[jarym]

The Federal Reserve wants to tame inflation by cooling the economy. I don't believe that historically that has ever been achieved without causing unemployment to rise.

These large companies are ultimately doing what the Fed wants them to do, no point blaming the c-suite for that?

[hnfong]

Worse, they're actually sort of using unemployment rate as a benchmark on when the economy has cooled down and when to stop raising the rates.

eg. https://www.forbes.com/sites/dereksaul/2022/10/12/does-the-f...

It's politically incorrect to say the Fed is trying to make x% people lose their jobs but that's basically what they're scheming for the past year or so...

[MSFT_Edging]

Its politically incorrect because you're not supposed to say the quiet part out loud.

Our system relies on the fear of the bottom. Capital is in charge, they require the threat of destitution in order to continue to get away with their continued extraction. When wages go up, more power is vested in the worker which isn't okay by the folks at the top.

[Ancalagon]

I didn't used to believe this but its actually true.

[malcolmgreaves]

They could all take massive pay cuts to preserve jobs. They have agency and they have chosen to enrich their stock price at the expense of people’s lives and well being.

[onlyrealcuzzo]

Contrary to popular belief, at a company the size of MSFT - the execs could drop all their wages to $0 - and it would not be able to save 5% of the workforce from getting fired.

The execs get paid a lot - but there's not that many of them, and there's 200k people at MSFT making an average salary (with benefits) >$200k. That's >$40B per year. The execs don't take home >$2B per year.

Satya made <$60M last year. There's not 35 execs at MSFT making the same amount of money or higher. There's 18 others, and they make a lot less money on average.

[roflyear]

MS c-suite makes a total of roughly ~$135,244,086, the board of directors make a total of about $4m (gates takes no salary at all, btw).

This 10k layoff, at an average salary of 190,302, is about $2b a year. So yeah not quite - but for them to suffer no consequences is still pretty gross.

[notfromhere]

Worse thing is that MSFT minted $72B in net income last year, so these layoffs are really about them saving...2.7% of net income in exchange for messing with the lives of 10k employees.

[LadyCailin]

> gates takes no salary at all, btw

This is in part, due to the fact that he has nothing to do with Microsoft anymore.

[roflyear]

Ah, I thought he was still on the board. One website listing salaries lists gates. Weird.

[raydev]

> it would not be able to save 5% of the workforce from getting fired

This part of your statement has no relevance given MS's position, even taking into account the current market.

MS as a company is in no danger here. In fact, they are doing quite well.

[onlyrealcuzzo]

> This part of your statement has no relevance given MS's position, even taking into account the current market.

You hire people if you need them, fire them if you don't. It's really that simple.

Your employer doesn't owe you a job.

[culi]

If all 10k of these workers get paid an average of $150k, Satya's salary alone would cover 4% of them. I find it hard to believe you couldn't save 5%

Do you have any actual numbers on the number of execs vs workers and their salaries?

[mrandish]

I just saw a headline yesterday based on a new study which said the average U.S. CEO's compensation is 399 times the average employee. So there's your number. A CEO taking zero would cover less than 400 employees. Also, keep in mind the vast majority of Satya's compensation is in long-term vesting stock options which can become worthless if the stock is lower in four years than it is this year. Also, due to how capital gains taxes work, Satya is going to hold his vested options for at least another year after they vest.

Plus, every sale of the company's stock by a key executive is immediately reported to the SEC and publicly available on the SEC and company's websites. Wall street watches this like a hawk. If any key exec unloads more than a few percent of their entire holdings at any one time, it will hurt the stock price pretty substantially. Effectively, it makes it so the CEO can't sell a lot their stock at once while they are CEO.

The big numbers you see for CEO compensation for this year are largely stock options that were granted years prior which vested this year. Almost all of Satya's compensation is performance-based instead of guaranteed. The company he leads must deliver sustained profitable growth over the long-term for his comp to be worth a lot. The fact it's worth a lot this year is almost entirely due to him already delivering on his commitments to shareholders in the past. Keep in mind that the average public company CEO is in the CEO job less than five years. Satya is in the minority that is succeeding. Due to the high visibility of the CEO role, the majority who don't succeed have a high likelihood of never earning significant compensation again.

