- Tech workers have had new leverage over the past two years as companies have boomed.
- As an economic shift rattles even companies like Meta and Google, that power may recede.
- Tech workers may face lower compensation packages if they change jobs, pay cuts and even layoffs.
Tech workers became some of the most in-demand workers earlier in the pandemic. Now they are losing their leverage.
Recruiters at Facebook, Google, Microsoft, Amazon and Twitter have struggled to hire enough workers over the past two years to keep up with demand for online products as the pandemic has kept people at home. Web3 products like cryptocurrencies and non-tradable tokens exploded. Even entry-level tech workers could basically set the terms of their employment, including high pay, flexible work schedules, and the freedom to work from home, or anywhere, for that matter.
This came to an abrupt end. Over the past three months, tech companies from Google to Twitter have dramatically slowed hiring or frozen it altogether. Dozens have made layoffs, with up to 30,000 tech workers losing their jobs this year at companies like TikTok and Oracle, according to Insider’s current tally. An external tracker, Layoffs.FYIbrings tech layoffs this year to more than 60,000.
For the average tech worker, that means the good times of multiple offers, big grants of restricted stock units, generous raises and retention bonuses are probably over. More than half of the common skills in the industry have declined in the past three months, according to a new report from Foote Partners, a technology consulting firm.
Even Facebook, now owned by Meta, is widely expected to start cutting workers based on new job expectations after aggressive hiring throughout the pandemic and offering generous pay packages.
“The pendulum has definitely swung back,” said Aalap Shah, managing director of Pearl Meyer, which advises technology companies on compensation strategy, about the recent market for tech workers. He added that last year, companies had a greater need for workers and even hired people who were less experienced or qualified than what the role required, with the hope that those workers would grow into their roles.
“Now there are austerity measures everywhere and companies are trying to focus on top-level talent,” Shah said.
Pay cuts may be coming
Employment agreements for technology workers may no longer include the promise of equity grants in some cases. And boardrooms are starting to relax the idea of big deals and bonuses to retain even top-level talent. For workers on the job hunt, they shouldn’t expect pay packages the size they’ve had in the past two years, Shah said.
“So many companies are taking a hard look at their pay structure and their equity structure and looking at how they can recalibrate,” Shah said.
Meanwhile, workers who kept their jobs saw their total compensation drop as stock options and restricted stock units lose value from the sudden slide in tech stocks.
Some are even speculating that pay cuts may be coming. Jason Calacanis, a media entrepreneur and tech investor known for early bets on Uber and Robinhood, recently told the “Odd Lots” podcast that he “100%” expected wage cuts to follow, given the clear pattern of a slowdown or freeze in companies. recruitment, cancellation of offers and dismissal of staff. Even Meta, Amazon, Apple, Netflix and Alphabet, also known as FAANG, and other seemingly untouchable tech companies could be affected, he said.
To avoid traditional layoffs, such companies will do something like end remote work and require employees to return to the office. When employees fight, the company can say, “Okay, so you don’t want to work here anymore,” Kalakanis said.
“What they do is lay off a bunch of people. Then they bring the wages back down and hire people back,” Kalacanis said on the podcast. “This is a de facto wage cut.”
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