The Tech Industry's Legacy: Creating Disposable Employees 271
An anonymous reader writes: VentureBeat is running an indictment of the tech industry's penchant for laying off huge numbers of people, which they say is responsible for creating a culture of "disposable employees." According to recent reports, layoffs in the tech sector reached over 100,000 last year, the highest total since 2009. Of course, there are always reasons for layoffs: "Companies buy other companies and need to rationalize headcount. And there's all that disruption. Big companies, in particular, are seeing their business models challenged by startups, so they need to shed employees with skills they no longer need, and hire people with the right skills."
But the article argues that this is often just a smokescreen. "The notion here is that somehow these companies are backed into a corner, with no other option than to fire people. And that's just not true. These companies are making a choice. They're deciding that it's faster and cheaper to chuck people overboard and find new ones than it is to retrain them. The economics of cutting rather than training may seem simple, but it's a more complex calculation than most people believe. ... Many of these companies are churning through employees, laying off hundreds on one hand, while trying to hire hundreds more."
But the article argues that this is often just a smokescreen. "The notion here is that somehow these companies are backed into a corner, with no other option than to fire people. And that's just not true. These companies are making a choice. They're deciding that it's faster and cheaper to chuck people overboard and find new ones than it is to retrain them. The economics of cutting rather than training may seem simple, but it's a more complex calculation than most people believe. ... Many of these companies are churning through employees, laying off hundreds on one hand, while trying to hire hundreds more."
It all comes down to payroll (Score:5, Insightful)
Turn about's fair play (Score:4, Insightful)
As someone who is "surplussed" and "losing" my job in March, it's the norm (3rd time in less than a decade.. Buyouts, contract losses, etc). Just don't complain when your newly hired $150k/year wunderkind jumps ship 3 months later for someone offering more. You've created a "fuck you, I've got mine" bed, and we're all laying around in it.
Re:It all comes down to payroll (Score:5, Insightful)
Hire another local programmer at 110% of the fired employee's salary to fix the cheap H1B programmer's code = 60% loss.
It's about raising the mean... (Score:4, Insightful)
When you hire tons of people especially quickly, you're going to have a lower mean of high quality people. Churn can be as stated, but also a common part of the industry, is to find a way of increasing the quality of your employees. Fire the worst, replace them with better. Rinse and repeat. Sometimes its about a body, any body, to move the ball forward. Then it's about getting better and better people. It's not just about training, it is still largely a talent based industry, where the majority of the progress is made by a minority of the people.
Welcome (Score:4, Insightful)
to greedy, laissez-faire, unregulated, globalized, secret-trade-agreement-favoring, trickle-down, uncaring, 1% favoring capitalism.
Republicans out there -- you voted for it, you got it. As they like to say, "To hell with you, Jack, I'm all right."
Except for not being true (Score:2, Insightful)
Sure, there are large layoffs in the tech industry, but big layoffs are not a new thing.
Two of the largest layoffs in US history occurred in 1993. 60K employees at IBM and 50K employees at Sears/KMart.
Big layoffs are a result of other business conditions, including.
An actual need to cut expenses -- bloated, slow-moving companies find themselves in the condition of declining sales, and big losses.
A desire to increase profit margins, often linked to increased stock prices -- CEO's can get lots of bonus compensation in this form
A result of chopping up a company, perhaps resulting from a hostile takeover.
None of these are unique to technology companies.
Re:It all comes down to payroll (Score:5, Insightful)
That 60% loss is not in this quarter. So the hiring manager has already received his bonus based on the 50% savings.
Re:It's about raising the mean... (Score:2, Insightful)
it is still largely a talent based industry, where the majority of the progress is made by a minority of the people.
No, it's a suck-up based industry, where the majority of the progress is made by those who know the right people, speak the right buzzwords, or went to the school that prepares you for the silliest interviews. I've got way further than I deserve on technical merit because - as Cartman would put it - I respect authority.
