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Personal Finance For Women

Will You Be Replaced by Someone Cheaper? It’s the Great Salary Reset

July 17, 2024

Economy


Listen & follow The Money with Katie Show: Apple Podcasts | Spotify

We got a “tip” back in March (all right, fine, it was Henah’s friend) that a major US employer with hundreds of billions of dollars in revenue might be quietly “resetting” their workforce’s wages.

But upon further digging, we weren’t able to find much—so we asked all of you instead, and found an interesting trend unfolding quietly across industries. Check out this original Money with Katie ~investigation~.

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Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is President of Morning Brew content and additional fact checking comes from Scott Wilson.

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Katie:

Earlier this year, my executive producer Henah mentioned something to me in a meeting. Her friend who works at one of the most profitable FAANG companies noted that it seemed as though people were being let go with the express purpose of replacing them at a lower cost.

Henah:

Yeah, my friend and I were talking and she was saying that she doesn’t feel like she could ever leave her role. She gets paid $150,000 base salary, which is pretty high for the area and for what she does. And so I said, are you sure? I mean, maybe you could find that elsewhere. People are always hiring. And she said, no, because I know that they’re trying to push people out and rehire at lower roles, which is something that I’ve been seeing and hearing about, and I don’t want that to happen to me. And so I thought that was really interesting. And then I pinged to you, Katie, about it a couple days later to say, I wonder if this is something bigger than what she’s saying.

Katie:

Then in March, Henah sent me an article seeming to confirm this friend’s one-off suspicions; BBC had reported “US salaries are falling. Employers say they’re just ‘resetting’.” And we hear about how strong the US labor market is, how unemployment is at or near record lows. The economy is still adding more jobs than it’s losing, but there’s something else going on too. On the heels of 9.3% wage growth for advertised roles in early 2022, things have fallen precipitously in the years since, according to the BBC. That, by the way, seemed to be a trend in the 20 or so conversations we had for this episode; many people reported a hiring wave in 2021 or 2022 that it seemed their companies were quietly trying to unwind.

The BBC said, “Some are finding an unwelcome surprise as they scan listings for open roles. A salary bump is all but impossible. In many cases, wages seem lower than their previous pay. Even for the same jobs.” In late 2023, ZipRecruiter found that 48% of the 2,000 HR professionals surveyed reported resetting salaries downward.

When I heard about this phenomenon, I figured news about it would be everywhere, but that’s not what I found. I struggled to find other corroborating evidence about the phenomenon, save for a few case studies about small consulting and HR firms I had never heard of. There wasn’t much spinning around the mainstream media apparatus about it. So I decided to ask all of you if you had experienced anything of the sort. And it turns out this was far more common than I anticipated.

So we’re going to be hearing from folks today. For privacy reasons, names and voices will be changed Dateline style, though some who felt less inclined to protect their former employer let their freak flag fly, which I appreciate because hey, we should all know who’s writing our checks, right? And understandably, people were nervous about retaliation or implicating themselves in a way that might impact their employment prospects.

But the tech media and consulting firms that we’re going to be talking about today are some of the biggest and yes, most profitable companies in the world that you probably interact with on a daily or near daily basis.

And I know what you might be thinking, Katie, this stuff has been happening since the dawn of capitalism, and that might be true, but it does seem like the way it’s happening now and the precise unwinding of the runup in wages in 2021, in 2022 is uniquely enabled by a few factors that are specific to this moment. And I would add masked by encouraging job data.

Welcome back to the Money with Katie Show, Rich People, where today your stories are on full display. We’re talking about the “Great Salary Reset” and the current challenge facing American employees. The incredible salary that you’ve worked so hard for your employer might be quietly looking for ways to reset it downward, including replacing you with someone cheaper, younger, less experienced, or not based in the US.

I know it sounds harsh because it is, and the worst part I think, is that it seems to be happening fairly under the radar. It’s a little hard to gauge overall layoff numbers, but the tech sector specifically saw around 75,000 in 2024 as of May per TechCrunch and closer to a hundred thousand per NerdWallet by June. That’s like one and a half Metas just in the first six months of the year alone. Nationwide across industries reports for the first half of the year are around 322,000 people with the hardest hit industries being automotive education, healthcare technology and media.

But as you’ll hear today, looking at layoffs alone doesn’t really tell the whole story because there are other ways salaries can be reset, like an insistence that nobody gets a cost-of-living adjustment for a couple of years in a row, thereby inflating away salaries, values, and lowering the cost of wages to the employer. Or, as a few listeners shared, they were quiet laid off aka pulled off projects, and so subtly embarrassed by the slow stripping away of responsibility that they just opted to leave themselves before the layoff came.

We’ll hear from them after a quick break.

