I can’t tell if it’s “the true cause” of the massive tech layoffs because I know jackshit of US tax, but it does make more sense than every company realising at the same time that they over-hired or becoming instant believers of AI-driven productivity.
The only part that doesn’t make sense to me is why hide this from employees. Countless all-hamds with uncomfortable CTOs spitting badly rehearsed bs about why 20% of their team was suddenly let go or why project Y, top of last year’s strategic priorities, was unceremoniously cancelled. Instead of “R&D is no longer deductible so it costs us much more now”.
I would not necessarily be happier about being laid off but this would at least be an explanation I feel I’d truly be able to accept
I found out about this about a year ago while I was laid off. It coincided with when the massive layoffs began. Seems pretty likely to me. Developer salaries aren’t low and to lose another 80% on top is a big hit.
Also a lot of my coworkers are really nervous about immigration right now. This is a bad time to be an Indian tech worker in the US. My team of about 10 could wind up reduced to me and one other guy. We’d even lose our manager and every PM. And this team is responsible for critical software at a major company.
This accounts for some portion of it, but the other part is the rise in interest rates. With borrowing money no longer being nearly free, companies tightened their budgets.
It’s not that borrowing money is free, zero interest rates means the government pays zero interest for its loans, not companies. It does put downward pressure on interest rates companies pay but they’re still going to have to pay a couple percent apy.
The reason zero interest rates are good for tech is because it forces capital to seek more long-term and risky investments. If I have a lot of money and can get 6% apy from loaning it to the US government, the safest bet on the market, why would I invest in something else? If i can’t get any money from loaning to the government (zero interest rates), and i cant get much from loaning it to other institutions because of that downward pressure, then maybe I’ll buy some more risky tech stocks because it’s possible for that company to grow more then the 1-2% id get from just lending my money. Most of techs financing is done through selling stock, not loans.
I can’t tell if it’s “the true cause” of the massive tech layoffs because I know jackshit of US tax, but it does make more sense than every company realising at the same time that they over-hired or becoming instant believers of AI-driven productivity.
The only part that doesn’t make sense to me is why hide this from employees. Countless all-hamds with uncomfortable CTOs spitting badly rehearsed bs about why 20% of their team was suddenly let go or why project Y, top of last year’s strategic priorities, was unceremoniously cancelled. Instead of “R&D is no longer deductible so it costs us much more now”.
I would not necessarily be happier about being laid off but this would at least be an explanation I feel I’d truly be able to accept
I found out about this about a year ago while I was laid off. It coincided with when the massive layoffs began. Seems pretty likely to me. Developer salaries aren’t low and to lose another 80% on top is a big hit.
Also a lot of my coworkers are really nervous about immigration right now. This is a bad time to be an Indian tech worker in the US. My team of about 10 could wind up reduced to me and one other guy. We’d even lose our manager and every PM. And this team is responsible for critical software at a major company.
This accounts for some portion of it, but the other part is the rise in interest rates. With borrowing money no longer being nearly free, companies tightened their budgets.
It’s not that borrowing money is free, zero interest rates means the government pays zero interest for its loans, not companies. It does put downward pressure on interest rates companies pay but they’re still going to have to pay a couple percent apy.
The reason zero interest rates are good for tech is because it forces capital to seek more long-term and risky investments. If I have a lot of money and can get 6% apy from loaning it to the US government, the safest bet on the market, why would I invest in something else? If i can’t get any money from loaning to the government (zero interest rates), and i cant get much from loaning it to other institutions because of that downward pressure, then maybe I’ll buy some more risky tech stocks because it’s possible for that company to grow more then the 1-2% id get from just lending my money. Most of techs financing is done through selling stock, not loans.