Xuu 🌹(he/him) ☮️🗽🚀Jan 23, 2023
Max Kennerly

Layoffs and stock buybacks are usually perceived by investors as savvy business decisions by pragmatic leaders when in reality both are an admission by the board and management that they have no idea what they're doing.

Layoffs are an admission the company doesn't know how to use human resources.

Stock buybacks are an admission the company doesn't know how to use capital.

https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/

What explains recent tech layoffs, and why should we be worried? | Stanford News

As layoffs in the tech sector mount, Stanford Graduate School of Business Professor Jeffrey Pfeffer is worried. Research – by him, and others – has shown that the stress layoffs create takes a devastating toll on behavioral and physical health and increases mortality and morbidity substantially. Layoffs literally kill people, he said.

Stanford News
Jan 21, 2023 at 6:14pmWeb
Show threadMrs RavenJan 21, 2023

@maxkennerly

Also, they don't know the work and have no idea how to get it done.

Theyve been hiring smart people to organize and get it done. The people at the top have no clue and here they go again, proving it.

Show threadMikeJan 21, 2023
@maxkennerly Stock buyback are proof corporate profits are too damned high.
Show threadMustansirMJan 21, 2023
@maxkennerly In a system where a company can mass layoff without legal repercussions, it's totally pragmatic for leadership to overhire and then layoff in cycles, as all their competitors are doing the same. The natural solution to this issue is regulation.
Show threadDavePerrino ✅Jan 21, 2023
@maxkennerly Human capital is expendable in today’s corporate plan. Worker protections in the US pale in comparison to other developed countries. In the meantime, republicans have their masses convinced that taxing corporations is bad for them. It will not change until we #PubliclyFundAllCampaigns.
Show threadEdin 🇪🇺Jan 21, 2023
@DavePerrino @maxkennerly meh, tech workers are still doing way better in US than anywhere in the world. There is way more worker protections here in Europe but I honestly don’t care about it knowing that an american engineer earns twice or even three times the money doing the same work as a European one.
Show threadSouthern LeftistJan 21, 2023

@techtraveler @DavePerrino @maxkennerly
Stop being ignorant.

You never know when the Tories will do a one-eighty on you.

Keep those guards up, pal.

Show threadEdin 🇪🇺Jan 22, 2023
@south_lib @DavePerrino @maxkennerly idk what a one-eight is, not from the UK
Show threadSouthern LeftistJan 22, 2023
@techtraveler @DavePerrino @maxkennerly
Oxford definition of 'one-eighty':
"A complete reversal in attitude or opinion."
Show threadPatty KimuraJan 22, 2023
@techtraveler @DavePerrino @maxkennerly "Total compensation" package is more than wages. Americans pay for our health coverage, that coverage is lost when you're fired. Avg premium cost for employee with children $22K. Avg family deductible before coverage is $3500. What about paid sick, vacation days? If you only compare wages you aren't comparing apples to apples. There's also out of pocket copays and co-insurance costs.
Show threadEdin 🇪🇺Jan 22, 2023
@pattykimura @DavePerrino @maxkennerly i dont disagree with you, my point is that tech workers are the last to complain. For them this trade between job security and raw numbers very much is worth it. A tech worker in a medium cost of living area in the US can earn triple the salary as someone in spain or france or italy. That easily makes up for the lack of insurance or unemployment benefits.
For other types of labor this of course does not apply.
Show threadPatty KimuraJan 22, 2023
@techtraveler @DavePerrino @maxkennerly Projections in the tech sector remain good for hiring. Unemployment generally is 3.5%, tech sector less at 2%. But job types are changing from high paying Silicon Valley to less high paying, banking, healthcare, insurance, and gov work. You can still easily find work, but the market is changing and wages will not remain as high on trend in the US. I used to work in hiring, employers are well aware of this trend. But you might find exceptions. Best wishes.
Show threadWestTexasJesusJan 22, 2023
@DavePerrino @maxkennerly let's not leave the Democrats out of this as they work in concert with their Republican counterparts to carry out the wishes of the ruling class. No matter what happens in politics the wealthy always seem to get the legislation passed that benefits them. #PubliclyFundedElections #multipartysystem #termlimits
Show threadAratharJan 21, 2023

@maxkennerly In 20+ years working in software, I have noticed that mass layoffs are frequently related to poor product decisions. It is an opportunity for management to trim teams when sales don't match expectations. Although profit margins can be high in software, the product failure rate is also high and many staffing reorgs are really a reaction to executive failure.

Spot on for the stock buyback. It means the company has too much cash and doesn't know how to grow organically.

Show threadSouthern LeftistJan 21, 2023

@arathar @maxkennerly
This is why labor unions and regulations are a must.

Whether ya like them or not, they're likely the only thing keeping a despotic, corporate regime from descending upon modern society.

I wouldn't want a Bill Gates-sleaze domineering every aspect of my life.

Show threadartisanroxJan 22, 2023

@arathar @maxkennerly

>and doesn't know how to grow organically.

*doesn't WANT TO

Show threadAmeriCanuckJan 21, 2023

@maxkennerly Partying with Sting hours before cutting 10,000 employees is an admission they revel in mass layoffs.

https://www.pcworld.com/article/1479735/microsoft-execs-partied-with-sting-hours-before-announcing-layoffs.html

Microsoft execs partied with Sting in Davos hours before announcing layoffs

Microsoft paid for a private Sting concert in Switzerland the day before announcing it will cut 10,000 jobs.