Because I couldn’t find much in the way of reporting about this phenomenon. I decided to tap my access to all of you on social media and I posted a single Instagram story slide. I said, I’m working on a story about the Great Salary Reset, and if you feel like you’ve been pushed out of your company and replaced by someone at a lower cost, can you email me? And within the hours that followed, dozens and dozens of emails came pouring in each bearing a different but similar tale.

These stories touched everything from startups to Fortune 100 corporations to higher ed, to nonprofits, from global consulting firms to small property and casualty insurance carriers. But no matter the backdrop or details, the sentiment was clear. As one listener put it, “It’s ridiculous and it’s definitely happening.”

These stories have varied endings. Some reported happily that they ended up getting higher salary somewhere else. Others wrote that they’re still struggling to find work months later or to find work that pays anywhere close to what they used to earn. Others noted that they’re now working for themselves.

Across the board, I noticed three major trends. The first is outsourcing or contracting, whether it’s remote workers in the US being replaced with remote workers in the Philippines or India at far, far lower wages or even just lower cost of living states in the US, companies are replacing workers with full-time benefits and US based cost of living with people in other countries or more insultingly, just contract work. They want you to do the same job but with none of the benefits.

The next is age and tenure discrimination. Now, discrimination is probably the wrong word to use, but essentially the trend is this, people with more experience, more education and therefore earning more money are being pushed out and replaced with younger cheaper people.

And lastly, jobs being posted again online after layoffs, layoffs that were supposedly because roles were being eliminated almost immediately, but with lower and sometimes far lower compensation. This last item, the speed with which jobs are being hired for, again, particularly in situations where the original employee was laid off, is of particular interest to me because typically layoffs are performed under the guise of strategic organizational changes. They’re a short term cost cutting measure that amounts to changing direction, to eliminating investment in certain areas of the business. But when you’re laid off and your exact job shows up on LinkedIn within a week for $20,000 less, what are we to make of that?

Mary:

Hello, my name is Mary.

Katie:

This is Mary. Mary says that a few months ago, her brother-in-Law, a sales analyst, lost his job shortly after a stellar annual review. It wasn’t personal. They said they were just eliminating his position.

Mary:

It was simply understood that they were just eliminating the position that it was a company decision, but that they were very adamant that this was not performance based, that they appreciated him, they liked his work ethic, they liked the job he was doing, that this was just a decision that they made from the top down that positions needed to go. And his was unfortunately one that went away.

Katie:

And so what happened next? How did the LinkedIn of it all come into the picture?

Mary:

The family group chat started firing up, right, of all of us siblings and siblings by extension, the empathy, the I’m sorry to hear that. Let’s reach out to our network. Let’s try to find something new. I was not well versed in the type of skillset that he had, so I asked for some more details on that and started just typing into Indeed and typing into LinkedIn, similar job titles or even similar qualifications that someone in that role would have. And that’s where for me exclusively, which then popped up for my husband, I found it on Indeed. He found on LinkedIn a role, same title for the same company.

Katie:

So they found his job on LinkedIn’s job board almost immediately. Same job, same title, same description, and only one thing had changed. It paid $20k less, but that’s not the weirdest part.

Mary:

And that’s where I, like I said, shared it with my husband, his brother, and then we both together went to him and said, Hey, did you see this? Why would they be hosting this job when they just let you go of this one? And he was like, huh. He was just very perplexed, confused. And he was like, I haven’t seen that. And I said, it’s not in your feed. And he said, no.

But it seemed odd and off. It was weird. I mean, in his mind, and I understand his feedback that he gave to us, which was, does it make a difference? I was laid off anyway from this company. So even if they were trying to hide it from me, clearly this salary range is not what I was making and not what my lifestyle is now conducive to. So I am not even going to necessarily try to put too much effort into exploring it and put more effort into trying to find something different trying find, which I appreciate, but also had me curious.

Katie:

I would be vindictive and spiteful and trying to track down the person responsible for blocking my LinkedIn profile. So what’s the situation now?

Mary:

He’s still on the job hunt.

Katie:

How long ago was this?

Mary:

About four months ago. So seemingly, I mean, again, as we’ve reached out to networks and people that were in similar lines of work, what he was making was probably on the higher end for someone who was new-ish to that type of work. So I don’t necessarily want to fault the company for understanding, hey, we hired someone with less experience on the higher end. It’s the idea that there wasn’t transparency in that. If that is the case.

And reaching out to other people who were kind of right there in the middle that now it seems like this company may be trying to get someone with lower experience for low pay, which in that case is also not okay. So there’s just a whole lot of cloudiness and not okay-ness around all of this. But he still is on the job hunt because he is an individual who now is believing that the work he was doing, he was being fairly compensated for, and now he’s trying to find another job in that same line of work with that same salary that may not even exist.

Katie:

Do you know when he was hired at that company, when he got that job with that salary?

