is due to age and a lot of people starting their careers during an extended boom period, particularly in tech which was getting absurd. The last few years in particular were far from rational.
Now the Fed is raising interest rates, housing is cooling, cheap money is no more ... and as a result you get a downward business cycle resulting in layoffs.
I don't see anything new here that hasn't happened over and over again ... but I've been in the industry for decades with multiple companies and sectors.
These companies aren't charities, they aren't meant to retain jobs just because they are profitable, and they definetly aren't your friend. Many of them are publically traded, which at the end of the day are beholden to one and one thing only, the shareholders.
I'm curious why you are calling them rational? They will lead to reduced morale. And will lead to more attrition afterwards. And probably won't lead to any sort of increased income. So, what makes them any more rational than going straight to bankruptcy?
Layoffs are rational and are common in downward cycles.
What downward cycle?
All I'm hearing is panic and hand-wringing about the economy, but I don't see what the problem is.
We had a "recession" in Q1 and Q2 of 2022. GDP dropped from 20,006 to a low of 19,895, then it went right back to its previous growth path.
Inflation is high, but it's dropping. It maxed out at 9.1% in June of 2022. Now it's down to 6.5% and expected to drop in the upcoming update (Feb 14).
We weathered a global pandemic, subsequent supply chain issues, and a war on the other side of the world that disrupted the energy economy. We're doing great, but people are fretting like it's 2008.
These companies are using forward-looking metrics to make these types of decisions, it really isn't follow-the-leader.
I don't have access to the data, but it's quite possible with interest rates rising, high inflation, and tightening monetary policy that they are seeing slowing growth/sales. Companies want to get out ahead of that, especially with the massive (and frankly absurd) hiring that these companies did over the last 2 years.
I'm not buying that Microsoft laid of people because Google laid off people, and Spotify laid off people because Microsoft laid off people. Somewhat unfortunately, these public companies are expected to show constant revenue growth, and they will "trim the fat" at a moments notice.
These companies are using forward-looking metrics to make these types of decisions
Such as? This seems super hand-wavy.
The pandemic already happened. Inflation peaked last summer, after the Fed responded. The supply chain crunch is resolved or resolving.
They had the bad news months or years ago. What are these forward-looking metrics that are worse than what we already experienced in the last few years, and why isn't the entire market panicking over them?
A social contagion if you will. It doesn’t seem rational at all at this point.
Hopefully some of the more naive people in the industry learn something from this. Your employer would happily kill your if it were legal and they made a cent more doing so, let alone something less like fire you.