Has the Era of the Mega-Layoff Arrived? [View all]

Snap is laying off 16% of its staff. Block lopped off 40% of its workforce. Oracle, meanwhile, is shedding thousands of employees, after Amazon.com cut about 30,000 in a matter of months.

Welcome to the era of the mega-layoff. In Silicon Valley and beyond, companies that are cutting staff are doing it with a big ax. Instead of laying off people in more incremental—and less disruptive—waves, employers are seizing on the potential financial upsides of severing swaths of their workforces at once. That is a departure from not long ago, when mass layoffs registered as a sign of trouble or mismanagement and that a company needed to take drastic measures to right its performance. Now, such a company is more likely to get a big stock bump and praise from investors for acting boldly.

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The willingness to make the big cuts reflects a fundamental shift in how U.S. companies view their professional talent. Instead of competing for knowledge workers with big pay raises and other perks, as many did for much of the past decade, corporate leaders have come to see large teams as impeding progress, not helping it.

“Most companies, if not all, could cut 30% to 50% of their workforce at any time and see no material difference in performance,” said Mo Koyfman, founder of the venture-capital firm Shine Capital and a former executive at the media company IAC. Sure, artificial intelligence has made some work processes more efficient, allowing for fewer people in some departments, he said. But “it also has given air cover, more importantly, to execute on the right sizing that you probably needed to do a long time ago.”

So far, the rationale for the cuts appears to be driven less by AI’s abilities to replace workers outright than by the soaring costs of building the technology, according to executives. And many companies, particularly in tech, continue to course-correct after overhiring during the pandemic. Regardless of the why, executives said, companies are finding a way to slash jobs and are being rewarded by investors for it.

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