They’re not layoffs. It’s worse than that.
by Matt May
Last week, I made an off-the-cuff list of Trump administration actions, and I could do another one just as long this week. But then, I’m going to be able to do that every week for the foreseeable future, so instead I’m going to try to stick to one topic at a time.
This one is about the labor market. It’s not going to sound much like it’s about DEI in tech, but I assure you that what’s happening in the markets is driving all of the scapegoating. Let me explain. (Oh, and international readers, I’m conscious that I’ve been extra America-centric these last few weeks, but I can assure you that we are really going through a lot right now.)
You’re going to hear a lot about “performance-based job cuts” in the next, oh, let’s say four years or so. They are going to look and sound a lot like layoffs, but they’re something different, and it’s going to catch a lot of people by surprise when it happens to them.
I cut my teeth in tech almost 30 years ago contracting at Microsoft. I did front-line tech support for Windows 95 when it launched, taught myself HTML while I was there, and ended up doing consulting work in Redmond from 1997-98. Most of my social circles were Microsofties at the time, back when Bill Gates and Steve Ballmer were in charge, and I saw and heard some things about the working environment there that didn’t faze me as a 20-something, but which horrify me in retrospect.
In that era, Microsoft was notorious for its policy of stack-ranking, an “innovation” of longtime General Electric CEO Jack Welch. In short, managers would rank their employees annually, and the lowest ten percent were put on what were called “performance improvement plans,” or PIPs. These “ten percenters,” as they were known, got no stock grants, no raise, and couldn’t change teams for the next year. If they were at the bottom of the stack at the end of the following evaluation period, if not before, they were fired. It didn’t really matter whether you were just closely bunched up in a high-performing team, or had a unique role that couldn’t be evaluated against others (like accessibility roles tend to be), or your boss just didn’t like you. Being put on a plan effectively was the end of your career at Microsoft. And that ruined lives.
There was another stock market darling at the time that was so enamored of its stack ranking program, it became the entire company’s north star. According to one report, “employees began to focus not on creating genuine value but on manipulating earnings reports and financial figures to appear successful.” That company was Enron, and its collapse in 2001 is now seen as emblematic of the greed and malfeasance of turbo-capitalism.
Anyway, stack ranking is back at Microsoft. And Meta, too. Both companies recently announced “performance-based” “reductions in force.” This sounds a lot like layoffs, and the intent is the same, but there’s one key difference. They’re firings. Calling them “performance-based” (at least theoretically) frees companies from liability under laws like the WARN Act or state regulations like Cal-WARN, which require 60 days advance warning before a mass layoff, and provide other accommodations for those losing their jobs.
Microsoft started their most recent round of job cuts last week, and many newly-fired employees are discovering that, instead of the months of severance pay, extended health care and other benefits that their predecessors have received in a layoff, they’re getting… nothing. Meta has announced they’re just going to be hacking and slashing all year—paragon of compassion Mark Zuckerberg told employees to “buckle up”—and Amazon announced a new wave of cuts to its “Communications and Corporate Responsibility” team, amid an attrition plan masquerading as a return-to-office mandate. Tesla’s shed more than 10% of its employees since last April. All have targeted DEI employees for termination, indicating that the people they’re letting go are merely irrelevant or inconvenient to their current mission, but blaming their individual performance instead of corporate direction could save them loads of money in separation agreements. Oh, and Trump fired the general counsel and one member of the National Labor Relations Board, which means they don’t have a quorum to hear private-sector labor cases. Just a coincidence, I’m sure.
Hmm. Microsoft, Meta, Amazon, Tesla… where have I seen those CEOs together recently? That’s right, they were all standing behind Trump during the inauguration.
Of course, this is all DEI’s fault. It couldn’t be that all these same companies are leveraged to the hilt as they spend hundreds of billions chasing AI unicorns. Not that they’ve mismanaged the resources of their company horribly, and aren’t getting the returns on all that invested capital. They couldn’t be looking for convenient scapegoats to blame for a drop in stock price, allowing their execs to keep their jobs while wiping out roles meant to protect workers and consumers. Right?
This week might be clarifying. Palantir, another heavy investor in AI whose CEO is in the Trump inner circle, announces its earnings today; Alphabet tomorrow; Amazon on Thursday. Microsoft dropped 6% after announcing their earnings last week. Tesla was an outlier, announcing horrible earnings but somehow going up, possibly because its CEO has taken control of the Treasury and is now reimagining federal bureaucracy as a way for unremarkable gen-Z guys with a daddy complex to play office. Anyway, it’s down 5% as I write this.
It’s setting up to be a really convenient time to announce bad earnings. Trump would blame it on Biden, obviously. The CEOs would all blame tariffs for the drop, and hope the theater of it all is likely enough to hide their own bad fundamentals for another quarter. I’m going to keep my conspiracy theories to myself, but if we suddenly pull back on tariff plans once big tech is done reporting earnings this week, I’m going to take that as a huge sign that the emperor has no clothes, and we’re heading for a recession.
Here’s what I know. Unemployment is going up. Companies are cash-rich and stock prices are high, but most are gambling on AI with no backup plan, and that is not quite panning out so far. If and when this house of cards collapses, it’s going to hit everyone hard. But we’ve already seen who it will target first. If you are working in one of these roles, I hope you have some money saved. If not, you should start saving now.
I’m going to leave you with a quote from the documentary The Smartest Guys in the Room. (Now available to stream on Amazon Prime Video!) I hope it’s not as timely as I think it is.
“In the Titanic, the captain went down with the ship. And Enron looks to me like the captain first gave himself and his friends a bonus, then lowered himself and the top folks down the lifeboat and then hollered up and said, "By the way, everything is going to be just fine." —former Senator Byron Dorgan (D-ND)
Office hours
I keep my calendar open on Thursdays for people who want to talk about working in DEI roles in tech, especially given, you know, all this.
Calendly - Matt May
My office hours are for people with questions about: product equity, inclusive design, accessibility in general careers in all of the above dealing with depression/anxiety/stress due to all of the above Free sessions are available on Thursdays. If these times aren't convenient for you, please
That’s it. Have a good week.