- The tech sector has already cut nearly 100,000 jobs this year.
- Those who have identified with their big-name companies and high salaries are taking it hard.
Layoffs at Big Tech companies have caused an identity crisis for many affected workers.
"If you've identified yourself with your salary, which a lot of people do, and if you identify yourself with working for a glamorous company like a Microsoft or Google or Meta, then your identity is taking a hit," Laurie Swanson, a career coach and a recruiter at InspiHER Tech, said.
The root of it all lies in the notion of tech exceptionalism: As companies like Google, Facebook, and Salesforce grew into the giants they are today, they seemed to defy gravity — making money hand-over-fist, even as they pampered their employees with perks that seemed too good to be true, such as massages, Ping-Pong tables, and free food.
Now, things are changing, and the world of posh perks and eye-popping salaries that zealous investors supported is reining itself in. Companies have let go of around 100,000 employees already this year, more than half of what they shed in 2022, according to Layoffs.fyi, a website that tracks layoffs in the technology sector. Companies like Google, Meta, Microsoft, and Amazon shed over 50,000 jobs in total, with all companies claiming that they over-hired during the height of the pandemic.
From a business-and-investors standpoint, this market correction is likely long overdue. But for tech workers who were sold on the glamorous lifestyle these companies have provided over the last few decades, this is a blow to their self-image. Tech looked like the solution to so many things that it produced a mindset among some employees that it was the exception to capitalism's rules.
"The feeling was that it is so exceptionally, incredibly, out-of-this-world good," Reyhan Ayas, a senior economist at the workforce-intelligence company Revelio Labs, said. "I feel like that's been brought down to earth."
The arms race to give the best perks
Understanding how Silicon Valley culture gave birth to a certain kind of overindulged tech worker starts with a history lesson.
Vijay Govindarajan, a professor at the Tuck School of Business at Dartmouth College, told Insider that as long ago as the 1980s, tech companies aimed for an open, more-informal office culture, the better to spark innovation. Part of that approach involved creating strong social bonds among employees. Open-office floor plans, communal kitchens, and freebies like food and coffee encouraged employees to gather up and share ideas. It effectively turned lunchtime and coffee breaks into working hours.
It became a recruiting tool, too. When companies wanted to lure and keep parents, they began offering maternity perks, on-site childcare, and lactation rooms. To recruit young professionals who were fresh out of college, companies tried to mirror college dormitories, Michael Malone, a tech historian and author who recalled seeing Pilates balls and video games at the former search-engine giant Yahoo, said.
"Your private life and your work life began to slide into each other. That was kind of cynical by these companies in the sense that 'We expect you to kind of live here,'" Malone said.
Office designs and perks eventually turned into an arms race as companies competed for not only the most talented people, but also for those who wouldn't mind logging a lot of hours. If one company is providing free food, then the other must up the ante, Govindarajan said.
Google became famous for its commuter buses, rock-climbing wall, on-site gym, and in-house massage therapists or massage chairs, depending on the campus. Microsoft paid for its employees' healthcare. Apple started holding Beer Bashes where the company treated employees to free beer, food, and concerts by popular artists such as Maroon 5. Meta installed on-site dental and healthcare, along with dry-cleaning services, and a bike-repair shop. And both Apple and Meta pay a portion of their employees' egg-freezing costs to win over prospective mothers.
Those perks came with a bump in salary expectations, too.
Young people were graduating with desires of becoming the next Mark Zuckerberg as they watched "The Social Network" in 2010, watched his company pull in $1.5 billion in venture capital in 2011, and then watched it achieve IPO in 2012.
Google raised the salary of entry-level positions by as much as $20,000, The New York Times reported, to keep its college-to-company pipeline going. Across the industry, companies went from offering restricted-stock units in less than half of all compensation packages to the units being a top employee perk.
Pandemic fueled the frenzy before the crash to Earth
Recent tech layoffs came after a robust hiring period that occurred during the pandemic-induced shift to digital working in 2020 and 2021. The industry and its eager investors were convinced that the stay-at-home orders had accelerated the country and the world into its digital future.
Tech professionals benefited because it boosted demand for their skills and boosted their compensation. The Great Resignation, where people quit in droves in favor of better-paying opportunities elsewhere, also bolstered the thought that there was job security in the sector.
Young tech workers took to TikTok to show off their offices, perks, and the lifestyles they afforded on high entry-level or junior salaries. The videos attracted hundreds of thousands, if not millions, of views and further pushed the narrative that tech was the "it" industry.
Reality sets in for the tech industry
Then, reality set in as the economy started to sour.
"It went from negotiating salary like crazy and complaining that they had to work past 4 p.m. or whatever, to realizing that working in tech doesn't make them that exceptional and they're also at the mercy of potential layoffs," Ayas said of the rupture point.
Spending so many years in the comforting embrace of tech, and then the harsh wake-up call of reality, disoriented and upset many regardless of whether it affected them.
An ex-Googler who was handed a virtual pink slip told Insider she "mourned" the loss of her job and that the layoff felt "un-Googley." A laid-off recruiter from Meta said she felt "hurt." Those who are still on payroll have been left with feelings of survivor's guilt and anxiety around whether they are next.
It's unfortunate, Govindarajan said, but he added that these tech companies have disrupted other industries like photography, automobiles, and department stores.
"There are many industries the tech sector disrupted where people got laid off. But now it's the turn of the tech sector itself," he told Insider.