Big Tech Cut 950,000 Jobs... And Then Hired Them All Back

0:00 In May of this year,

0:01 Meta announced it would be laying off around 8,000 employees,

0:03 or around 10% of its entire workforce.

0:05 Just 2 months before that, it laid off a further 700 people,

0:09 and 2 months before that, it was another 1,500 people.

0:13 Again, in 2025, it laid off a further 4,000 people,

0:16 including a large chunk from its AI division.

0:18 And this was all on top of the record layoffs from its year of efficiency,

0:23 which actually lasted 3 years and cut an additional 26,000 jobs.

0:26 Now, obviously, this hasn't been great for morale,

0:29 even after the Zuck mandated that people start having fun again,

0:32 but if you do the math, that's collectively around 40,000 people that have been

0:36 laid off over the last 4 and 1/2 years.

0:39 All from a company that only had around 75,000 employees to begin with.

0:43 For most of the other major tech companies,

0:45 the numbers aren't really much better.

0:47 And in specific cases, they are actually much worse.

0:49 This also isn't including the people who have just,

0:52 you know, made their you money and quit.

0:55 Now, obviously, big tech in particular has been changing rapidly.

0:59 Companies are investing hundreds of billions of dollars into AI development,

1:02 which means they just have less free cash flow to pay their staff

1:05 and a greater incentive to justify that very

1:07 same investment by doing supposedly AI enabled layoffs.

1:10 But if this is really happening so broadly,

1:13 how many jobs do these companies really have left a cut?

1:17 Well, the good news or the inconvenient truth is

1:19 uh basically just as many as they started with.

1:23 Apart from the outliers like X,

1:25 most of the major tech companies have just as many people today

1:27 as they did when layoffs became the hot new trend in the valley.

1:31 The same is true for more traditional industries as well

1:33 that have quietly had to curb their layoff enthusiasm.

1:36 And this does raise the obvious question of why bother?

1:39 These companies have effectively passed the same

1:42 group of technical talent around between one another,

1:44 killed the vibes that they so clearly covet,

1:46 undermined the job security that made tech jobs so desirable in the first place,

1:50 all to generate headlines that didn't really

1:52 look as good as they thought they would.

1:54 So, what was all of this for?

1:57 This week alone, about a dozen major companies announced job cuts,

2:01 including Amazon and Google's parent, Alphabet.

2:03 Meta announced Thursday that it's laying off about 8,000 workers

2:06 as it continues to ramp up spending on artificial intelligence.

2:09 In a dramatic twist, Open AI Sam Alman has revealed that Meta is dangling

2:15 jaw-dropping $100 million signing bonuses to lure his top engineers.

2:20 76% of Nvidia employees are millionaires and 37% are worth over $20 million.

2:27 How crazy is that?

2:29 Ford has rehired 350 experienced

2:31 engineers after admitting that artificial intelligence

2:34 alone did not deliver the quality it expected in vehicle development.

2:38 Okay, so even if you set aside the very real human cost of doing all

2:44 of this and just look at it through the cold dead eyes of corporate strategy,

2:48 these layoffs have still been doing real damage to the companies making them.

2:51 The most immediate damage is just to workplace morale,

2:54 which I know might sound a little bit wishy-washy,

2:56 but in roles that rely on talent

2:59 in highly collaborative environments like tech development,

3:01 it can be a big deal.

3:03 Workplace researchers have observed what they have dubbed turnover contagion.

3:06 The idea is that when a round of layoffs goes through,

3:09 the survivors start updating their resumes and people who are already

3:12 thinking about quitting naturally become slightly

3:14 more motivated to make that jump.

3:16 Andrea Durler, who leads research at the workplace analytics firm Vizier,

3:19 describes this whole cycle as a clear failure of workforce planning,

3:23 which is the polite academic way of saying

3:25 these companies keep firing people they still need.

3:27 The second problem is that especially in technical roles,

3:30 a lot of doing the job well just comes down

3:33 to having done the job for a long enough time.

