Layoffs Are Coming(jacobian.org)
jacobian.org
Layoffs Are Coming
https://jacobian.org/2020/mar/13/layoffs-are-coming/
77 comments
> but there’s nothing fundamentally different in terms of finances between the week before and the last week
This is not true for many households. People with young schoolchildren, people who work for tips or in the service industry, people who can't work remotely but are forced to stay home. There are many people whose finances have fundamentally changed in the last week.
This is not true for many households. People with young schoolchildren, people who work for tips or in the service industry, people who can't work remotely but are forced to stay home. There are many people whose finances have fundamentally changed in the last week.
Apologies, I meant ‘financial markets’, not personal finances. I’m correcting it now. (Not a native English speaker, sorry)
This timing is really unfortunate. I work as a freelance software engineer and my assignment ended a month ago. I've been looking for a new assignment, but it looks like nobody is hiring right now. I'm preparing for burning through all my saving because I don't see it change easily in the next months :(
Same here. I was about to start a new job abroad two weeks from now, but now my country's borders are locked and I can't fly out (not that I'd want to if I could, in this situation). I'm hoping I can renegotiate for remote, but if that fails, I'll be burning through savings too.
I'm kinda feeling this too. I've been accepted into a masters in quantitative finance abroad, and was looking forward to starting in September. Now, not so sure what's going to happen, especially if we're heading into recession and other issues...
Same but due to bad sales. Mine is postponed until people go back to work.
Hopefully 9 months of mortgage is enough to survive this.
Hopefully 9 months of mortgage is enough to survive this.
I'd like to warn everyone to not quit, even if you have deep savings or think a layoff is coming. Do reasonable things to stay, where reasonable depends on your support network and savings.
Even 2-3 extra months is significant cash for most of you. Not having a job during a recession is scary (even to me with no kids, no spouse, no dependents). Tech might be better off in some respects, but it also means it will be much harder to get a job in an emergency as those will be filled by many others.
Even 2-3 extra months is significant cash for most of you. Not having a job during a recession is scary (even to me with no kids, no spouse, no dependents). Tech might be better off in some respects, but it also means it will be much harder to get a job in an emergency as those will be filled by many others.
I am not sure if I'm lucky or unlucky - I recently, meaning 15 days ago quit my job. It was a decision prepared well in advance.
I'm glad because I am mentally prepared to not work for quite a while with okayish amount of savings. I'm sad because this means all my own business plans, that I prepared my savings for, are on hold.
Im still not sure is it better to go through resection with no work but with savings or just work through it.
I'm glad because I am mentally prepared to not work for quite a while with okayish amount of savings. I'm sad because this means all my own business plans, that I prepared my savings for, are on hold.
Im still not sure is it better to go through resection with no work but with savings or just work through it.
I think it's much better to enter a recession while employed. For starters: not everyone is fired, obviously. If you're not fired then you can just keep going on as usual. It's not easy to find a job in a contracting economy.
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FWIW: corporate layoffs are going to lag somewhat. For PR reasons, no one wants to be seen as dumping folks during a crisis. And for accounting reasons, the need to balance the sheets generally lags by a quarter (that is, virtually no employer is "agile" with its layoffs).
The more immediate job losses are in the service sector, and that is happening already.
The more immediate job losses are in the service sector, and that is happening already.
And in the service sector, job loss isn't so clear cut... people will just have hours reduced a ton, in some ways being a defacto lay-off.
European airlines are already announcing layoffs.
What other result could come from the global economy basically crawling to a halt for - best case scenario - a month or two?
Not to be glib but I think most people understand this.
Not to be glib but I think most people understand this.
Sometimes I wonder if the harm reduced by "flattening the curve" is greater than the harm introduced by flattening the global economy...
Is that to say it's better to be dead than unemployed?
Not meaning to be glib nor overly dramatic. But I thought the whole point is that flattening the curve eases load on hospitals meaning they turn away fewer people, and thus more of them survive. So the question you are asking is: how much is preventable loss of life worth?