The same can be said of pretty much any industry which isn't well regulated or well unionised (there are bad regulations, e.g. the regulatory capture of accounting exams, and bad unions, which see productivity as defeat rather than a common goal - though such unions are far more common in the US than Europe).
Re:Time for a UNION! (Score:5, Insightful)
Although this problem needs a solution, a union is not that solution. Unions are a relic of a bygone era. The core premise of a union is that employes are all the same and can be swapped in and out of work like parts in a machine (once they are trained). This leads to collective bargaining which takes back some of the power that big employers have. However it also removes individuality from the worker. If I am smarter, stronger, or more skilled than my coworkers, I want to be able to elevate myself based on my merits. A union interferes with that. You pay a union, and the union acts only in its own best interest, not in your individual best interest.
Modern skilled workers, especially in the IT and Engineering fields, are usually very specialized. This is not a good fit for a union. It would be ill advised to take a good thing and remove all motivation for creativity and the free flow of invigorating talent.
A better solution is to simply prevent large corporations from getting away with their bullshit. No "gentleman's agreements" to prevent poaching. Stop accepting lies regarding layoffs and market performance. Reward employers for using home-grown talent rather than rewarding them with tax loopholes for moving overseas.
Disposable Employees also in turn create.... (Score:5, Insightful)
....disposable employers.
When the market is doing well, which is almost all the time since I been in IT in my area, it's not hard to find jobs. So if somebody comes along and offers me more money, equal hours (or better) and equal or better working conditions, well let's just say I have a macro'ed resignation word doc that fills in date and employer name. Why? Because I know if the tables where turned, they would not hesitate to put my head on the chopping block.
Loyalty is for suckers.....
Do I like it this way? No, but this is the world we live in.
That's a myth (Score:3, Insightful)
Hire another local programmer at 110% of the fired employee's salary to fix the cheap H1B programmer's code = 60% loss.
No. If they DO have to hire a local person ( non-H1-b), they are able to get them at 90% of what they originally paid him.
See, the offshoring and H1-B has been putting DOWNWARD pressure on salaries.
Salaries here where I live haven't moved in 15 years - and that's not including inflation.
Sorry, but there is no real downside for a company to hire offshore or H1-B labor - only an upside.
Re:Disposable Employees also in turn create.... (Score:3, Insightful)
Tough problem (Score:5, Insightful)
This is a very current problem. The tech press is talking about IBM's announcements/rumors about yet another huge restructuring. Not so long ago, IBM was one of the most stable places in the world to be employed at outside of government and academia. There was an implicit contract that employees who contributed and worked within the framework of the company would be taken care of for an entire career. I think that needs to come back for those who desire it, not necessarily for socioeconomic reasons, but for workforce improvement reasons. This move to contractors and outsourcing for everything is just idiotic MBA management consultants looking at a spreadsheet and seeing a way to shift costs. The long term problem is that loyalty works both ways, and employees who are treated as disposable will treat their employers the same way.
I know that large organizations generate forests of dead wood as well, and that there comes a time when some of it needs to be cleaned. However, an enlightened company in my mind would be better served retraining that dead wood worker for something else. You get someone who knows the organization's culture and politics, and the institutional knowledge of how their previous job was done doesn't walk out the door.
I know I'm not in the majority on /., but I would love the ability to stay with the same employer for an extended time, without the worry of suddenly losing my job and immediately being branded with The Scarlet Letter U (unemployed) that prevents me from being hired ever again. I actively seek out employers who treat their employees well in exchange for long service -- and they're harder and harder to find. The reality is that the industry is rough - the 25 year old single coder/systems guy is preferred over the experienced person who's done the latest rehashed tech fad over and over again. Anyone with a family would be pretty foolish to go the contractor route - it's hard to explain to the family that you can't pay the bills this month because a customer didn't pay you or there's no work to be had. There's a difference between someone like me, who would put in extra effort in exchange for more security, and someone who just wants job security because they're lazy. I've worked with plenty of those types over my career as well -- they set themselves up as the single point of failure in a system or hold all the knowledge on a particular process just because they're scared someone will come and lay them off. You would get less of this if large companies didn't routinely say "we're cutting 30,000 workers" the way HP just did.