Mary:

Over a year, almost two years, and to my knowledge, hadn’t really received any salary bumps in that time that he was there, that the salary he was hired on at is the salary that he was let go at. So yeah, that’s also what’s peculiar.

Katie:

Another listener who we’ll call Joy emailed to say something similar as her whole family was impacted. She said, both my husband and I experienced this. We were both laid off in the past year and our jobs were almost immediately reposted at much lower salaries.

Then you have Tasha. Tasha is an employee at a Fortune 100 company who wrote in to say that this has been happening very blatantly in her organization for the past year or so:

Tasha:

Throughout 2023, there was a pretty obvious uptick in both layoffs. So announced layoffs at my company and then performance related terminations that were not specifically disclosed to us. And then when it became more obvious that people were starting to leave the company and under circumstances that we didn’t really know, so coworkers like their slack would just go dark or their email would be disconnected. That’s when I think people started to ask more questions.

And what we were told in large company forums is that the standard for performance was being raised, it was now higher and that we should expect to see basically an increase in performance improvement plans to help meet that standard. So in one example, we would have a coworker who had left the company and we didn’t really know why. And then leadership was posting their job on LinkedIn at the level below basically, and sharing that to their network saying, hey, we’re hiring this new role when the person had departed probably the week before. So I think the result has been a lot of anxiety for employees, coworkers that they had worked with for a long time leaving and just a lot of anxiety as well about losing their job too.

Katie:

Do you feel like you are experiencing that anxiety? Are you feeling nervous about this?

Tasha:

For sure. I don’t think you can really get away from it. You can kind of use the tools in your arsenal. So like the emergency fund and saving money and investing I think helps with security. And what I will say is, at least at the company I work at, the severance packages are pretty significant. So there is a lot of sort of runway from severance. So that definitely helps. I think the anxiety is there, but I think most people are aware of this by now and are reasonably prepared if something were to happen.

Katie:

Yeah. Have there been any pay cuts or discussions internally of what sounds like trying to adjust compensation or titles down?

Tasha:

Nothing that I am aware of for current employees. I have seen anecdotal examples of the hosted salaries. So for new hires, the salaries are different, but as far as internal, I am not aware of any changes to compensation.

Katie:

And when we say different, would that be lower?

Tasha:

Anecdotally, I have heard lower. I can’t confirm that, but that’s my suspicion.

Katie:

Another listener who we’ll call Phaedra, was a really high performer.

Phaedra:

I started working at Accenture right out of college in the consulting business, and I spent about 15 years there. I was consistently a high performer. I advanced quickly, and it’s such a large company and there are so many aspects to the business that I really believed that it was a place that I could spend my entire career.

Katie:

So Phaedra was a top dog in her organization. She had moved from consulting the client facing part of the business to something called corporate functions, which was the non-client facing side of consulting that keeps the firm running, think human relations, data analytics, marketing training, sales project managers and chiefs of staff. It’s a place that Phaedra said is good for high performing women in consulting who also want to have families. Everything was going great until…

Phaedra:

So during the Q2 earnings call in 2023, they started hinting at the need for business optimization actions that they needed to take to start to reduce costs. And then the call was turned over to the CFO and she announced a plan to streamline operations and transform non-billable corporate functions. And that plan would result in laying off 19,000 employees of which half were announced to come from corporate functions. And there was no internal warning within the firm before this announcement. So employees, we were listening to the call and we heard this at the exact same time that the market analysts and the investors and the Wall Street was, and it was just pretty jarring. And so in the following days after the call, we learned that part of that transformation included moving corporate functions, positions from high cost markets that were like the United States, Canada, Europe to what they were deeming, kind of like a target or a strategic location.

Katie:

Strategic location, global optimization. These are all nice euphemisms for, we’re about to screw a lot of people over. What is a strategic location?

Phaedra:

Accenture has a big presence in. So these are markets where there’s a talent pool, but they have significantly lower cost of living. And so the job can essentially be done for less. So in this case, the target locations for a lot of the corporate functions transitions were Argentina, India, the Philippines.

Katie:

But Phaedra wasn’t laid off. Instead, she got more responsibility and put on a path to promotion. And six months passed like this.

Phaedra:

It was tumultuous for a little bit. And so as the rest of that 2023, the year progressed, they had two performance cycles. And so during the first performance cycle, an announcement was made ahead of time that they were going to pause promotions and corporate functions. So it was frustrating, but could be explained away. So went about my business still continuing to do the best job that I could. And then when the end of the year cycle came around, we were told again that promotions and corporate functions would be paused, but just for the US and Europe, and they would still be able to happen in those target locations. And so the way the firm operates, those promotion lists are always eventually released internally so that we can celebrate and see who’s gotten promoted, celebrate those people.