Not meaning to be glib nor overly dramatic. But I thought the whole point is that flattening the curve eases load on hospitals meaning they turn away fewer people, and thus more of them survive. So the question you are asking is: how much is preventable loss of life worth?
There have been studies showing that unemployment directly increases mortality here is just one [0].
[0] - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1448606/
[0] - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1448606/
That's interesting, sad, and makes intuitive sense.
But I'm not sure we can take it back and say "we need to allow more people to die from coronavirus so that fewer die from unemployment". Ideally we would want to minimize both.
But I'm not sure we can take it back and say "we need to allow more people to die from coronavirus so that fewer die from unemployment". Ideally we would want to minimize both.
One day when we have the benefit of hindsight someone will do an analysis on the quality-adjusted life years gained and lost by the different responses to this.
death will follow either way, like 2008
https://www.telegraph.co.uk/news/2016/05/25/financial-crisis... https://www.bmj.com/content/347/bmj.f5239 https://www.forbes.com/sites/melaniehaiken/2014/06/12/more-t...
damned if we do, damned if we don't
https://www.telegraph.co.uk/news/2016/05/25/financial-crisis... https://www.bmj.com/content/347/bmj.f5239 https://www.forbes.com/sites/melaniehaiken/2014/06/12/more-t...
damned if we do, damned if we don't
We have ways as a society to make sure an economic downturn doesn't kill anyone. We can't say the same thing about an unchecked pandemic.
Not in the US, but yeah -- societies have safety nets for economic downturns. This also assumes the rest of the world is mostly functioning. A global pandemic that breaks everything everywhere is a different story.
If your house burns down but your neighbors are fine, it's easy to get them to help to pitch in rebuild a little. If everyone's houses are torched then you're on your own...
If your house burns down but your neighbors are fine, it's easy to get them to help to pitch in rebuild a little. If everyone's houses are torched then you're on your own...
I get the sentiment, but consider: the economy will recover. Some people exposed to corona virus will not.
The alternative is letting it widely infect the population leading to 5%+ of symptomatic cases dying (which could be as much as 2% of the overall population) and people being unable to get critical medical attention for any ailments while this is happening. You don't think the economy would shut down in the scenario, if only from upper-middle-class and up individuals quitting their jobs and bunkering down to save their own skins?
Flattening the curve is not an alternative to letting it widely infect the population, it is just managing the rate of infection slightly. The same number end up infected.
That’s exactly the controversy in the UK government’s off-piste response to this scenario.
If it pays off, Britain will win handsomely out of this.
That’s one hell of a massive “if”.
If it pays off, Britain will win handsomely out of this.
That’s one hell of a massive “if”.
In the case of the former, it's the virus that kills people. If deaths occurred by way of the latter, it would be only because the wealthy ruling class refused to pay their fair share (via the subversion of our democracy) to support basic necessities of food, shelter, and health care.
Italy has 24,747 reported cases and 60 million people. That's 0.04% of Italy's population. If we conservatively(?) assume that there are x10 actual patients, then it's still 0.4%.
If, without intervention, 40% of all people may contact coronavirus, then each country is going to be hit x100 worse than where Italy stands now. I doubt there would be a "global economy" to speak of after that.
Flattening the curve is our only hope.
If, without intervention, 40% of all people may contact coronavirus, then each country is going to be hit x100 worse than where Italy stands now. I doubt there would be a "global economy" to speak of after that.
Flattening the curve is our only hope.
Note that this one is not a crash imposed by market forces overextending themselves(the usual dynamic of recession), so much as a reset button suddenly pushed. An economy under quarantine is not just a depressed economy, it's a different economy, as demonstrated by the abrupt mass adoption of WFH and sudden political will for sick leave. The game took a time-out and the rules changed. When we resume business as usual, it won't move the clock backwards.
So there is a silver lining in that opportunities going forward will change, but that still means "no opportunities" in the near term while everyone sorts out what to make of it.
So there is a silver lining in that opportunities going forward will change, but that still means "no opportunities" in the near term while everyone sorts out what to make of it.
If anything, I think tech is protected from the effects of the coming recession. Our industry is one of the best poised to maintain business as usual. That said, the impact of the economic effects is coming.