[culi]

> So there's your number. A CEO taking zero would cover less than 400 employees.

That's not our number at all. GP said "executives" which includes a lot more than the CEOs. For all I know 1% of the company could be executives

[onlyrealcuzzo]

Well, I told you how many "execs" are at MSFT. It's 19 out of >200k employees - so there's 100x less execs than your guess.

[cocoland2]

Out of curiosity, Did you mean 20k people making more than 200k. The overall strength is 220k at MS isn't it

[shiftingleft]

Microsoft net income 2022: ~$70B. Why force pay cuts or fire workers when you have roughly $300k of net income per employee to work with?

[onlyrealcuzzo]

Why make a profit when you can pay your employees >100% of your revenue and just go into debt instead?

It's not how business works.

You hire people if you need people, and you pay them the least you can get away with, so you maximize profits - because long ago, you raised money with the promise to the people you raised the money from that you would do this, and you have a Fiduciary obligation to do so...

[coldpie]

> you pay them the least you can get away with, so you maximize profits

We agree then that employees should put in the least amount of work that they can get away with, right? Fair's fair.

[ckdarby]

That is what a lot of employees do. That is why these layoffs are probably happening, cutting 5% could have been done by freezing hiring and performance evals.

They're particular individuals who will take a stance like what you're outlining and sit in a limbo state outside of performance firing them. They bring down team moral, high performing employees feel cheated, etc.

[coldpie]

I think it would be more accurate to say it exposes to the high performers that they are being cheated. Those employees are donating their time & effort to the company so that their bosses can drive fancy cars, fund yacht racing teams, take tourist trips to LEO, buy social media companies to use as toys, and pay off politicians to keep those same employees desperate. The owners want employees fighting amongst themselves for scraps because it keeps them distracted from their real enemy.

[roflyear]

Lots of companies do take no profit and pay out entirely to their employees, and there are some famous examples of that.

[onlyrealcuzzo]

Lots of co-ops and private companies...

Please show me one public company that has said - sorry shareholders - we're returning 100%+ of profits to our employees forever.

[skinnymuch]

Who cares if a public company hasn’t done it? We know it’s possible. We need to make the world a better place not have the status quo.

[skinnymuch]

Long ago capitalism and then neoliberalism infected our brains. There’s no rational reason why any of these promises were made in the first place while still having people without health care or a home.

[w0m]

The argument would be sustainability I believe.

[skinnymuch]

Microsoft will survive even if they never fire another person for years.

[coldpie]

Microsoft spending $70B in cash this year is proof of that, in case anyone reading doubts the above statement. https://en.wikipedia.org/wiki/Proposed_acquisition_of_Activi...

[unity1001]

> The Federal Reserve wants to reduce wages by cooling the economy

There. Corrected.

https://mronline.org/2022/05/26/u-s-federal-reserve-says-its...

[whatever1]

How did the Fed force the companies to over-hire?

[kyrra]

See the Fed's own theory on this topic: https://www.federalreserve.gov/faqs/money_12856.htm

> For example, when interest rates go down, it becomes cheaper to borrow, so households are more willing to buy goods and services, and businesses are in a better position to purchase items to expand their businesses, such as property and equipment. Businesses can also hire more workers, influencing employment. And the stronger demand for goods and services may push wages and other costs higher, influencing inflation.

[mattnewton]

My layman’s understanding is that near zero interest rates make borrowing nearly free and so investments like lots of headcount are rational. The companies don’t have to be doing the borrowing directly (though some do), they can simply benefit from investors willing to tolerate more risk since they have fewer “safe returns” as options, or more income from consumers who are willing to spend at low interest rates.

[notch656c]

By lowering interest rates to the point people chased ever more expansive and risky investments. If all your competition is getting free money you as a business must generally take it too or extinguish to your over-capitalized competition. People also have more loose money which means if you can't up your production your customers will find alternatives and your business will dry up.

[mikojan]

Inflation has been attributed to rising profit margins[0]. Surely, you can take a jab at those who profitted at every step.

[0]: https://www.epi.org/blog/inflation-minimum-wages-and-profits...