3:35 Institutional knowledge like which workarounds actually matter and which

3:38 cursed legacy code should never be touched and even

3:41 really basic things like who sits at what desk

3:43 makes a big difference in how quickly stuff gets done.

3:46 In theory, companies like to imagine that this gets captured in a handover dock.

3:50 In reality, even if the laid-off workers really did want to put

3:53 their all into teaching their replacement how to do their job, it still doesn't.

3:57 I will get into this particular example in detail a little bit later,

4:01 but Ford recently had to hire back a team of senior quality assurance engineers

4:06 charmingly referred to as the Greybeards

4:08 to address certain failings in the company's production.

4:11 The company had attempted to replace them with an AI system overseen

4:15 by a much smaller team of more

4:17 technically qualified but significantly less experienced operators.

4:20 And well, credit where credit is due, the company reversed this move,

4:24 acknowledging the problem that there was nobody left who

4:26 could tell the AI why it was being dumb.

4:28 Now, this is a problem because when

4:30 a company eventually realizes it cut too deep,

4:33 getting people back usually costs a lot more

4:35 than keeping them around in the first place.

4:38 If a company is rehiring someone, that normally means they were a talented

4:41 employee and they've usually landed somewhere else.

4:43 So businesses are paying a premium on top

4:46 of the recruiter fees and layoff expense to get people back

4:49 who for obvious reasons don't necessarily want to work

4:52 for companies who have a reputation for letting people go.

4:55 Companies like Meta have developed such a bad

4:57 reputation for morale turnovers and layoffs that they

4:59 are now paying a measurable premium to hire new staff because if given a choice,

5:04 people would take almost any other option for the same level of pay.

5:08 More broadly, according to industry estimates,

5:10 laid-off roles are now being refilled at a significant premium

5:13 from what the original position paid in the first place.

5:16 Some of the people they want back also just simply aren't coming back at all.

5:20 Laid-off employees naturally realize that their employer

5:22 doesn't and didn't really care about them.

5:24 Of course, that was probably always true,

5:26 but actually being laid off makes it a bit harder to ignore.

5:30 Support groups for laid-off Googlers reportedly ballooned after 2023 cuts,

5:33 full of people who hadn't written resumes in 15 years because

5:37 they genuinely believed they found the last job they would ever need.

5:40 Now, I know there's a level of irony

5:42 in these people losing their extremely highly compensated jobs,

5:44 often developing the tech that replaced them,

5:47 especially since, let's be honest here,

5:49 a lot of them would happily automate other jobs

5:52 if it meant a slightly more lucrative RSU package.

5:54 But the point here is that purely from the business perspective,

5:58 if layoffs were supposed to cut costs, they haven't been doing a very good job.

6:03 This is also ignoring things like severance,

6:05 higher unemployment insurance rates,

6:06 and recruiter fees to enable the constant churn.

6:09 The losses aren't random either.

6:11 Stanford economist Nick Bloom pointed out that attrition

6:13 driven by return to office mandates loses

6:16 companies or best people first because the best

6:18 people are the ones with outside options.

6:20 What's left is mostly the people who couldn't afford to leave.

6:23 Now, obviously, mandatory return to office is slightly different from layoffs,

6:26 but they were done with the same intention of thinning out the workforce,

6:30 hoping that people would quit instead of publicly having to reduce headcount.

6:33 Now, it sounds dumb, but it gets dumber.

6:36 So far, these have just been the immediate costs.

6:39 Entry-level hiring has collapsed by somewhere between 55 and 65%

6:43 at the major tech companies since the layoff era began.

6:47 IBM's head of HR, Nicol Maro, has been unusually blunt,

6:50 warning that if you cut the pipeline,

6:52 there's no secession talent in 3 to 5 years.

6:55 And IBM is now tripling its entry-level hiring

6:57 to patch the hole it dug for itself.

6:59 And on top of all of that, these companies are burning

7:02 the thing that made them special employers in the first place.