Are you kidding me? Tech is so ridiculously inflated, just look at how many stupid "tech" startups were created recently. This will deleverage now. Not even the "big guys" are so super safe - a lot of VC money is recycled back into "tech" via AWS bills and online ads.
The only worse business right now is probably oil, especially fracking. Those guys are doomed.
The only worse business right now is probably oil, especially fracking. Those guys are doomed.
You are completely wrong. Tech is definitely not worst industry affected by the corona virus by a long shot. Service workers are definitely not a job that can be done at home. Tech workers usually have good salaries while service workers are likely to live paycheck to paycheck. Plus they do not have the same access to medical benefits.
The cruise ship industry would like a word with you.
There's a few more small sectors like this. But I was thinking of the "official" s&p sectors:
https://www.tradingview.com/markets/indices/quotes-snp/
https://www.tradingview.com/markets/indices/quotes-snp/
Depends on which "big guys" you are on about. Likely, it's those who have recently IPO'd on VC money and depend on lots of moving parts and huge costs like cloud costs, logistics, travel and are also in specific domains which are waiting to be sherlocked by a FAAMNG company. The best of all:
It is those "tech" startups who generate little revenue and no profit, but take in VC money into their series D,E,F and G+ for years.
Ultimately, it comes to no surprise that layoffs from such startups would happen at this time since my so called "machine learning crystal ball" predicted this [0] anyway whilst ignoring other earlier vacuous predictions. FAAMNG and other profitable companies will survive this.
[0] https://news.ycombinator.com/item?id=21926473
It is those "tech" startups who generate little revenue and no profit, but take in VC money into their series D,E,F and G+ for years.
Ultimately, it comes to no surprise that layoffs from such startups would happen at this time since my so called "machine learning crystal ball" predicted this [0] anyway whilst ignoring other earlier vacuous predictions. FAAMNG and other profitable companies will survive this.
[0] https://news.ycombinator.com/item?id=21926473
When I wrote "big guys" I meant Apple, Microsoft, Facebook, Google, Amazon. And I meant even those aren't safe due to the reasons mentioned in the GP, despite large cash buffers and generally excellent credit.
Many (most?) companies will survive, the question is in what form.
Many (most?) companies will survive, the question is in what form.
Correct. No-one's completely safe. But those companies you mention that are made up of the FAAMNG including Netflix are powering the majority of the internet services such as (AWS, GCP, Azure, Facebook Ads and Apple Services) which are used by many developers and startups. For some of them, this isn't even their main source of revenue generation.
It's the unsustainable VC funded, near-zero revenue, rapid growth and high costs burn rate so called 'tech' startups which some have IPO'd or some are still raising capital with no plan for a profit that will not survive.
It's the unsustainable VC funded, near-zero revenue, rapid growth and high costs burn rate so called 'tech' startups which some have IPO'd or some are still raising capital with no plan for a profit that will not survive.
From direct effects, maybe. But no one is immune from the second order effects. Once our customers start going out of business because they are directly exposed, they can't buy our software anymore.
I think that depends.
Netflix will be in great shape.
Amazon will be hurt by falling consumer spending but benefit greatly from people transitioning the rest of the retail activity to online shopping.
Apple will probably not sell too many premium goods to people who have just been laid off.
Facebook, Google, and Microsoft, being B2B companies, are subject to the rest of the economy.
Transportation is in big trouble, although food delivery is poised to take off.
Netflix will be in great shape.
Amazon will be hurt by falling consumer spending but benefit greatly from people transitioning the rest of the retail activity to online shopping.
Apple will probably not sell too many premium goods to people who have just been laid off.
Facebook, Google, and Microsoft, being B2B companies, are subject to the rest of the economy.
Transportation is in big trouble, although food delivery is poised to take off.
Aye, downloaded Uber Eats and SkipTheDishes for the first time this weekend.
The streets are empty and the local gub'mnt has been advising people to avoid gatherings like restaurants and bars. They're open still, and probably slingin mad amounts of food, but all delivery...
