WellEndowedDragon t1_j0rlfae wrote on December 18, 2022 at 9:59 PM

Reply to comment by dungone in Tech Workers React to Ongoing Industry Layoffs With Shock by Sorin61

No, no, no, don’t change the goalposts now. A “non-zero impact” is nowhere NEAR “coordination of wage suppression” like you claimed. And a single statement made is not evidence of “pushing an agenda”.

I also Googled “Andreessen Horowitz 50-75% layoffs” and could not find this alleged statement anywhere, so you need to provide evidence they even made this statement in the first place.

Even if that VC did make that statement, and even if they did try to push for layoffs, you need a LOT more evidence than that (which isn’t even evidence in the first place) to claim that there is a widespread collusion campaign to suppress wages in the entire industry.

dungone t1_j0rqith wrote on December 18, 2022 at 10:35 PM

I never said "non-zero" so you need to seriously chill. Just because I can't dumb it down to the level where you can look at a cartoon villain pulling on literal puppet strings doesn't mean that you can discount clear evidence of coordination. For the record, Marc Andreessen said, "The good big companies are overstaffed by 2x. The bad big companies are overstaffed by 4x or more."

And he's far from the only big investor calling for layoffs. Another VC was pontificating on the McKinsey & Company podcast that the bigger layoff the better. Another big shareholder on Google publicly called on them to make massive cuts. The list goes on and on.

Now, let me tell you something. In 4 years of studying for an economics degree I never learned of a single reason why extremely profitable companies (ones that earn hundreds of thousands of dollars in profit per employee) should start doing layoffs in the middle of a strong economy and a worker shortage. Normal, sane common sense would tell you shouldn't even begin to contemplate layoffs until you are literally at risk of going bankrupt. And this is backed by research: https://www.careerusa.org/resources/career-files/158-resources/career-files/16-must-read-articles/372-lay-off-the-layoffs.html

> But some of the drawbacks are surprising. Much of the conventional wisdom about downsizing—like the fact that it automatically drives a company's stock price higher, or increases profitability—turns out to be wrong. There's substantial research into the physical and health effects of downsizing on employees—research that reinforces the seemingly hyperbolic notion that layoffs are literally killing people. There is also empirical evidence showing that labor-market flexibility isn't necessarily so good for countries, either. A recent study of 20 Organization for Economic Cooperation and Development economies over a 20-year period by two Dutch economists found that labor-productivity growth was higher in economies having more highly regulated industrial-relations systems—meaning they had more formal prohibitions against the letting go of workers.

So, what's the alternative? That the wealthiest investors who control the tech industry are a bunch of massive idiots? I could buy that. But I can also point to the fact that these companies have a long history of wage suppression and anti-labor actions. And the've already been found guilty of doing it in court. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation

I'm going to trust the business school professor who says that there is no legitimate business need for layoffs and that the only reason these lucrative companies are doing them is because they are taking their queues from other companies (and investors) who are also doing layoffs. I know that it can be hard to connect the dots, but that's another way of pointing out that this is coordinated.

WellEndowedDragon t1_j0rzfay wrote on December 18, 2022 at 11:40 PM

Thank you for providing sources and logical explanations. I was never saying that there definitely wasn’t coordination between VCs and tech executives to push for layoffs, I just get highly annoyed when people make grandiose, sweeping claims based off a single anecdote.

However, I still disagree with you on some fronts.

> I never said non-zero impact

You said “you think Andreessen Horowitz pushing an agenda has zero impact on the tech industry?”. Implying that they had some (i.e. non-zero) impact, which is vague, broad, and certainly does not mean “coordination to suppress wages”. I never said that they had zero impact, simply that the statement by itself doesn’t come close to proving widespread collusion for wage suppression.

> extremely profitable companies

You do realize that the majority of tech companies, especially startups, are not profitable, right? The modus operandi for startups and even midsize tech companies is to throw everything into growing as quickly and as widely as possible, profitability be damned.

Now, we may see that change as this economic environment has caused investor sentiment to shift towards prioritizing profitability over growth potential, but overall, the vast majority of tech companies who did layoffs are not profitable. Companies that are highly profitable, like Apple, Google, or Microsoft, have either not done any layoffs, or in Microsoft’s case, cut less than 0.5% of their staff.

> backed by research

Unfortunately, many tech execs and VCs don’t exactly make decisions based on scientific or empirical soundness. Your study itself say that the “conventional wisdom” is that layoffs automatically drives the stock price higher and increase profitability.

So, what do you think is more likely?

A. That major stakeholders and decision-makers are doing layoffs due to an emotional response (getting scared because they see other companies doing layoffs, so they wonder “should we do that too?”), plus a genuine belief in the conventional wisdom that layoffs would increase their company value and profitability?

or,

B. That all of these layoffs are actually part of a massive conspiracy to lower wages in the industry, despite wages trending way up in the past few years?