7:05 A job at Google used to be the prize.

7:07 Partly this was because of the pay,

7:09 which at the time was decent but still inferior to something like finance,

7:12 but mostly because it was seen as the best place in the world to work.

7:17 It had cool offices, interesting projects, a decent work life balance,

7:20 a vibe culture, and most importantly, good job security.

7:24 If that perception dies,

7:25 the smartest people can just take their talents to finance instead,

7:29 which pays comparably, never pretended to love you,

7:32 and is somehow now the less risky option for a high performer who doesn't

7:35 want to find out from a LinkedIn notification that they no longer work there.

7:40 Now, to play devil's advocate here,

7:42 despite the beanag chairs and kombucha on tap,

7:45 these are still for-profit companies, not a jobs program.

7:48 Even if there are costs associated with doing layoffs,

7:50 and there are a lot of costs,

7:53 it could be argued that endlessly accumulating staff who feel overly

7:56 secure in the role would end up costing a business more,

8:00 especially if all their competitors are willing

8:01 to pay a premium to poach their best talent.

8:04 But well, these companies are still accumulating workers.

8:08 Alphabet finished 2025 with around 190,000 employees,

8:11 essentially back to its all-time peak.

8:14 Microsoft ended its last fiscal year with 228,000 people,

8:18 identical to the year before,

8:20 despite cutting roughly 15,000 across two heavily publicized rounds.

8:23 And Amazon is within 2% of its 2021 high

8:27 even after 4 years of going allin on headcount efficiency.

8:30 So, the workforce is right back to where it started.

8:33 And since most entry-level hiring has been so slow,

8:35 this pool of workers has mostly been maintained

8:37 with people just moving to the next company in line.

8:40 So they did all of this, accounted for all of these costs,

8:44 accepted the human toll, took the morale and reputational hits,

8:47 all to effectively just play past the parcel of employees.

8:50 Which raises the obvious question of why?

8:53 Well, Stanford business professor Jeffrey Feffer

8:55 has spent decades on this exact question,

8:57 and his conclusion has been depressingly consistent.

9:00 Layoffs repeatedly failed to cut costs

9:02 or improve performance once you account for severance,

9:04 morale damage, and lost productivity.

9:06 The same was true for headcount trimming efforts like return to office mandates.

9:10 Researchers at the University of Pittsburgh's Catz Business

9:13 School went looking for financial improvement at S&P

9:16 500 companies that imposed strict return to office

9:18 mandates and found no significant improvement at all.

9:21 Employee satisfaction, on the other hand, dropped measurably.

9:23 Now, say what you want about the senior leadership of these companies.

9:27 Most of them aren't stupid.

9:28 They are capable of reading these studies and understanding

9:31 the basic cost benefit of what they are doing.

9:34 But across corporate America and particularly in tech,

9:36 they are doing it anyway for three simple reasons.

9:39 The first is quite simply human vindictiveness.

9:41 For the last decade in particular,

9:43 tech workers had a little bit too much power and security,

9:46 safe in the fact that nobody else could do what they do,

9:49 which bred a culture very different from a standard corporate hierarchy.

9:53 Staff pushed social agendas, spoke out against their own bosses,

9:56 worked their own schedules, and demanded recognition for their achievements.

9:59 You know, a true nightmare scenario.

10:01 A lot of these companies leaned into this idea

10:03 when it was convenient for talent acquisition.

10:05 But it has become pretty clear that the actual

10:07 executives at the top of these businesses,

10:10 not so secretly, despised this culture.

10:12 People like Zuck may have been the CEO

10:14 of one of the most powerful companies on Earth.

10:16 But his entitled employees didn't kiss the ground around

10:18 his feet like they ought to in a more traditional company.

10:21 The Wall Street Journal ran what might as well

10:23 be the era's mission statement as a headline.

10:25 The bosses are back in charge.

