When working at large tech companies like Salesforce, Meta, Netflix, Google, PayPal, Amazon, Dell, Microsoft, Uber, Cisco, IBM, and the likes, no one ever thinks that they will ever be laid off, yet it can happen to anyone from the entry level employees to the middle managers, all the way up to the top of the chain of command. When it happens, it tends to come as a complete surprise, which leaves one with a myriad of emotions, along with many financial obligations. 

When one company plans layoffs, you can bet that there are plenty of others that are ready to follow suit. No company wants to be the first one to do so – and be villainized by the media for laying off their staff – but once the first round of layoffs begin, other companies follow down the same path, as they’ve been waiting for ways to downsize, but do not want to capture the negative media attention from being the first company to do so.

When we look at the landscape of big tech, about 1,000 tech companies have laid off around 150,000 tech workers, and there may be more on the horizon. It might not be fair, but we will get into the economics of why this occurred in a bit, but before we get into that, let me share with you my own personal experience of being laid off.

I worked at the largest marketing agency in the world. We served Fortune 10 and Fortune 500 companies alike. Something that is all too common in the world of marketing agencies is layoffs. It happens time and time again throughout the industry, especially when an agency loses a huge client that covers most of its payroll and other expenses. For us, we lost a Fortune 10 client, and you can just imagine how big the deal size was for a client at that level. That led to an immediate, wide-scale restructuring within our agency once we received the news that their contract wasn’t going to be renewed. 

I was still relatively new in the industry and couldn’t wrap my head around what a ridiculous business practice it was to hire and fire so many people dependent on one client. The old hands in the marketing world laughed and told me, “that’s just the way it is.”

One senior executive told me that he never fills his office with more items than what can fit into a single box, so that it doesn’t take him long to move out when his time comes. That guy had been in the industry for two decades, yet experience had taught him to continue that process throughout his career.

He was not one of the people who received the feared pink slip when the client left, but I was.

While that mindset my former coworker held may seem cold to the emotional experience that a layoff can cause, believe me when I say that I’ve been there, and felt the emotional roller coaster myself. Having lived through that experience, however, I’ve learned that it’s more important than ever for you to be able to make a sober assessment of your current situation and options if you have been or fear that you may be laid off from a tech sector job.

This is my way of helping you learn from my (unfavorable) experience.

https://www.youtube.com/watch?v=_E_oXK9wdKw

Understanding the Landscape of What Leads to Massive Growth of Industries, Along With the Layoffs We All May Potentially Experience in Our Lives

Businesses operate in cycles. They go up. They go down. This is all too common in the business world. 

Even with understanding that, it’s extremely difficult to be pragmatic during massive growth stages. After the last period of growth, it’s easy to think to yourself, “But this time, it’s different…” much like how the meme community of Wall Streets Bets on Reddit continually stated throughout 2020 through 2022. 

Why? So many people never saw an economic downturn in their lives and didn’t think that this was possible. 

Unfortunately, that time had arrived, especially for the tech industry, and that downturn led to massive layoffs, despite the path it was on that once led to perennial growth due to the rapid pace of innovation.

Innovation doesn’t always pay the bills, especially when most of the world is impacted by rising costs all around. And just like other industries, big tech hit a point where their operating costs increased too heavily for it to make sense. My experience as an MBA and a formerly licensed financial advisor allows me to see the greater economic aspects that our country is heading towards, and it’s not a pretty sight. 

If Growth Is a Good Thing, Then How Did It All Come Crumbling Down?

When we think of a general in the military, the beholder of the title commands large groups of people at their whim. The generalist you can find in the stock market are what are deemed the market leaders, as many of these big tech companies were referenced as. 

Yet, being a general in the stock market still comes with its challenges. 

Big tech has historically paid higher rates than any other field in the market, and in some instances, have paid more than their Fortune 1000 counterparts. 

Yet, due to the economic climate we have entered into, as we face a recession, as heartbreaking as it is, it only makes sense that these large companies have to downsize.

Before the layoffs even began, big tech companies have been making moves over the past two years to cut costs. Some workers chose to move to other, lower-cost states than California when the industry went to remote work during the pandemic. Some of the big tech firms began creating an HR formula that ultimately lowered the pay for those workers who moved away in response.

