[spiderice]

I've heard this theory a number of times. I'm not against it. I just don't understand how it would work. Wouldn't salaries just increase again once everybody starts hiring? If this theory is true, all these layoffs are leaving these companies understaffed. Meaning they need to hire everyone back eventually.

[vineyardmike]

The success is two fold:

1. layoffs make people desperate and reset the expectations. Eg I made 300k at Google but when unemployed I’ll take a job for 100k at a random company. Then Google can hire back at 200k and be the top salary again.

2. Layoffs make the employees scared of being laid off. They don’t expect raises, just employment. They work harder for less just to keep a job. Look at Amazon announcing most people won’t get a raise or even a stock refresh with the stock crash.

This works at scale even as some individuals and companies don’t comply.

Bonus: layoffs (somewhat) reset the cost basis of the company and save a ton in a long term downturns. It gives cover to kill that blockchain department that everyone realizes they don’t need.

[MonkeyClub]

> It gives cover to kill that blockchain department that everyone realizes they don’t need.

There goes Web 3 (and 2.5). I guess we'll be stuck with sucky Web 2 for a while still, while all the aunties are onboarding.

[mercer]

at least word clouds are not so common anymore...

[rland]

Yes, but not immediately. This is how it works:

1. There are a finite number of software engineers capable of competing with FAANG.

2. You outbid outsiders. At times, talk to your friends and tell them not to gum up intra-clique recruiting.

3. This continues for a long time, but at some point, salaries get a little too high.

4. Flush everyone all at once... resetting the baseline of what a tech salary "should be." This resets expectations for all the new talent coming in that might compete with you.

5. After the tech salary "should be" a few tens of thousands less... quietly start (2) again.

If you time it right, (2) happens when money is cheap and it's easy to found a competitor, while (4) happens when there is a "tech downturn" and VC are scared. What a tech salary "should be" is quite sticky, it takes a few years of (2) to actually change baseline expectations.

The existing cultural understanding of what tech workers "should be making" influences: what do the most promising new hires demand? how aggressive are your existing workers in asking for a raises, promos, etc? what do people take as a "given" and what do they think is a reach for them? These things operate as a sort of piggy bank. Every time you outbid a startup for promising talent, you are drawing from the piggy bank; that person tells their friends, makes a post on linkedin about it, which causes subsequent outbiddings to cost, pound for pound, ever so slightly more. When the piggy bank is empty, you refill it again by traumatizing everyone with a big, industry-wide layoff. But: you can only do this if you have a big hammer to wield.

As a bonus, if you can be a little bit discerning in your firings, you actually can shed dead weight in the process.

[pcthrowaway]

This is still taking a pretty big bet that hiring won't cost them more in a few years with inflation anyway, compared to retaining employees and just giving them the expected yearly payraise

[veqq]

https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...

> 2010 United States Department of Justice (DOJ) antitrust action ... Adobe, Apple Inc., Google, Intel, Intuit, Pixar, Lucasfilm and eBay

had colluded to not hire workers from each other, to suppress salaries. Facebook actually didn't play along, ultimately leading to the decade's compensation explosion.

[MuffinFlavored]

> just increase again once everybody starts hiring

How long until that? 12 months, 18 months?

If you got fired from your $180k/yr job in 2023 and inflation is another 6% this year (after being 8% last year), you need a $190k/yr job in 2024 to have broken even, right?