And so when I was looking at it, I was kind of shocked, I think, to see just how few resources and corporate functions were promoted even in those target locations. And that was kind of the turning point for me. I sort of realized that the firm had kind of been slowly building this ceiling over me that was going to limit how far I could advance. And they just put that last brick in place that if my talented friends in these locations couldn’t even get promoted, what chance did I ever have?

Katie:

So what did you do?

Phaedra:

I ultimately decided to leave and took a job elsewhere. And so I miss a lot of amazing and talented people I worked with, but I have not regretted the choice to leave and feeling challenged in a new work environment, but not fearing every announcement cycle that you’re going to be impacted or they’re going to make a change that diminishes the type of work that you’ve been doing. I don’t regret leaving that environment. I was able to find a position that was slightly higher pay. It was fairly lateral, but still offered a lot of the same flexibility that I had come to really want to still be able to support my family the way I wanted to. So I’ve been fortunate in that I’m in an environment now that my compensation is slightly better than what I had received at Accenture, but I feel very supported and have opportunities to grow.

Katie:

I am so happy to hear that.

And while this didn’t happen to Phaedra, she heard from others being laid off that their severance packages were contingent upon them remaining for several more months to train their replacements.

And on the note of offshoring in a global economy, Phaedra mentioned something that I hadn’t really thought about, but I’m really glad she did. She made a point of saying that the people being hired in these strategic were really talented and deserving, and she said she learned a lot from them. And I don’t know, there’s a part of me that goes, well, even if it’s a lot cheaper for the businesses and it costs Americans and Canadians and Europeans, their jobs, it might be a lot of money to someone in a lower cost of living country. It might be a really good thing for them. And I’m still not sure how to parse the ethics of this inevitability in a global economy, but you’re going to hear more about it today, so I figured I’d mention it.

We’ll get right back to it after a quick break.

Ellery was another high performing woman who wasn’t laid off either. She too left of her own accord after seeing the writing on the wall, but she said to classify her departure as her choice is a bit of a stretch.

Ellery:

They stopped including me in meetings I used to regularly be in. I wasn’t looped into c-suite communications anymore, and my projects were abandoned. They no longer had the executive buy-in that they needed.

Katie:

Ellery’s employer ended up paying a consulting firm for three months to drive strategy on her projects, then left all of their implementation to her direct report who was paid a lot less money than she had been.

And what did your boss tell you was the problem? Like what was unquote wrong?

Ellery:

He said it wasn’t performance. He said my role was too expensive and it couldn’t be justified, which of course was a self-fulfilling prophecy.

Katie:

Why is that?

Ellery:

My impact was declining because I didn’t have the buy-in or the communications that I needed if I were to look objectively, yeah, I wasn’t contributing the way that I even wanted to be anymore. It was actually hard to argue that point, if that makes sense.

Katie:

But not because of your choices for strategic direction. So you mentioned that they told you this is too expensive for us. How did you get into a position that you were expensive in the first place?

Ellery:

Not of my own doing. I didn’t negotiate for my high salaries. I worked there for over six years in different roles and doubled my salary in that time. I was grateful. I feel like I earned that growth and always worked hard to meet new expectations, but I never asked for those numbers. They were given to me. Those numbers were their choice. And then I was left holding the bag wondering what I had done wrong.

Katie:

Ellery said she saw two others in her approximate pay band experience the same and choose to leave while the two that stayed were laid off a few months later. And at the end of the day, she ended up taking a 30% pay cut to find new work, and she says that that’s left her with some dissonant feelings.

Ellery:

I actually would’ve loved to talk about a negotiated salary because I loved the work that I did and I actually did. Other than the feeling of being excluded, I actually loved the place I was and the work that I did and would’ve been willing to discuss. What can we change then?

Katie:

That’s really hard.

Ellery:

Yeah, I don’t know that that’s a sentiment that others would share, but that’s something that I definitely felt, which was, it’s not all about money for me. A little bit of dissonance obviously with I made a lot of money and now I took a big pay cut, and my pride is struggling with that daily, but I probably would’ve done the same work at this pay band and I would’ve been happier. I was still working on the projects I cared about.

Katie:

Yeah. Yeah. That’s so hard. I know what you mean too, about the pride and you start to kind of identify with a specific compensation, and then when you don’t have it anymore, it’s kind of like, well, what does that say about me and my work now?

Ellery:

Yeah, it’s huge.

Katie:

It’s hard to go backwards.

Ellery:

Absolutely. Absolutely. Fortunately, one of the things we’re taught is you keep your investment contributions high even, or you keep them using as your income raises. So all these things. So it’s one of those, like my lifestyle didn’t flex with my pay, so no one’s really noticing it in the household. I am pride wise, pride wise, a hundred percent feeling that.

Katie:

Sean is a young and ambitious guy in Texas, and he had a rather awkward experience with being the “cheaper” option. So when you were offered your promotion, what were the details?