10:27 Executives saw the layoff wave as a chance

10:29 to put entitled workers back in their place

10:31 after the leverage workers built up during

10:33 the great resignation and the remote work boom.

10:35 The commentator Ed Zitron went further

10:37 in a piece bluntly titled tech elite hates labor,

10:41 arguing that the industry resents having created a pampered class

10:43 of worker that it now has to cater to and overpay.

10:46 Even several prominent people within tech have been

10:49 happy to say the quiet part out loud.

10:51 Venture capitalist Keith Rabo boy said Meta and Google hired thousands

10:55 of people to do fake work out of vanity called those workers extraneous

10:58 and held up Elon Musk's Twitter purge where roughly 80% of the company

11:02 was cut as the model the rest of the industry should copy.

11:05 Venture capitalists and real life Baron from Dune.

11:07 Mark Andre mocked the remote laptop class.

11:10 David Saxs called Twitter bloated and overstaffed.

11:12 All of this meant that when mass layoffs became

11:15 more commonplace across the industry and these executives saw

11:18 that their stock price wouldn't take a hit for doing

11:20 it and in many cases would actually trend upwards,

11:22 a lot of them were more than happy to dive

11:25 in, even if the long-term benefits would be questionable.

11:29 Sure, they might have just ended up passing

11:31 the same people along to the next company,

11:33 but it did still send the message that nobody is irreplaceable.

11:36 The HR software company Bamboo HR surveyed more

11:39 than 1500 managers and found that roughly a quarter

11:41 of sea suite executives openly admitted that they hoped

11:43 return to office mandates would get people to quit voluntarily.

11:47 About 20% of HR leaders said their inoff

11:49 rules were specifically designed to drive attrition.

11:52 And around 40% of managers said layoffs followed

11:54 because not enough people left on their own.

11:57 And again, this was just what they were publicly admitting to.

12:00 I don't get it.

12:02 Why are they confessing?

12:04 They're not confessing.

12:06 They're bragging.

12:07 The sad part is it kind of worked.

12:09 In one survey, the share of workers who said they would quit over

12:13 a mandatory return to office collapsed from 51% to just 7% in a single year.

12:18 Again, this is just one variable.

12:20 But ultimately, people have now been trained

12:22 to hold on to their jobs at all cost.

12:24 It's not great, but even the most vindictive CEO still needs to justify

12:28 their smiting to shareholders who don't

12:31 have endless patience for workplace power politics.

12:33 So, it's time to learn How many works to find out how they

12:36 have actually justified this so far and why it's kind of backfiring on them.

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13:53 So big tech bosses with bruised egos finally getting one up on the people

13:57 who actually built their technology in the first place is nice and all,

14:00 but outside of their emotional support podcasts,

14:02 this kind of justification isn't going to fly.

14:05 Expensive and financially damaging layoffs still need

14:08 to hold up to the scrutiny from shareholders.

14:10 But well, if anything, they have been right on board,

14:13 largely because of the equity math.

14:15 A huge chunk of tech compensation is paid in restricted stock units or RSUs.

14:19 Grants of company shares that drip out to an employee

14:22 over about four years depending on the exact agreement,

14:25 but only as long as they stick around long enough to collect them.

14:28 This has been a great deal for these companies because it allows them to pay

14:32 worldclass engineers worldclass compensation with shares it can

14:34 print rather than money it has to earn.

14:37 And it also means that staff are compelled to stay

14:40 with their company to actually receive

14:42 shares they have technically already earned.

14:44 But printing shares creates its own problem.

14:46 Every RSU that eventually vests is a brand new share,

14:49 and every brand new share makes everyone

14:51 else's slice of the company a little thinner.

14:54 Shareholders are uh not fans of getting thinner.

14:57 Now, over the last decade, the solution to this has been stock

15:01 buyback programs largely just to mop this up.

15:03 The company takes real cash and buys its own shares off

15:06 the open market to cancel out the new ones being minted for staff.