The streets are empty and the local gub'mnt has been advising people to avoid gatherings like restaurants and bars. They're open still, and probably slingin mad amounts of food, but all delivery...
> tech is protected from the effects of the coming recession.
How so?
> Our industry is one of the best poised to maintain business as usual.
It may look true from a certain point of view. But things change very fast. A while ago, bankers thought they were immune to disruption in their industry.
Preparing your contingency plan never hurts.
How so?
> Our industry is one of the best poised to maintain business as usual.
It may look true from a certain point of view. But things change very fast. A while ago, bankers thought they were immune to disruption in their industry.
Preparing your contingency plan never hurts.
A company that's overstaffed will axe people, especially the expensive ones.
If stock market tanks 40% from its peak, C-level execs will start laying off people.
Another important thing to consider: reduce liabilities ASAP. I'm writing an article on this currently, but I see way too many friends and co-workers who have over-leveraged themselves: large mortgages, car loans, student loans, etc.
In good times it is a good idea to reduce leverage (pay down your debts) so you have less monthly burn.
If you are in a highly leveraged position right now, here's my advice: get a 6 month (or 1 year) emergency fund in place ASAP, pay off any debt using the debt snowball method (smallest debts first) to free up cash flow, and DON'T TAKE ON ANY MORE LOANS!
The difference between having a monthly burn rate of 3k (with no debt) and 8k (with debt) is massive and will dramatically impact your life: anxiety, stress, emergency fund, etc.
Now's the time to derisk yourself as much as possible.
In good times it is a good idea to reduce leverage (pay down your debts) so you have less monthly burn.
If you are in a highly leveraged position right now, here's my advice: get a 6 month (or 1 year) emergency fund in place ASAP, pay off any debt using the debt snowball method (smallest debts first) to free up cash flow, and DON'T TAKE ON ANY MORE LOANS!
The difference between having a monthly burn rate of 3k (with no debt) and 8k (with debt) is massive and will dramatically impact your life: anxiety, stress, emergency fund, etc.
Now's the time to derisk yourself as much as possible.
> debt snowball method
Dave Ramsey's "Snowball" method is nice for the hodunk folks who don't get finance, but really you should be paying off the highest interest rate first, since that will cost you the most.
Snowball is good from a psychological and (kind of) from an administrative sense, but it's mostly to help people take control of their financial situation, not make the most cost-effective long term choices.
Dave Ramsey's "Snowball" method is nice for the hodunk folks who don't get finance, but really you should be paying off the highest interest rate first, since that will cost you the most.
Snowball is good from a psychological and (kind of) from an administrative sense, but it's mostly to help people take control of their financial situation, not make the most cost-effective long term choices.
I am in the process of buying a condo apartment (Canada) (each year real estate was usually a 6% increase in value).
I sent the signed approval friday, but they refused it because my PDF was sign electronically. I was about to re-send it Monday..
What is your opinion?
Thank you!
I sent the signed approval friday, but they refused it because my PDF was sign electronically. I was about to re-send it Monday..
What is your opinion?
Thank you!
Real estate in NYC is already dipping 30%, you could have definitely timed this one a bit better, but if you are in it for the long-haul, then you’re fine.
Save the paper trail, talk to a lawyer
This won't be any regular lay off. Bars and restaurants are all shutting. Retail stores can't stay open. 60% of the workforce may be out of work in 3 months time. This might be an economic collapse.
Let's not overreact either. A sensible thing to do is to issue an executive order that protects employment during this time, freezes all kinds of credit payments, freezes rent payments. Perhaps the Treasury should guarantee payrolls, too.
You can do the maths:
19m work in retail
13m work in restaurants
Add in the logistics businesses to support all these.
Add in the logistics businesses to support all these.
My point is this is most likely temporary (on the order of weeks). Guarantee people's financial/employment safety (the measures I've listed), keep them in their homes, back to business when this blows over. This is exactly the kind of stuff governments are supposed to do.
But is it just "weeks". We've no evidence nor precedent to know how long this lock down will last. The problem being that without any vaccine (and mass generation of vaccine and distribution to the population), the virus will continue spreading when those "weeks" are up.