Sean:

I was being offered about $106,000 to take on management of a 12 person team overseeing around $180 million in sales a year. They mentioned the current manager was slowing down and wanted to retire this year. This sounds fine until you realize I was already making about a hundred and this would be another 15 to 20 hours of work each week, and I’d almost certainly get called for emergencies on every vacation I took for the rest of my life.

Hilariously, if you do a math on that, I was being offered the privilege of having to work another 60 hours a month for about $500. And for context, I could literally work as a bagger at my local supermarket for double that hourly rate if I really wanted the extra $500 bucks and make it about 30 hours a month instead of 60, while never getting called on vacation. So no thanks.

Now, the awkward part of this whole thing is that the team I was offered already had a manager, and they were one of my best friends. Let’s call him John. I was unaware John wanted to retire. We’d actually had coffee the previous week and they had told me they wanted to work at least another 10 years or so. Not only that, but they were worried they were being pushed out, is they had randomly started getting very vague but very negative feedback for the first time ever in their career. He mentioned HR had scheduled a meeting with him and that his director had just stared at the floor, avoiding eye contact for the whole thing with HR taking the lead, saying things like he didn’t have that spark anymore, whatever that means.

Now, you may hear that and think they were slowing down and not meeting expectations, but the story has another hilarious twist because there was one person at our company who was responsible for tracking everyone’s performance metrics, and that was me.

John was crushing it. He had one of the most productive teams at the company having built up a $300 million business from virtually nothing over 12 years. So why do they want him gone? Now, remembering that the offer I got was $106,000 being good friends with John, I knew he was making $166,000, and I know this because A, he told me, and B, another one of my friends worked in HR and I may or may not have a printout with everybody’s anonymized pay data. So I knew how much everybody made in the role they were offering me, and the lowest paid current employee was making about $135k, which is obviously relevant.

Katie:

So what was the pattern that you were witnessing?

Sean:

There was a noticeable trend where the Johns of the world made between $165k and $200k a year, and they were rapidly being replaced with a new generation being offered around $105k to $115k. That’s basically it. I think the interesting thing too with the offer is that even if you try to account for the experience, like we went back and prorated his starting pay to 10 years ago, his starting offer was still $135,000 in today’s money.

Katie:

Oh, wow.

Sean:

So yeah. Isn’t that interesting? It’s like you might think he’s got 10 more years of experience that’s 10 more years of raises, but prorated and whatnot, it’s still looking like they’ve cut the base down tremendously. And I think a big part of that is the number of people they’ve got coming into the role and how much our business has expanded.

Katie:

Yeah. How many people would you say are at that John level? Because from my purview, if you have a person that is responsible for really growing a team and a business from nothing to $300 million in a little over a decade, that extra $60k a year that you’re saving by pushing that person out doesn’t really seem like it makes any sense. But I’m kind of picturing here there might be an entire layer of people, a layer of Johns that are making that amount that they’re trying to cut costs across all of them.

Speaker 4:

Yeah, I’m a big data geek and having all the access to company pay and looking at what other people were doing and anecdotal experience from these Johns, I know that there are 80 Johns at the company across the entire company, and we have a pretty generous bonus structure. So if you take that into account, someone between what I was being offered and what the Johns were being offered is about $75k a year in total comp. So if you multiply that out by 80 people, that’s about $6 million a year, which isn’t nothing. But at the same time, these people are responsible for running $50 to $60 billion a year in revenues. So if you really think about it, it’s like, okay, we’re growing 10% a year per team on a $60 billion business. That’s quite a lot of money.

Katie:

Sean said that the role that’s experiencing so much churn used to be primarily staffed by people in their forties with about 20 years of experience. And now most of the new hires backfilling, those laid off employees are in their late twenties and way cheaper. He estimates that around a quarter of the most tenured folks in his company were pushed out.

Another listener who will call Lana emailed to say that she’s seen this happen a lot in her company in the last three years. She wrote, “It’s not just about salary. They’re trying to reset their pension obligations and healthcare costs too.” I guess the thinking goes, I presume that older employees who may have families or have a lot of tenure, they just cost more to provide benefits to. And if you’re hiring someone single and young and with little experience, that’s going to be cheaper across the board, but it’s not just the tenured expensive employees who see the work getting shuffled away from them.

Ryan, a woman early in her career had been working for a startup for about a year when she realized that something strange was happening.

Ryan:

We were told kind of in an offhand comment in October of last year that we were going to start hiring contract employees from the Philippines to be doing data analyst jobs such as the ones that the rest of our team was doing. We were on a very small team of about seven of us. So the idea was that the processes that were more manual were supposed to be done preferably overnight for us from the Philippines so that our overall timelines could be shortened or expedited much quicker. In reality, what happened was that there were very experienced and very skilled data analysts that were being hired and contracted onto our team.

