Comment by endsync | Hacker News Reader

Comment by endsync | Hacker News Reader

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Bloat is real, but there's another labor market dynamic in play here.

There was a huge run-up in corporate employee compensation in the tech sector over the last few years. (Some called it a "shortage," remember. Some of it is genuine growth in the sector, some of it was definitely "labor hoarding" by large companies that could afford to carry excess staff in a tight market as a hedge against being unable to fill critical roles - or to deny talent to competitors.)

While I would be surprised to learn of explicit collusion to suppress wages (unlike the _In re: High-Tech Employee Antitrust Litigation_ case,) collusion is not needed. The more tech employers lay people off, the more incentive there is for the next large tech employer to announce a layoff, and that's discoverable without collusion. In the aggregate, the benefit to flooding the market to reduce employee bargaining power offsets potential loss of critical talent, because it drives down the cost of acquiring new talent.

The "war for talent" quickly turns to the "war on talent."

You're describing a monopolized labor market. Sure, there may not be felonious collusion, but many of the illegal elements of a monopoly are very much present.. as you essentially point out. I'm also not sure why you would be surprised to learn there is collusion, the size and timing of these blocks are certainly curious, and I think further investigation would reveal quite a bit more than you're imagining here.

I also wouldn't describe it as a "war on talent" when it is actually a "war on wages." This is is also the reason I wouldn't be surprised to find actual collusion here.

The war on wages is being waged (? is that the same word?) by the Fed. Companies just follow.

That's a good point. Few people realize that a big part of fighting inflation is getting wages down. Jerome Powell said as much in an interview in May of last year:

> So in principle, it seems as though, by moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and I think put supply and demand at least closer together than they are, and that that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that. [0]

To be fair, much of the wage inflation (particularly in FAANG) was also led by an easy money policy.

I take issue with heavy handed manipulation of the money supply that leads to these weird dynamics. I've written about it before [1] that a big risk is ever growing Fed power in the form of heavier regulation or a digital currency. Imagine someone can flip a switch and decide that everyone earning above $X will take a pay cut to fight inflation, all without any oversight or judicial proceeding.

[0] https://www.wsj.com/articles/transcript-fed-chief-powells-po...

[1] https://mleverything.substack.com/p/inflation-and-government...

Not just Powell, every Fed kept talking about "we don't want to repeat history". What they meant is 1970-1979, when they were beating down the economy for a decade and when they decided to let the pressure go, inflation went right back where it was before the beating. Because the wages were still up and with the power of the unions it was very difficult to bring them down. At least that's how it was explained to me by a stock market expert.

So until we give up our fat checks from FAANG they will keep beating FAANG down. I dunno, fuck them maybe? But the same expert told me many times: do not play against the Fed.

The top end company stock prices are just like real estate, the money experts always use them to reduce the entire economy to simple terms and over-generalize.

If our only two options are the Fed or FAANG winning I choose neither.

The macro market (and their truthsayers) are obsessed with reducing things to the [current price] of public companies. Even though there is never ending increasing disconnect between their stock prices and the long term value they generate for the broader markets. The more we gamble on those small sets of metrics being the "truth" from which to guide society the more we (see: gov and media) will adapt to protect and push them higher.

> The top end company stock prices are just like real estate, the money experts

Anyone celebrating expensive real estate is celebrating destruction of our economy.

Real estate is an economic input, same as food and fuel. When those get expensive, it is understood that it will lead to widespread misery and poverty.

The people that make money off sitting on real contribute nothong, they should be treated the same way. assomeone who'd make money from hoarding canned tuna.

That implies there's some unspoken understanding among CFOs that the Fed won't ease up until tech salaries go down, and that requires layoffs.

If I have to bet whether this understanding exists or not, I'd bet on exists.

It is the same spelling of the word, but the first is a noun and the second is a verb. Yay for homonyms :)

If you want to avoid repeating that word you could go with

"The ware on wages is being conducted by..."

I'm sure there's other, equally good ways to phrase this, too.

Winner.

> the size and timing of these blocks are certainly curious

The timing of the layoffs was exactly "as soon as all investors decided to stop their long-term deals". It's really not an evidence of collusion, except maybe of the investors. (But they too had an explanation.)

People are confused here because MS doesn't care about investors timing, but they had a clear trend to jump into.

That said, other evidence may be more revealing. This is strictly about timing.

I think you're right in that this is MS jumping on a trend.

Most big companies need to purge workers on occasion, but don't because it sets off alarm bells.

Unfortunately, this is an opportunity for companies to make big cuts without standing out.

No conspiracy needed just raise interest rates with this much debt, turn money printing into QT and cause a recession. Thin wedge is the most speculative areas: i.e tech.

Or maybe it's just because we're entering a recession which makes it necessary to cut costs.

There's no reason to view it as a pure tech-only thing. Every single company has hoarded talent in the past two years owing to the tight labor market. And it only needs some folks to signal before the flood gates open.

Finance is beginning now but a lot of layoffs will follow in H1 2023 IMO.

I don't attach any positive or negative moral value beyond everyone just working in their own self interest.

These layoffs are precisely intended to suppress tech employee wages, which like any other sector, have remained fairly stagnant for the last 5 years.

> collusion is not needed

It's not explicitly needed. However, rest assured there's a mutual understanding among all big tech executives that the next few years are going to be incredibly profitable for them.

Think about it. They can do layoffs as many times as they want. This forces lower wages. They can still use inflation, the pandemic, the recession, and war as an excuse to keep raises low (or non existent). They can keep current employees in fear for several years.

Hey, you're right -- this is a bargaining chip for BigCo, but the "invisible" factor here is that the economy is clearly in freefall and no one is ready to call the emperor naked. Everyone's cutting their losses, and in sectors as important as tech and with companies as big as MSFT, there's always some government support and "insider insight" into these events. If BigTech comes out of this on the other side, I fully expect one big company to be absorbed / dependent upon another. If not, this is prime time for underdogs to really show what they are capable of.

Free fall? That is some ripe hyperbole.

As soon as the dust clears the hiring spree will ramp up again. This is a colluded (public collusion, probably a better term for it that I don't know) wage reset.

Is this a war on talent, or just free market dynamics?

They are both free market dynamics.

'Free market dynamic' just means 'natural' - for some reason people think natural = good.

Cystic fibrosis is natural. So is the Plague and brain tumous.

Collusion, wash trading, self-dealing and insider trading are all 'free market dynamics'.

i always found that word "talent" condescending, like "consumer".

this is HR-speak. i see my colleagues as (code)monkeys not as talent, and i hope they see me the same.

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