Why Big Tech Laid Off 200,000 Employees | Explained In 5 Minutes

Описание: SOCIALS!
TWITCH:   / theandrewdaniels  
DISCORD:   / discord  
INSTAGRAM: @TheAndrewDaniels
TWITTER: @AndrewDanielsYT


CONDENSED SCRIPT:
If the US job market is extraordinarily tight and missing some 3 to 4 million workers, and the US economy has been growing well the past couple of years, why are these companies tightening their belts so hard? When I say big tech, you probably think of Meta, Google, Amazon, and so on.

While it's true that all those companies are laying off workers in the tens of thousands, these layoffs extend to Spotify, Coinbase, IBM and more.

While there are a lot of reasons that a company might lay people off, I'm going to take 5 minutes to explain the top 3.

Any industry that kept people who were stuck inside entertained absolutely flourished, and consequently, any industry that required people to be out and about took a hard hit.

With the sudden influx of of customers, and therefore more money, tech companies went on a crazy hiring spree thinking this virtual gold rush would last forever, but of course it didn't.

Now, they had a ton of employees they didn't need, and profits were falling, so they essentially started getting rid of people.

They didn't just fire the people they'd hired, rather they looked at all their employees and cut the ones they felt they didn't need.

This included new employees and employees with decades of experience.

For example microsoft cut a lot of jobs from mixed or virital reality divisions as that industry has proven to be a lot less profitable than most people had anticipated.

Amazon has laid off people in it's drone delivery division, since that's gone essentially nowhere in the last 10 years.

Cutting payroll is one of the easiest ways to increase profits, especially if you over-hired during 2020, so you don't really need that many employees anyway, and you especially don't need them if they haven't turned the company a profit since the division was started.

The second reason is companies have Recession Fears It's hard not to inject my personal opinion here, since I think the only reason that a recession will happen is if enough people think it will happen, and start acting like it will by not spending money.

While hiring can be expensive, it can be even more expensive to hold onto employees as profits drop.

So with the knowledge they can relatively easily rehire, big companies are very willing to jump on the layoffs train en route to maintaining stock prices and keep their pockets full.

The final reason a lot of people aren't going to like, and it's essentially copycatting.

Imagine you're google, and you see Microsoft, a rival tech giant, laying off over 10,000 employees.

Then you see that your other tech giant rival Amazon lays off a ton of employees.

Suddenly, Meta also starts laying people off, and now you're really worried.

Then you realize, well none of your virtual reality investments are paying off, and clearly companies are leaning out on payroll, so you're just going to go ahead and get rid of a few divisions that aren't increasing your bottom line.

Now obviously that's a hypothetical and probably Microsoft is too big to jump the gun like that, but think of smaller companies like Spotify or Snapchat that might not have the resources microsoft does.

They see the huge players all getting rid of employees, and think maybe they need to be doing the same, and so they do.

This causes a kind of trickle down layoff effect that that starts with the big companies, and then the little ones get scared and follow suit.

Now, for what it's worth, most of these employees will be fine.

A lot of these big companies gave huge severance packages, and almost 80% of laid off people are finding a new job within 90 days.

I also think this signals the end of the "Pick a company and stick with them for life" trend of the past hundred years or so, because at the first sign of potential trouble, you become a number, and then become unemployed.

**DISCLAIMER**
Nothing in this video is meant to be taken as financial advice, it's purely to educational and entertainment purposes. Before making any significant financial decisions, consult an expert.