Tech Layoffs: Amazon Denies Speculations Of Companies Cutting Staff To Regain Pay Power

Tech giant Amazon has denied speculations among analysts and recruiters that companies are reducing their workforce to regain the pay bargaining power they lost over the last few years following the hiring spree during the pandemic.

"This speculation is entirely false. Role eliminations did not significantly change our overall compensation costs, and, unlike other companies, we are not reducing any employee's pay. We remain committed to our compensation philosophy as a means to attract, retain, and motivate employees," a spokesperson for Amazon told Insider.

The issue stemmed from speculation among analysts and recruiters that tech companies are trying to reset their pay ceilings in a bid to cut costs.

The outlet also reached out to other Big Tech companies for comment and while Microsoft did not have anything to share, Meta and Google did not respond.

A recruiter only identified as Keri by Insider said job applicant wage offers these days are much lower than those before the pandemic and before Big Tech firms engaged in a widespread hiring spree.

"I do think there's a lot to be said about companies making strategic decisions to put power back in their hands and put their foot down," Keri pointed out.

Another recruiter, Heather Colvin, told the outlet that she believes there will be "a reset in terms of compensation" as some companies "recognized that they were paying above-market value for people."

Senior researcher at W.E. Upjohn Institute for Employment Research, Aaron Sojourner said that "certainly, layoffs reduce workers' bargaining power."

The outlet noted that as more layoffs take place, the chance for a monopsony power to emerge is possible. Monopsony is a term that refers to the power employers have over labor-market conditions and wages, as per Insider.

Other observers noted that most tech layoffs might stem from the need to cut operational costs due to the global economic downturn, Forbes reported. On the other hand, the outlet also cited research by 365 Data Science wherein it was suggested that cutting longer-serving roles with higher salaries could help companies meet financial targets.

University of Washington professor Margaret O'Mara told Axios that layoffs could also be a result of the tech industry, which had invested in the habits and behaviors that were bred during the pandemic, now returning to the pre-pandemic setting.

The most recent layoff announcements this year include Dell, Yahoo, Affirm, Ebay and Zoom. Amazon also announced plans to cut 18,000 jobs early last month.