Victor Vaughn | Red Phoenix correspondent | Maryland–

The memo Elon Musk¹ sent by email announcing Tesla was laying off 10% of its global workforce in April was surprisingly candid: “There is nothing I hate more, but it must be done,” the emerald heir opined, claiming the layoffs were necessary to allow the EV manufacturer to be “lean, innovative and hungry” for the next “growth phase cycle.”

Nearly 25,000 tech workers were laid off in the first weeks of 2024, despite improving fundamentals. Last year was, according to NPR, an absolute bloodbath for the tech industry: in the once-lauded glittering spires of Silicon Valley, where innovation and disruption of the status quo are celebrated, underneath, there lies a darker reality of mass layoffs and lack of job security. Amazon saw the highest number laid off in 2023, with 27,410 workers losing their livelihoods, followed by Meta with 21,000, Google with 12,115, and Microsoft with 11,158.

1,186 tech companies and start-ups laid off more than 260,000 tech workers in 2023 — the worst year for tech since the dot-com crash of the early 2000s. The volume of layoffs increased compared with 2022, where 1,061 tech companies and startups laid off almost 165,000 workers. That total itself was more than 2020 and 2021 combined.

So far, 326 tech companies have laid off over 98,000 workers in 2024. In the case of Tesla, Musk’s move came after managers had reportedly been told to provide lists of names throughout the company to upper management.

Everywhere you look, the giants of the industry are shedding workers — online retailer eBay fired 9% of their full-time workforce via Zoom call. Vice Media’s Vice.com news site ceased publishing content, affecting “several hundred positions.” BuzzFeed announced a plan to reduce its workforce by 16%, less than a year after shutting down their news division. Google/Alphabet replaced part of its ad sales team with AI and laid off hundreds in the Fitbit, Pixel, and digital assistant divisions. Microsoft completed its purchase of Activision Blizzard for a whopping $69 billion in October and then promptly announced 1,900 layoffs. Back in January, Amazon ordered 18,000 people axed via email in the largest job cut in its history.

All this, despite record profits and the fact that IT spending expected to increase 8% to cross $5.1 trillion in 2024. Tech companies have been consistently laying off workers since 2022.

The bourgeoisie and its apologists continue to argue that the massive tech and media layoffs are simply outliers in an otherwise strong employment market, citing the low unemployment rate since late 2021. According to this narrative, these layoffs are a natural correction from over-hiring during the pandemic and historically high inflation, and these high-profile layoffs are being exaggerated by the media and actually disguise a very robust employment situation. Musk himself towed the bourgeoisie’s party line for Tesla’s firings, blaming “duplication of roles and job functions in certain areas.”

Meta Platforms CEO Mark Zuckerberg² echoed these sentiments, theorizing why companies like Google and Microsoft are all downsizing despite solid earnings:

“[Zuckerberg] theorized that tech layoffs persist due to recognition of the benefits of leaner operations. In an interview with Morning Brew Daily, the Meta CEO noted ongoing adjustments to the post-pandemic landscape and discussed competition with Apple (NASDAQ:AAPL) and other topics.

Amid the pandemic, e-commerce surged, boosting online ad gains. However, with the return to stores and economic adjustments, sales growth slowed, leading to ad rate normalization. According to Zuckerberg, many firms over-hiring and making significant cuts attributed to COVID-19 navigation rather than the AI boom.”

The American bourgeoisie has been remarkably consistent in citing these reasons: with some variation, all of them have blamed over-hiring, high inflation, or efficiency. 

Amazon announced cuts to their highly profitable AWS cloud computing segment, as well as “Twitch, Audible, Buy with Prime, Prime Video, and MGM Studios.” There were even rare job cuts to Jeff Bezos’³ Blue Origin. Alphabet/Google CEO Sundar Pichai⁴ previously signaled that layoffs were on the horizon, and recently announced they’re letting more people go and moving jobs overseas to India, Ireland, and Mexico. Of course, it’s never all financial — Google also announced they were firing 28 employees for their participation in a sit-in protest against Israel’s ongoing genocide of the Palestinian people of Gaza.

However, the economic picture doesn’t quite align with tech executive’s reasoning, according to NPR: “Now in 2024, tech company workforces have largely returned to pre-pandemic levels, inflation is half of what it was this time last year and consumer confidence is rebounding.” So the explanation about this being about efficiency or tightening belts during a slowing economy is not backed by the data. What dirty secret lies at the heart of these layoffs then, if it’s not about losing money?

The reality is that these layoffs are the result of a combination of herding effect and a tactic used by the capitalist class to boost stock prices. In other words: one company fires workers to cut costs, which causes a boost in stock prices as wealthy shareholders anticipate profits, causing more companies to follow suit, encouraging more tech companies to cut costs and lay off staff. Experts characterize the large number of layoffs as a “social contagion” as more tech companies mindlessly copy what others are doing.

This social contagion serves in part to push stock prices up, to give an illusion of profitability, of becoming “leaner and more efficient,” and of generating more profit with less people, but it serves a further purpose. For those who “survived” this round of layoffs, it’s a constant reminder that their income, meaning their ability to survive, is never truly secure. Usually the remaining workers put up with the additional work now demanded, lest they end up out of work themselves. 

Being laid off from your job quite literally kills people, as studies have shown that the stress they create takes a devastating toll on physical and mental health, increasing mortality and morbidity substantially. For example, layoffs can increase the risk of suicide by a factor of two or more. The drive to make companies ever more profitable and workers ever more productive has a very real cost: nearly 120,000 workers’ deaths per year. This dirty little secret is why, as Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies, tweeted, “Wall Street loves layoffs.”

Biographical Notes

(1) Musk, Elon Reeve: South African-born American capitalist entrepreneur and industrialist, born in 1971 in Pretoria, South Africa. He is the founder, CEO, CTO, and chief designer of SpaceX, early investor, CEO and product architect of Tesla, Inc.; founder of The Boring Company; co-founder of Neuralink; and co-founder and initial co-chairman of OpenAI. His life and work epitomize the contradictions inherent in American monopoly capitalism. His companies have been involved in unlawful labor practices; he recently bought and gutted 75% of the staff of social media company Twitter.

(2) Zuckerberg, Mark Elliot: American capitalist entrepreneur and philanthropist, born in 1984 in White Plains, New York, USA. Known for co-founding Facebook, Inc. and serves as its chairman, chief executive officer, and controlling shareholder. His platform has significant influence over the globe, shaping communication, information dissemination, and political discourse.

(3) Bezos, Jeffrey Preston: American capitalist entrepreneur, media proprietor, and investor, born in 1964, in Albuquerque, New Mexico, USA. He is the founder, CEO, and president of Amazon. His contribution to the capitalist system is significant, having built one of the largest corporations in the world, impacting exploitative labor practices and being a major mover in the “retail apocalypse” affecting brick-and-mortar stores.

(4) Pichai, Sundar: Indian-American capitalist business executive, born in 1972, in Madurai, Tamil Nadu, India. He is the chief executive officer (CEO) of Alphabet Inc. and its subsidiary Google. He is a significant figure in the capitalist class, with unprecedented information access and technology use worldwide.

Categories: Labor, U.S. News