PCWorld
Show threadWestTexasJesusJan 22, 2023
@primal @maxkennerly I'm really not that surprised that Sting turned out to be a capitalist pig.
Show threadAmeriCanuckJan 23, 2023

@westtexasjesus @maxkennerly Neither am I surprised that the CEO of Microsoft got a 10% pay raise, not long before he announced these "difficult" decision to fire 10,000 employees.

https://www.thegamer.com/microsoft-ceo-satya-nadellas-pay-bonus-layoffs-xbox/

Show threadDeb ProtheroJan 21, 2023
@maxkennerly also found this useful to understand the layoffs and broken business model: https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys
Pluralistic: Tiktok’s enshittification (21 Jan 2023) – Pluralistic: Daily links from Cory Doctorow

Show threadMissyintheDot↔️Jan 21, 2023
@maxkennerly capitalism sucks. Period.
Show threadKen FarinskyJan 21, 2023

@maxkennerly
Mass layoffs do a bunch of things, but I would bet that the driving factors are:

1. Reduce expenses to get the stock price up.

2. Strike fear into the employees who might want a raise or want to unionize.

Point 2 might include lowering wages for all tech workers because there's now more competition of people looking for jobs...

Show threadMarkJan 21, 2023
@kfarinsky @maxkennerly Amen to your Pt 2, as this will lower inflation and possibly convince the Fed to be less aggressive with the next increase. And once the remaining staff agrees to lower comp, easy and cheaper to rehire if they cut too far. I spent 40 years in tech corporate finance. I am deeply, deeply cynical.
Show threadbassplayerJan 21, 2023
@maxkennerly Disagree on rhe basis of a generalized assumption. I've worked at places that have great management and vision but the market took a turn and the math didn't work out. Tech has always been cyclical.
Show threadSunnySideUpJan 21, 2023
@maxkennerly But it does show they know how to work the system they’re paying for.
Show threadTheRealCiceroJan 21, 2023
@maxkennerly I always chuckle when I hear about a company that thinks they can shrunk themselves to greatness. And often it is the bottom of the pyramid getting laid off, with their managers surviving
Show threadSouthern LeftistJan 21, 2023

@maxkennerly
Not much of an economist.

Can someone explain how élite stock-exploitation works?

But yes, corps make way too much no matter how ya say the story.

Show threadtom4okstateJan 22, 2023
@maxkennerly this is why it blows my mind, that stock prices of a company engaging in a big layoff will temporarily raise. The management literally just showed you they don't know what they're doing and the response is "Great. That company is worth more now." What?
Show threadCraig KolbJan 22, 2023
@maxkennerly The “argument” is that buybacks are essentially tax-efficient dividends. Tax stock buybacks, directly or indirectly, and poof.
Show threadPatrick FasanoJan 22, 2023
@maxkennerly We should consider both of them good things, since that means those resources can be used productively, rather than tied up in companies that are clueless.
Show threadJ.H.NoyesJan 22, 2023
@maxkennerly
All these layoffs coinciding with Davos kinda has the feel of blood offering to it--like drops from a finger into a shared well of blood, the Elites are telegraphing their willingness to inflict injury on their workforce to one another.
@GregMartyn
Show threadVery Human RobotJan 22, 2023

@maxkennerly
There are certainly some business where those is true.

But is it so, that a fun fair that hires people in spring and lays them off in fall "doesn't know how to use human resources?"

Also, some buybacks are because the market is saturated and mature, and the company focuses on what it's good at, and lets owners figure out what to do with the rest of the money.

(I think paying dividends would be more honest than a buy-back, but the tax system dis-incentivizes that.)

Show threadTracingVRL by A.J. FishJan 22, 2023
@maxkennerly https://tracingcovid.substack.com/p/if-davos-man-were-the-official-pandemic
If Davos Man Was the -Official- Pandemic Czar

A lull between surges shifts the spotlight to who might be running the show.

TracingCOVID
Show threadGabrielJan 22, 2023

@maxkennerly
The FED took away the punch-bowl and the party is over.
I hope all the well-paid tech workers used their privilege to support others in their community and build meaningful local support systems.
It would be really foolish to sell out to corporate censorship and neoliberalism before immense austerity is imposed on the population.

Federal Reserve Chairman Jerome Powell said Wednesday it will be almost impossible for the central bank to beat inflation without hundreds of thousands of Americans losing their jobs.

Fed officials expect the unemployment rate to rise to 4.4 percent next year, up from 3.7 percent in August, as they jack up borrowing costs and slow the economy, according to projections released Wednesday. https://thehill.com/policy/3658981-why-the-fed-is-pushing-unemployment-higher/

Why the Fed is pushing unemployment higher

Federal Reserve Chairman Jerome Powell said Wednesday it will be almost impossible for the central bank to beat inflation without hundreds of thousands of Americans losing their jobs.  Fed officials expect the unemployment rate to rise to 4.4 percent next year, up from 3.7 percent in August, as they jack up borrowing costs and slow…

The Hill
Show threadartisanroxJan 22, 2023

@maxkennerly

I absolutely refuse to believe that all this is due to some measurable level of ignorance that in some alternate universe can be corrected by a cooperative increase in basic management skills...rather than just sheer malicious willful and knowledgeable greed, totally unconcerned about the lowest ranks of employees and regarding them as liabilities when they receive their first paycheck rather than assets.

#business
#layoff
#stock
#buyback