The problem for me with contracting isn't the constant learning - I like that. It's the bouncing around, never knowing where you'll be in 6 months, and never getting to finish anything you start.
In a perfect world, my solution would be twofold:
- Admit that there is going to be huge structural unemployment in the future, and enact European style unemployment insurance and worker protections.
- Take the design/engineering aspects of IT or SW development, draw a clear line between the engineering and the tech tasks, and merge it into the licensed professional engineer track. A professional organization would get a lot more support than the unions that techies irrationally fear. In addition, having a clear career ladder starting out as an entry level tech, spending the time necessary to make mistakes, then graduating to a status that requires you to be responsible for what you build/design is a good thing.
So...don't be disposable. (Score:4, Insightful)
This sounds a little insensitive, but, don't be disposable. You're a Windows admin. Great. So are a million other people. If you're a Windows admin who also knows some programming, there are maybe 250,000 people with your skill set. If you add in that you know some Linux, maybe 100,000 people.
What I'm saying is, if you want to be safer than the average employee, don't be average. Enhance your skill set.
Re:Turn about's fair play (Score:5, Insightful)
new employee act like they want to join for life.
The key word here is act, because as far as I know, nobody joins a company for life anymore, unless he's in civil service. Not the lowliest contracted janitor, right up to the (contracted) CEO.
Re:It all comes down to payroll (Score:5, Insightful)
This. I've actually seen this practice in action. My division is always in the red because we do not directly make money, we build the products, services and tech that another division then sells. So we end up looked down upon as a money sink while they are heralded as the saviours.
That's a severe management problem, which is solved by internal billing. Everyone using your services should get an internal bill, which gets internally counted as your income. If your department thinks something should cost $100,000 and they only want to pay $50,000, then they should hire an outside company to do the job for $50,000 (either you are inefficient, or they are living in a dreamworld). Obviously with heads rolling if you offered to do the work for $100,000, and they found someone who offered it for $50,000 and ended up costing $200,000.
The solution is to refuse to play their way (Score:4, Insightful)
1. Have/Learn marketable skills.
2. Have plenty of money in the bank and as little debt as possible.
3. Have a source of passive income to help with cashflow during times of unemployment (Rents, royalties, etc.).
4. Have as few kids as possible.
5. Be picky on what jobs you accept. Use 1-3 to exit the labor force for as long as necessary to retrain and regroup.
6. Be active politically: e.g. Lobby congress for tighter H-1B restrictions, better labor laws, inclusive capitalism.
7. Live below your means. Try to do as much as possible yourself without hiring contractors, mechanics, gardeners, etc.
Re:Time for a UNION! (Score:5, Insightful)
Well, as this story suggests, the company already views you as interchangeable cogs, so you might as well go with the flow.
You can still collectively bargain for minimum standards. The engineers should go on strike when they take away the secretaries' health insurance. The secretaries should go on strike when they try to replace the engineers with H1Bs.
The "ruthless meritocracy" bullshit is exactly what your corporate masters want you to believe. That it's all dog-eat-dog, but you could be the top dog! And your coworkers? Psssh those losers are just dragging you down! Best not cooperate with them, or they might get some of the scraps we might toss your way instead!
And really it's the prisoner's dilemma. If the workers work together, everybody can be better off! But if everybody's just thinking of themselves as rugged individualists, well...divide and conquer.
I'm glad I work for a non-profit. It's like being an employee-owner. Everybody works well together, everybody gets taken care of, the janitors have health insurance and retirement plans and we've got a lot of people who've been working here 15, 20, and 30 years.
Re:It all comes down to payroll (Score:5, Insightful)
Unless his next quarter is a negative bonus where he has to pay his ill-gotten gains back, he gets $10000 for hitting this quarter's target and gets only $1000 next quarter. As opposed to only getting $1000 both quarters. The behavior is a no-brainer.
