Tech has been experiencing ‘massive layoffs’ lately, but always good to look at the why, before you jump to the ‘Oh NOOOO!’

“When people hear layoffs, that is a highly charged word… But you have to understand this in the broader context, which is there was explosive growth during the pandemic, and all that growth was unexpected,” said Russell Hancock, chief executive of Joint Venture Silicon Valley, to MarketWatch.

The ‘broader context’ is that tech is going through a period of adjustment and ‘right sizing.’ Said MarketWatch, “The largest number announced by a Big Tech company so far is the 18,000 projected layoffs at Amazon.com Inc— but Amazon hired hundreds of thousands of workers during the pandemic to grow into the second-largest employer in the U.S. (From) fewer than 800,000 employees at the end of 2019… to more than 1.6 million at times last year…Microsoft grew its workforce more than 50% … hiring roughly 77,000 workers; it recently announced 10,000 layoffs. Meta Platforms Inc. nearly doubled its head count from roughly 45,000… to more than 87,000…then decided to cut about 11,000 workers.”

Context!

So when you see headlines that scream dire warnings about The Biggest Layoffs of the Tech Downturn…So Far, context.

“Venture capital has also continued to fund young tech companies that will be in need of experienced workers. EY reported that 2022 was the second-biggest year for venture-capital investment on record, with more than $200 billion pushed toward young companies, behind only 2021,” MarketWatch further reported.

So, that’s the good news or rather the not-as-bad-as-it-looks news.

Now time for the –  potentially more good news.

Companies hire based on a potential employee’s skillset and experience/expertise. The problem in tech has long been those pesky noncompetes. Tech companies often require new employees to sign noncompetes, so no matter that you may be among the downsized, you might have a difficult time making even a lateral move to a company that needs your particular experience. But tech doesn’t much care for competition, so noncompetes are one way of helping to stifle it.

Well, this just in:

FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition, and as the press release put it so succinctly and eloquently, “The Federal Trade Commission proposed a new rule that would ban employers from imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.” They’re seeking public comment (link there, so don’t be shy) on the proposed rule, which is based on a preliminary finding that noncompetes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.

 

FYI, the FTC’s new rule would make it illegal for an employer to:

• enter into or attempt to enter into a noncompete with a worker;
• maintain a noncompete with a worker; or
• represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and notify workers that they are no longer in effect.

This is especially critical at this juncture as, while the number of layoffs (so far, at least) has been by far eclipsed by the hiring that went on during the halcyon days and the pandemic, layoffs are layoffs and it’s long overdue that workers are given a fair shake. Responding to the FTC’s request is also important so we do hope that you’ll take heed and take the time to comment. Would we put it past tech et al to devise yet another way to stifle competition? Given the history so far…no comment. Onward and forward.