> found guilty in court

That is verifiably false. If you had read your own source, you’d know that there was never even a trial held, and the plaintiff companies in that case immediately settled. In American law, settlements are explicitly not an admission of guilt. Innocent companies settle all the time, because settling is very often far cheaper and less risky than fighting a big lawsuit in court.

Now, don’t get me wrong — I’m NOT saying that there isn’t anti-labor and anti-union efforts in the tech industry, as I know that those efforts are widespread in ALL industries in the hypercapitalist corporatocracy that is America. I’m just saying you can’t say they were “found guilty in court” of doing so.

My overall point is that you cannot say there is widespread collusion in the industry to suppress wages because there is simply no concrete, definitive evidence to prove that’s the case. All you are doing is speculating based off some statements made by some VCs, and a lawsuit from almost over a decade ago that never even went to trial. Granted, it is logically sound speculation, but it’s still just that: speculation.

dungone t1_j0s58i8 wrote on December 19, 2022 at 12:22 AM

Here's a great quote about what's going on:

> I’ve had people say to me that they know layoffs are harmful to company well-being, let alone the well-being of employees, and don’t accomplish much, but everybody is doing layoffs and their board is asking why they aren’t doing layoffs also.

(Aside: this quote rings extremely true to me personally because several CEOs have told me similar things).

So why are executives who are fully aware that the layoffs are bad for the company doing layoffs? Because their boards are pressuring them to. And who are their boards composed of? VCs and other extremely wealthy investors. Just take a little deeper look at boards and you'll see that it's largely the same group of oligarchs serving on the boards of most companies. Firms like Andressen Horowitz are on the boards of hundreds of companies. This is not a grandiose claim. This is the exact mechanism for coordination in our corporate economy.

I'm not going to show you a cartoon puppet master villain. I think you're confusing coordination with something more like blackmail when you say you want "concrete proof". The things I've brought up so far are in fact evidence of coordination.

WellEndowedDragon t1_j0s6jnw wrote on December 19, 2022 at 12:32 AM

Did you even read my comment?

Refer to the second to last section of my previous comment, as that has already directly addressed what you just said. Then answer the question I posed in that section. Then address the other points I have made. I’ve shown you the respect of addressing all the points you’ve been making instead of ignoring them, I expect you to do the same.

dungone t1_j0s7srt wrote on December 19, 2022 at 12:41 AM

Like I said, the evidence is in front of your face. You're either going to see it or you don't. To press this home - I'm kind of telling you that these behaviors are coordinated by definition. But I'll pose this question to you: what would you consider "concrete" evidence? If it's not the guy who owns all these companies saying, "hey everyone start doing layoffs" and then they all start doing layoffs, then what? And when the executives are saying, "well, we really don't think layoffs are the right thing to do, but the board is telling us to," then what? And if business school professors are saying, "the only reason they're doing layoffs is because other companies are doing layoffs," then what? How exactly would you personally define the word "coordination"?

Now, I'm going to give you that I haven't explicitly said how coordinated layoffs are related to wage suppression. Although that should be obvious. And it's one of many coordinated wage suppression attempts. We're talking about tech here. Outsourcing, H1B visas, even the corporate diversity programs, their secret no-poach agreements, and even their "teach kids to code" initiatives all share the same exact goal: increase the engineering labor pool and depress wages.

WellEndowedDragon t1_j0tk3ti wrote on December 19, 2022 at 8:30 AM

You’ve made some very good points, especially regarding bringing up all the other tactics they’ve done to increase the labor pool.

However, I’d like to point out that your very last statement is not entirely accurate. They do all of these things with the true end goal not being to depress wages, but to increase the value of their investments as much as possible and thus make as much money as possible. Of course, lowering costs (i.e. wages) is very often a major factor in that, but they aren’t just evil and intentionally trying to make tech workers poorer.

Now, with that being said, let’s switch context to all of the research you presented showing that layoffs more often than not harm the well-being (and thus, the value) of the company rather than helps it. With that in mind, if layoffs hurt the value of the company, and thus the value of investor equity, why would investors push for layoffs?

This now loops back to the point I was making in my earlier comment that you completely ignored: there is a very good chance that investors genuinely believe the conventional wisdom that layoffs will increase the value of their investments and profitability of the companies they have stakes in. Again, they aren’t calling for layoffs explicitly to suppress wages, they call for them because they think it’ll make them more money.

So, I’ll again ask the question which you still haven’t answered — what do you think is more likely?

A. That major stakeholders and decision-makers are pushing for layoffs due to an emotional response (getting scared because they see other companies doing layoffs, so they wonder “should we do that too?”), plus a genuine belief in the conventional wisdom that layoffs would increase their company value and profitability?

or,

B. That all of these layoffs are actually part of a massive conspiracy to explicitly lower wages in the industry, despite wages trending way up in the past few years?