Unless he's high enough up AND his behavior drives the company into bankruptcy, then the gets a $50000 retention bonus to help ensure his leadership through these tough times.
Re:Time for a UNION! (Score:3, Insightful)
LMAO, out they come at the whistle of the word. Unions are alive and well today. There is no premise that people can be swapped out, but that collective bargaining means that we all stand together and no-one can get trodden on. A union is the only way that workers can "simply prevent large corporations from getting away with their bullshit". They got working hours and conditions under control in the 19th century, wages and equality under control in the 20th, and may finally get randomly firing people/hiring H1Bs under control in the 20th. Look at Germany - unions working with companies to produce huge profits, high employment and decent working conditions. At the moment all you're doing is enabling divide and rule from the top down.
Re:So...don't be disposable. (Score:5, Insightful)
Dear Dimit:
Thank you for taking the time to apply to our job. Unfortunately we are not able to extend an offer of employment to you as we feel you are overqualified for this position. Thank you for your interest.
Sincerely,
HR
Re:Time for a UNION! (Score:5, Insightful)
That's an incredibly selfish attitude that puts the individual interest above the interest of the collective. The irony is that collective bargaining is much more effective and is much stronger in the long run. Your self interest is great until such time that you reach a point when other, more skilled people take your place (which is inevitable, because our cognitive capabilities decline with age, not to mention that older people have more responsibilities and find it hard to work 80 hour weeks).
Even the most meritocratic of individuals can run into unforeseen and unfortunate circumstances (e.g., an accident that has you laid up, or family issues). I worked in a strictly up or out management consulting firm, and about a year ago, my pregnant wife had some issues. My son was born, prematurely, and I was in a rough place with my personal needs and professional responsibilities. My wife was hospitalized and my son was in the NICU, unable to breathe, and I was the only one who could take care of things. My employer was understanding -- for about 6 weeks -- after which things got rather unpleasant. So, I quit and joined another firm that is not only more prestigious but was also more understanding and accommodating of my needs. But I was fortunate -- I could very well have been unable to find a job, and been unemployed for a year because I wanted to take care of my family.
Union agreements ensure that in such cases, collective bargaining agreements protect everyone.
Not really. Most of what goes on in IT today is quite commoditized, and there are very few areas that are truly specialized. And it is only going to get worse as IT matures. You may think your task is highly specialized, but the truth is, there's probably someone in another part of the world willing to do it for a tenth of what you get paid. That is not specialization.
If you want real specialization, you perhaps see it in chip design, algorithmic optimization, biotech etc. You know, all those guys with PhDs who specialize in a subject?
And how do you propose we do that? The share market is the ultimate arbiter, and the people who are rewarding the companies and the executives are the shareholders who are in for short term profit (it's the extension of the same short term myopic outlook of looking out for oneself rather than the collective).
I find that most Americans have a poor understanding of unions almost entirely rooted in propaganda, and it gets repeated again and again as gospel. The truth is, unions are immensely helpful to the labor force, especially in a service economy such as ours. Everyone thinks their skill is specialized, until it gets outsourced and commoditized.
You are not special. And despite what you may think, unions can help you negotiate agreements that would be impossible for you to go at alone.
Re:The solution is to refuse to play their way (Score:4, Insightful)
Your list could be collapsed to:
1. Be wealthy enough to not need a stable job.
Re:It all comes down to payroll (Score:4, Insightful)
They can't leave unless it's to go back home. In the case of some countries it's just a few years, but if you're from someplace like India you'll probably be there a decade or more before you ever get a green card.
I've worked at a number of smaller companies, and (at least in that environment) this whole yearly wage increase thing simply doesn't happen. If you want a substantial raise, it means accepting an opportunity somewhere else. Something an H1-B holder cannot do, so it's no wonder that they're preferred. I wouldn't exactly call you slaves, you're really more like indentured servants.