That's a whole other scenario which will have bigger consequences than just a recession.
Linkbait.
Offers no evidence. I see no reason why the vast majority of software companies would be affected at all by this (Github, google, amazon, etc).
I especially foresee this being a huge benefit to biotech.
Offers no evidence. I see no reason why the vast majority of software companies would be affected at all by this (Github, google, amazon, etc).
I especially foresee this being a huge benefit to biotech.
Uh, sorry to break it to you, but Github, Google and Amazon are not the vast majority of software companies.
The burden isn't on me to list every company that won't be affected by this. The burden is on the person making claim to provide evidence for their claim.
[deleted]
On the contrary, this article has a lot of useful advice for anyone in uncertain times. Predictions of who may or may not be affected are not the interesting part. Any of us may be affected by events beyond our control, and the article has plenty of tips that may be helpful for anyone.
Anyone in academia have takes on the potential effects on graduate students (PhDs / post-docs)? What happens if a lab loses funding?
Government funding for research should be largely unaffected. Also most grants are long-term. On the other hand, fewer people will probably go into industry in the near-term which leads to more competition for grad school / postdocs.
Ancedote time.
My job was ending due to bad sales, my next job is on hold until people return to work.
Our daycare said they are charging us money but we can't come (they said this week only... But this is after we complained).
The only business but really affected? My wife's company who treats people 1 on 1. But who knows even that might be slowed down from paranoid customers.
My job was ending due to bad sales, my next job is on hold until people return to work.
Our daycare said they are charging us money but we can't come (they said this week only... But this is after we complained).
The only business but really affected? My wife's company who treats people 1 on 1. But who knows even that might be slowed down from paranoid customers.
I feel like in the domain of Software companies, this only applies to very traditional, conservative companies. Most startups and “liberal” companies will be fine having their employees WFH. In a month or so, they could even be pleasantly surprised about how worker productivity went up due to the benefits of WFH.
How are they fine if they don’t have customers anymore?
Of course the number of customers will wane. However, the economy is not something that can easily be halted. For example, businesses really on other businesses to function. This means that B2B products won’t be as severely impacted when compared to the local cafe.
For a recession to start something fundamental has to change irreversibly. E.g. cornerstone companies implode. A class of securities evaporates.
What does the virus pandemic change irreversibly?
What does the virus pandemic change irreversibly?
> For a recession to start something fundamental has to change irreversibly.
It seems like you're thinking of the last recession (2008), which included the collapse of major financial firms like Lehman. But most recessions are much less catastrophic. A recession just means a slowdown in the economy, usually defined as "two consecutive quarters of negative GDP growth".[1]
[1] https://en.wikipedia.org/wiki/Recession#Definition
It seems like you're thinking of the last recession (2008), which included the collapse of major financial firms like Lehman. But most recessions are much less catastrophic. A recession just means a slowdown in the economy, usually defined as "two consecutive quarters of negative GDP growth".[1]
[1] https://en.wikipedia.org/wiki/Recession#Definition
[deleted]
I just got laid off but there is a lot of defacto legalization of discrimination. Anyone who isn't in the majority like women and people of color are going to be hit extremely hard in this new round of layoffs that began last week. For those who remain you'll be asked to do "shared sacrifice" and either take pay cuts do even more unpaid overtime or both.
Financial markets have stability issues when the situation is calm in the short term, but it’s unknown what’s going to happen six months from now. The situation is reversed today, we’re all going through some bad mess due to our states being unprepared for this, but it’s mid to high chance this will have settled one way or another in six months.
What we had last week was a shock that came not from the financial system itself but from public health. We might have to adjust our lives to this and that might have financial implications, but there’s nothing fundamentally different in terms of financial markets between the week before and the last week.
Recessions or down cycles are normal, and that might happen - and that is finances just charting the rest of the world at large. But the 2008 crisis was a result of something going haywire in the financial system itself, which is something that is more prone to create much bigger shocks than external events. We might have a mild recession, yes. But it’s unlikely it’s going to be like 2008, since this crisis is fundamentally external.