15:09 Analysts have estimated that over the last several years,

15:12 effectively all of Meta's roughly $96 billion of buybacks and around 90%

15:16 of Google's 156 billion went to sterilizing

15:19 the dilution from employee stock compensation.

15:21 So yeah, effectively they were just paying their staff

15:24 out of their retained earnings in a very roundabout way.

15:28 Eventually shareholders realized that this would all work a lot better,

15:31 at least in the short term, if companies kept doing buybacks while

15:34 doing less stock creation for their employees.

15:36 When someone gets cut before their RSUs finish vesting,

15:39 the unvested shares just disappear.

15:41 They were never created.

15:43 So, the dilution never happens,

15:45 and the company even gets to reverse the expense it had already booked.

15:48 In normal times, this would mean that more of the buyback money

15:51 could go to bidding up the price of stock in regular markets.

15:54 But well, we are not really in normal times right now.

15:57 All of the money that was going to buybacks to offset

16:00 these stock bonuses is now going to data centers instead.

16:04 Now, I have already spoken endlessly about this spending,

16:06 so I am not going to waste your time again.

16:09 But the point is that they can either spend money on stock buybacks,

16:12 spend money on neutralizing RSUs, or spend money on data centers.

16:16 They don't have enough to do all three.

16:18 Google and Meta have already started scaling back their buyback programs.

16:21 And some of these companies are now issuing debt to fund data center

16:25 construction or going even further and actually

16:27 issuing new shares onto public markets.

16:29 For existing shareholders,

16:30 this made them much more amendable to a level of employee churn

16:33 to avoid employees actually collecting their stock to sell on public markets.

16:37 Most of the big firms vest RSUs at a flat rate of about 25% per year.

16:42 So, if you earn $200,000 in stock compensation in a given year,

16:46 you get $50,000 after the first 12 months,

16:48 $50,000 12 months after that, and so on.

16:51 But if you keep working there, those future bonuses keep stacking up.

16:54 So, even assuming your bonuses stay totally flat, if you quit,

16:57 you are still walking away from as much as $500,000

17:00 in compensation that you will have theoretically already earned.

17:04 And again, this is in companies that spread things evenly.

17:08 Amazon schedule is infamously backloaded at 5, 15, 40, and 40%.

17:12 So, an Amazon employee cut 2 years in has

17:15 collected just 20% of the equity they were promised.

17:18 People have started reading these schedules very carefully

17:20 for reasons that are probably obvious by now.

17:23 In a culture of permanent churn,

17:25 a lot of these RSUs simply never live long enough to vest.

17:28 Now, if you hypothetically wanted to be a bit cynical,

17:31 according to company financials,

17:32 there are currently over a quarter of a trillion dollars in outstanding stock

17:36 waiting to be accessed by employees in just the top seven tech companies alone.

17:40 That's also only as of the date those bonuses were actually granted.

17:44 If you get awarded 100 shares worth $50,000 and then the price

17:47 doubles next year before it's actually handed over to you to liquidate,

17:50 you still get 100 shares.

17:52 they are just now worth $100,000.

17:54 Now, of course, in theory,

17:55 this is a nice way to motivate staff to align them behind a stock price,

18:00 but it also means that the true value of outstanding stock incoming

18:03 RSUs is likely to be significantly higher than what has been expensed.

18:06 Because over the last 3 years, when a majority of that stock was vested,

18:10 the average value of a mag 7 company has roughly quadrupled.

18:13 Realistically, that means there is something like half

18:16 a trillion dollars worth of stock that will

18:18 be hitting the market over the next 2

18:20 years coming from the employees at these companies.

18:22 And that's also ignoring the stock coming from this year's slate of mega IPOs.

18:26 That's a lot of stock hitting a market

18:29 on top of a potent combination of reduced buybacks,

18:31 increased capital raises, stretched valuations,

18:33 and further bonuses going towards newly hired staff in the AI space.

18:37 Even more simply, more money coming out of the market than going into it.