So these were people of maybe 15 plus years of experience, pretty complicated technical roles for what I can only assume was a fraction of the cost of hiring a young data analyst here in the US. So we noticed over time that these people were not really invited or brought into the team culture at all as part of the startup. So we were told that we would have meetings, that we would be able to connect, which didn’t really happen.

And I ultimately believe that at one point in time, the kind of executive part of the startup decided that it was more efficient and more cost effective to bring on more data analysts for a fraction of the cost than to keep young learning data analyst here in the US.

Katie:

What happened next? What happened to you? How long after you noticed this trend did things begin to, as the industry parlance I’ve learned is impact? How long before you were impacted?

Ryan:

I was impacted pretty quickly, maybe about two or three months along the way. And we also kind of expected that we would be participating maybe more as a team or receiving feedback. It was a very small company, so there were not very standardized methods of giving feedback. And even when asking for feedback, meetings were pushed back, meetings were canceled, so there was no clear, concise way to receive feedback. And then ultimately at the beginning of last year, I was let go from the position with a side note on my performance, which I find shocking considering the lack of feedback.

Katie:

So what is your situation now? Did you begin looking for new employment afterward or are you still waiting to find a job?

Ryan:

I was kind of ready to leave the company more or less, so I was preparing to leave, so I traveled for a while.

Katie:

Nice.

Ryan:

Now I am still kind of traveling and doing some other back and forth jobs.

Katie:

Ryan didn’t have any reason to believe that she was underperforming, and in fact, she had asked her manager for a feedback evaluation after her first year, which she says he begrudgingly agreed to and scheduled for a month later. And then the day before canceled it two weeks later, she was fired.

After the tape had stopped rolling in a previous interview with a listener who also, like Ryan worked in tech, we had commiserated that for a long time millennials were told that if they just studied the right thing, if they didn’t major in underwater basket weaving and instead got a STEM degree, that they would achieve job security. After all, Ryan is a data analyst with a quantitative, mathematically rigorous background, and she told me she was going back to school now. I asked her if she felt like she had been misled or if she felt like the promise of studying the right thing would mean that she’d be able to find and keep work easily felt like a lie.

Mary:

My decision to go back to school is honestly kind of unrelated. It’s more following an initial passion. I went into school and said, I’m young and I have the time now. I should do the hardest thing I can do. I should do the most technical, the most mathematic, the most, whatever that may be. That got me into data analysis, but I actually wouldn’t say that it’s a fault or that it’s a waste of time because I feel personally that it’s always easier to go from the quantitative into the qualitative and that if anything, it gives you a little bit more of a maybe deeper mathematical understanding of what’s going on, but I think it’s really hard to go the other way.

So I would say maybe it’s not the golden ticket and maybe it’s not the end all be all, but if you’re in a world of people that are all qualitative, having a quantitative edge is going to give you a boost.

Katie:

Heather, another listener, shared something similar.

Heather:

I was recently laid off from my full-time permanent job in Ontario, Canada. I was given three months working notice with the expectation and on the condition that I would use those three months to train my replacement, who has been hired in the Philippines.

Katie:

And how long had you been with your company when this happened?

Heather:

I had been there six years total. So I was there for five years and then I left for a little bit and they had recruited me back into the company before I was recently given notice of the layoff.

Katie:

And do you have a sense, based on what you observed while you were there or maybe in the aftermath, if this happened to anyone else at your company, can you give us a sense for scale or size?

Heather:

Yes. So my employer is going through a transformation initiative globally, and in my function in particular, they’ve laid off around 60% of the workforce and they’ve rehired the same roles in various offshore locations as a cost saving measure.

Katie:

Anytime a company says we’re going through a global transformation initiative, that shit is about to hit the fan. That can never be good.

Heather:

Absolutely. Absolutely. And they have been doing it for about eight or nine months at this point. So it’s been an ongoing saga for us.

Katie:

As for her training her replacement, this was stipulated into the severance package such that she wouldn’t receive it if she didn’t agree to stay.

Sadly, not everyone who’s been on the receiving end of this corporate fuckery has come out on the other side unscathed. Allie, a software engineer who began earning six figures at the age of 25, has had a hard time since she was laid off at the same FAANG company that we mentioned in the intro of this episode where Henah’s friend works in 2022.

Allie:

I started off when I joined the company in 2017, I was 25 and my initial offer was base of $100k plus then a bonus roughly of about $20k. So I was making about $120k to begin with. This was a significant jump when I was working outside of thing, I more or less doubled my income coming into thing. And then within my time there, I was at this company for five and a half years, and I doubled that initial salary as well. So at my peak it was $240k.

Katie:

So that was 2017, 5 and a half years. So what happened in 2022?