As we progress forward, there are chances that the rate of pay from these behemoths in the tech world could even potentially fall more in line to the compensation provided from other industries. Many software engineers, data scientists, and other big tech positions receive the same level of salary as senior executives in other industries, and that may be changing very soon. 

"While the tech industry is known for paying the highest wages out of any industry out there, what we have seen in 2021 is adjustments being made from large tech companies to readjust salaries based on where their employees moved to, in order to adjust for their new costs of living,” says Leonard Kim of AdvisorCheck. “We may potentially see tech salaries decrease even further, to match those of their marketing, human resources and operations counterparts, as programming and engineering salaries are much higher than others who fill equally as important roles in their companies. When people are looking at working at conventional companies, the salaries that they were once used to may seem farfetched to reattain as well. Due to these changes in the environment, it is best to sit down with a financial advisor and go over an in-depth strategy of what you plan to do with your money and stock options, as the future may not look as bright as it once did," he continued.

Your Severance Package Provided to You By Your Employer

Big tech companies are renowned for having pretty good severance packages, which can often provide anywhere from 6-12 months of income for the employees that are laid off. If you haven’t already negotiated your severance package and your RSUs are not vested (or are not all vested), you should ask if you can receive an accelerated vesting or partial accelerated vesting schedule as a part of your package. If you still haven’t signed your severance agreement package, this is also an opportune time to speak with your attorney, if you have one, to ensure that you are getting the most out of your severance package. 

Unfortunately, not all severance packages are created equal, as some former Twitter employees recently discovered when they learned that they wouldn’t be paid out on their agreed upon settlements. The impact of not being paid out on your severance package may do a lot more than leave a bad taste in your mouth; it could completely curtail the plans you had for that time that most people tend to use to recover from dire financial scenarios. In California, the unemployment benefits at around $1,800 a month are unlikely to cover the costs of the lifestyle you have cultivated for yourself. For that I will impart the same lesson to you that I’m actively trying to teach my pre-teen son: you never know until you ask. 

“As over 150,000 people faced layoffs from big tech companies, we see the job market diminishing,” says Leonard Kim from AdvisorCheck. “Many of these tech employees have stock options that could have vested that they might want to cash out on to continue to pay for the bills, or to use the time off to take a vacation to travel the world. While it might sound intriguing to do so, keep in mind that our economy does not plan to enter into a recovery anytime soon and that the job market is not set the recover for a while. Furthermore, what we have to consider is that there is a high probability that these mass layoffs could be a readjustment to the entire tech industry as a whole,” Leonard Kim continued

There are quite a few different scenarios where it may or may not be a good idea to sell any vested shares. Once vested, selling your shares will have tax implications, and given the high pay of many big tech jobs, that could bump you into a tax bracket that would not be favorable for someone without a job.

On the other hand, the signals are currently showing that stock values, especially in big tech, may not have a great season ahead in the very near future. However, this could also change significantly if you are looking at the long-term impact of your former employer’s impact on society, which is going to come in handy when it comes time to live out the tail end of your career or enter into retirement.

Equity, Non-Competes and Restricted Stock Units (RSUs)

Chances are that if you have decided to work at a big tech company, you were drawn in by their massive compensation package, which probably had additional benefits such as equity. That equity may not have always came with an upside however; as employment contracts could have also included a non-compete clause, which could limit your ability to get a new job. The Federal Trade Commission (FTC) has recently announced that they may be making the non-compete clause illegal, however, which is a good sign for those seeking new employment in tech.

When it comes down to the restricted stock units offered at the time of onboarding, some of these may not have vested in time for your departure, leaving them valueless. Some may hve stock in companies that aren’t publicly traded, which leaves you with no options for your equity until an acquisition or an Initial Public Offering (IPO) arises in the future. For others, you may be holding onto RSUs that could be or have been converted into stock. If your RSUs are already vested when you were laid off, there is good news: those shares are yours, no matter what. You can sell them now to get as much money as you can or save them until later if you already have enough in savings to weather any potential economic storms that may be coming.

WIth that said, chances are, you’re wondering if you should cash in on these to either go on an extravagant vacation to get over the traumatic experience you just experienced, or to start paying the bills before you take on your next position.