18:41 Now, to be fair, these pools of unreleased stockbased compensation are still

18:45 at record highs thanks to record high prices and huge AI based pay packages,

18:50 but they would be significantly higher again if they

18:53 weren't continuously scraped down over the last 4 years.

18:56 I know this sounds a little bit tinfoilty,

18:58 but it's worth keeping in mind that locked

19:01 up expiration and insiders looking to liquidate

19:03 their winning positions was one of the key

19:05 catalysts for the unwinding of the dot bubble.

19:07 At the very least, it's not unreasonable to think

19:09 that executives are considering ways to manage this ballooning obligation.

19:12 Now, if all of that was a lot of boring numbers, well, that's kind of the point.

19:17 Equity engineering is boring, which is why most of the headlines

19:20 have been focused on the third major justification,

19:23 which is the AI tools that all of these shenanigans

19:26 were going to finance in the first place.

19:28 AI was supposed to make the whole layoff era make sense.

19:31 There are naturally a lot of headlines when

19:33 a major company cuts tens of thousands of workers,

19:35 but usually a lot less attention when they

19:38 hire back just as many to cover over shortcomings,

19:40 but people are now starting to notice.

19:42 And well, it's kind of getting a little bit embarrassing.

19:45 I mentioned Ford earlier because they

19:48 leaned hard on AIdriven quality inspection.

19:50 Now, on paper, this is actually a perfect use

19:53 case for pattern recognition software because inspection work is repetitive,

19:56 datari, and hopefully consistent.

19:58 But well, to nobody's surprise,

20:00 according to their chief operating officer, Kumar Ghotra,

20:03 the systems were not getting the desired results

20:05 while quality failures were costing the company billions.

20:08 So Ford went out and rehired roughly 350 of their veteran Graveybeard

20:12 engineers it had let go and put them back on the line.

20:16 The CEO of Coinbase, Brian Armstrong,

20:18 apparently went full founder mode and reportedly fired engineers who

20:21 didn't on board the company's AI coding tools within a week.

20:24 According to their own claims,

20:26 somewhere between a third and 40% of Coinbase's code is now written by AI.

20:31 Unfortunately, they announced this a few days before their entire

20:34 platform went offline for several hours due to technical issues.

20:37 And then just last week, literally as I was writing this video,

20:40 Coinbase's AI powered prediction market alerts

20:42 pushed breaking news to millions of users,

20:45 announcing that Norway had beaten Brazil 3 to2 in the World

20:48 Cup before the match had even kicked off.

20:50 Now, putting aside the horrors of having a prediction

20:52 market on top of a supposedly respectable investment platform,

20:55 this is obviously not a great look.

20:57 Companies mess things up all the time,

20:59 but customers and even investors are a lot

21:01 less forgiving of those mistakes when leadership has made

21:04 a big deal about getting rid of people

21:05 that were there to avoid them in the first place.

21:08 More broadly, a report by Robert Half found that roughly one in three managers

21:12 who cut a role citing AI has already rehired for the same or similar position.

21:17 Org view found that 55% of leaders who made

21:19 AIdriven cuts now admit it was a mistake and Gardner

21:22 projects that by 2027 half of all AI blamed layoffs

21:25 will have rehired the role under a new job title.

21:29 Forester found roughly the same with one extra twist.

21:31 A lot of the rehires are coming from offshore at lower pay.

21:35 So the original workers still lost.

21:37 And then of course there is the part we already knew.

21:40 According to a rumé.org or survey,

21:42 59% of companies that cited AI is the reason for layoffs admitted they

21:46 emphasized AI's role because it plays better

21:48 with stakeholders than admitting to financial constraints.

21:51 It sounds bad, but it gets worse.

21:53 This whole game has created almost

21:55 a cult-like culture around a really strange idea,

21:58 particularly in the tech industry.

22:00 So, go and watch this video next to find out why you are

22:03 apparently going to spend the rest of your days in the permanent underclass.

22:05 And don't forget to like and subscribe to keep on learning how money works.