Allie:

In 2022, that is when we started to see the beginning of a big shift in the tech market. This was post pandemic. A lot of companies were starting to pull back some of the reigns that had been loosened after the pandemic. And there was what I would consider the beginning of the tech bubble burst. I was at the beginning of it, I was in a part of this company that does home service AI, maybe a bot that you have in your house that answers questions like, what’s the weather outside? Like I was working in a part of the company that became expensive, and the team that I was on, primarily a science team that was I’d imagine quite expensive to run. Our projects were too new, and they cut my whole team along with a significant portion of this department of the company. This was the initial layoffs that occurred, but I believe over the time since I’ve left, over 30,000 people probably have been laid off maybe more.

Katie:

Oh my God.

Allie:

So I was a part of that layoff in the first round that happened.

Katie:

But Allie says there’s a certain element of her situation that rubs salt in the wound. She gets a message every few weeks from some recruiter looking to rehire her at this same company for the same job, but with a catch.

Allie:

So I noticed a huge shift in the reach out that I get. When I was working at this thing company, I would get pretty regular LinkedIn messages from other recruiters at other tech companies asking if I would interview. That was a pretty common occurrence. But I noticed once the market shifted and these big tech companies were doing these mass layoffs, the recruiter reach out really dried up and the tone shifted. It stopped being full-time work that I was getting reached out for, and it started to be primarily contract positions. A lot of the tech companies, including the one that I worked for, were trying to hire back from what I could tell their talent at a fraction of the cost without benefits, without stock to do more or less the same work. And I get a message from this company and other tech companies for contract positions maybe four times a month if not more, to come back and do basically the same thing with less.

Katie:

So you’re receiving recruiter messages from recruiters working at the company that you were laid off from trying to hire you to do the same job that you were doing, but this time as a contractor and for less money?

Allie:

Yeah, I definitely get those.

Katie:

Allie now works as a contractor at a major major media company, and she says she, along with six other contractors, were promised full-time jobs that never materialized.

Allie:

And the only thing that I could really get traction in was contract positions. So I did take a contract position with a large media company, and the agreement there was that after nine months, I’d come on board full-time if we both were satisfied, if I was happy with the work I was doing, and if they were happy with me. After about a month or two, they formally offered the position to me, I was pretty happy and I accepted a few months later, it became clear that they weren’t going to follow through on that offer. My team had been primarily contractors. We were replacing, ironically, a team that had been laid off and came on as contract workers. Most of those contract workers to my knowledge, didn’t get hired on and had a similar agreement. So incredibly disappointing and frustrating situation. I put a lot of time and effort into that role, trying to build out some new services for ’em. So I since have left that position when the contract ended and now I’m just back on the job market.

Katie:

Ultimately, Allie feels like she was a little misled about what opportunities her hustling in this industry would open up for her.

Allie:

The things that frustrate me the most is I came into tech with the promise, a big salary of rewarding work, and it wasn’t just handed to me. I hustled very hard for my job and worked very hard while I was there to build up a pretty solid resume. The feeling that that all gets wiped clean, I think that pride certainly plays a part in it. You work your way up to a certain position and then you have to go back down on the ladder, and that’s not really ever discussed. I am looking at taking a pay cut and in general, just rethinking my career and what it really means to be in corporate America. And really if the price you pay to work in these jobs is worth it, I’m targeting jobs that have way better work-life balance, and I will more or less happily take a pay cut to work somewhere that values their employees a little bit more. And I think just in general, there needs to be a reckoning with the tech industry that a lot of this bad behavior is going unchecked. I hope at least through other people stirring their stories like this that we can get a better conversation started.

Katie:

And finally, we have Lisa. Now Lisa is a Rich Girl who signed an NDA and she wasn’t able to share too much, but she feels like her company got the idea to replace her with a cheaper employee after they were hiring for a different role.

Lisa:

I was working at the company for a little over a year, and I know that when I started, it was more of a employee favorable market and I was able to negotiate hire. I know this because I was in more of a manager role, and when they were first hiring somebody to come onto my team team, I was part of the hiring committee. So I know that they were hired for well under what I was paid, even though it was the same job. It was just about a year later.

And then after two people left on my team, we put out applications we were hiring, and we got somewhere around a thousand applicants, which was crazy. And again, like I said, originally I was on the hiring team and then at some point I stopped getting invited to interviews. I was no longer on emails, and I figured something was up at that point.

Katie:

So you mentioned that when you got hired, you think that there was something about the job market at the time that worked in your favor. Was that 2021, 2022 timeframe?

Lisa:

Yeah, it was before all of the big layoffs started happening.

Katie:

And so what happened next? So there you get all these applicants, you’re kind of like, okay, this is feeling a little bit strange that I’m no longer being included in things. What happened then?

Lisa:

I continued doing my work and then one day I was let go. I was not given much detail into why I was let go. I tried following up to show that I had a record of good work. I was praised for my work. I didn’t have any indication that I was underperforming, but they sort of maintained a company line on that. I do know that I was not the only person let go. There were probably about 30 people let go in one day, which felt like a layoff that was not called a layoff, and it was not the first time and they continued to hire.

So the thing that stuck out to me was that they were letting people go, but continuing to hire, which didn’t feel like a layoff in the way that they kind of described it as a course correction. It felt like they were letting go of people who were being paid a certain amount to rehire those roles for less.

And so, like I said, somebody on my team doing a very similar role was hired for a lot less. We got a lot of applications and then I was let go. I don’t have a ton of detail as to what happened afterwards in terms of who they hired for how much. I know that they did end up hiring two more people to replace me and somebody else who had left. And I’ve continued to see people from that company that I know leave and I’ve continued to see the same sort of behavior from people that I still know that were there. I did end up having a conversation with my boss at some point afterwards because they had reached out to me and it was nothing detailed, but sort of a, hey, what happened to you was messed up conversation. And I just kind of said, I get it. I feel better off anyway. I’m not upset with you, whatever. That was also sort of a thing to me where I was like, I don’t feel like I was let go for the reason that I was told I was let go.

Katie:

And what is your situation now? Did you immediately start looking for new work? Have you found new work? What happened to you afterward?

Lisa:

I decided that if I never have to work a full-time corporate job again, I won’t. And I was lucky enough that I knew enough people from previous jobs from college just through friends that I have been hired enough for contract work that sustained me for a little while now, and I think I’m just riding that wave. I took some time to get over burnout, and now I’m doing my own thing. I’m doing contract work and I’m seeing where that gets me.

Katie:

One person who to my call for stories said that this hasn’t happened to her, but that it happened to her dad in 2008 after the great financial crisis. She says he lost his job, but he still received severance. And it reminded me that many of these tactics aren’t new per se, but things like technology and offshoring and remote work and degraded worker protections and an at-will employment environment have enabled them to worsen after a year or two of rising wages, companies are trying to claw back their profits from labor, leaving individual workers, holding the bag.

But it’s not just that. It’s that these underhanded tactics are cutting people’s pay, traumatizing them with layoffs. And in case it wasn’t obvious, pretty insulting. Imagine giving 20 years to a company and being a top performer only to be replaced by a 25 or 30-year-old who’s going to do the job for half as much. And as the course we had to take for this episode shows it’s not a story that’s really being told in popular media.

Most of the headlines we read tell us that unemployment is low and the labor market is strong. And while those things might still be true, it’s like true with an asterisk. Consider the statistic that we mentioned a few episodes ago that 95% of the jobs created between 2005 and 2015 were contract roles.

The playbook is obvious and honestly, pretty simple: If you have a young inexperienced employee, replace them with a highly skilled worker in the Philippines, and if you have a tenured highly paid person, replace them with the younger and inexperienced employee and wherever possible, only hire contractors because they’re cheaper and you don’t have to pay for their healthcare or benefits and bonus, you can kick ’em to the curb whenever you feel like it.

After we turned the recording off, I chatted with Lisa (that last interview you heard) about the difference between working for yourself as a contract consultant and working full-time for an employer, how the latter choice benefits from a narrative that it’s more stable and secure, but as this episode has shown, most employment contracts are at will, which means you can be terminated for any reason at any time. Maybe, we agreed, the truly safe option is working for yourself.

When I was writing this episode, I was struggling with what I wanted the final takeaway to be. There was a big part of me—a big, big part of me—that wanted to find the capital T capital A “The Answer,” some sort of individual action item that I could give you to prevent this from happening. And while I think there are certainly strategies that can insulate you to some degree in your career from things of this nature, the more I thought about it, the more I felt like what I really wanted was for people experiencing this to feel less alone and to know that it’s not just them. And actually it’s not really about you either.

You can do everything right and still find yourself facing these circumstances, at least in the short term. As some of our stories today highlighted, sometimes being the most tenured, valuable, expensive person on the team works against you, not for you.

But as many of our callers highlighted, they either landed on their feet or are in the process of doing so. And if you’re fortunate enough right now to have job and income stability, maybe things are going great for you and you don’t feel as compelled to savor invest because you’re earning great money and scaling up your lifestyle accordingly, maybe just tuck away these stories in your back pocket as evidence that it’s worth taking your company’s worst impulses into consideration as you build your financial plan. How long could your emergency fund support you if you were to find yourself in their shoes? Are there any other lifestyle choices that might be putting you at risk? For example, buying a house that’s at the very tippy, tippy top end of what you can afford.

Unless we work for ourselves, we can’t control our employers, but we can control our own balance sheets and in times that feel precarious control is a valuable asset.

And that’s all for this week’s episode of The Money With Katie Show. So thanks for joining us and we will see you next week. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin. Our audio engineering and sound design comes from Nick Torres. Devin Emery is Morning Brew’s Chief Content Officer, and additional fact-checking for the Money with Katie Show comes from Katie Brandt.