While these may seem like good ideas, they may not be the best options for you, especially in this down economy we are currently in.

Why Your Equity Might Not Be Worth Much Now – As Opposed to What it Could Be Much Later 

Chances are, your former company’s publicly traded stock has a high probability of being at the lowest point it has ever been at. Considering that, selling off your stock could lead to an immediate loss of unrealized gains that the company could earn as it recovers through the recession and once we reenter into a time of growth in America. 

One of the worries for those who track the stock market and the greater economy is that we may be on the path toward stagflation. This scenario is characterized by an economy with high inflation, high unemployment, and a stagnant or shrinking economy. While a recession is bad enough (two quarters of slowing economic growth), our currently historic inflation rates and layoffs that are starting to pick up make this a genuine worry for many.

The S&P 500 finished 2022 with its worst year since 2008, with a decline of nearly 20%. The NASDAQ (the exchange on which most tech stocks are traded) started in January 2022 at around 15,000 points and ended in 2022 at around 10,600.

There was no “Santa Claus rally” at the end of 2022, which does not provide a great outlook for the near future. While past performance is not indicative of future returns, the data since 1972 shows us that years that don’t end with a Santa Claus rally (which has only happened a handful of times) are typically a harbinger of bad or at best a lackluster following year in the markets.

Between the potential of another World War on the European continent, rumbles of an oncoming food shortage crisis, inflation that has yet to be tamed, supply chain worries, and layoffs that are beginning, I hate to be the bearer of bad news but this does not look like it is shaping up to be a great year for the economy, especially big tech.

Tech companies are likely to get hit the hardest if people begin to pinch pennies. But all is not bleak for big tech employees who have been or are worried about being laid off. There are other organizations actively working to recruit and hire former big tech employees.

Your Options as a Former Big Tech Employee

As terrifying as it must have been to get word from your department that you would be downsized, we can’t do anything but come to an understanding that our careers are not going to be anything similar to the path that our parents and the prior generations have experienced. While they worked at a singular career throughout their lives and received a pension and a gold watch at the end of their tenure, for us, most of that responsibility is left on ourselves to handle. 

We would highly advise against cashing out on your stock options or pulling out loans from your retirement accounts. Instead, use what you can from your severance package or unemployment to curtail the inundating costs associated with living the lifestyle you once had and while you are looking for new work, think of ways to cut down on as many costs as possible. While a fancy haircut may have been a weekly occurrence, it might be wise to limit the visits and decrease the frequency of the services you do render, or cut out some costs completely.

As embarrassing as it may feel to start trimming down costs, the truth of the matter is that everyone across the board is doing the same thing to accommodate for these difficult times that we are facing, and your peers will have a deep understanding of why you are doing this now – as opposed to any other time in history. This almost gives you an opportunity to save face when it comes to disbanding from a world led by envy and instead moving into a financial standpoint where you are taking charge of your finances. 

As desirable as it may be to take off as much time as necessary, keep in mind that the market will not wait for you to get back into the field. Most companies have already started recruiting your peers as these positions at larger tech companies have disbanded and openings at other types of businesses in the private and public sectors continue to be filled up.

The immediate downside of moving into a position outside of big tech is that you will experience a huge shift in the salaries, along with the benefits that you were once used to.

Companies outside of big tech just don’t have the same kinds of benefits, nor the expansive profit margins, to be able to afford the extravagant offerings that big tech provides. Yet, they do their best to compete. 

Use what you once earned to negotiate the highest pay you could, but also keep in mind that there may need to be drastic changes to your lifestyle, especially since there’s a decent probability that your income may not return to the levels it was once at.  

Organizations Actively Hiring From Big Tech Layoffs

It is no secret that the public sector pales in comparison to the innovation found in the private sector, and many parts of the US government and NGOs that facilitate their work are looking to leverage the knowledge and skills of big tech employees who may be in the job market now.

The US Department of Veteran Affairs is looking to fill 1,000 tech-specific roles, in hopes that many aspects of their services can be modernized with the help of former big tech employees. US Digital Response is a non-profit organization that helps governments with digital expertise, and its Chief Experience Officer Jessica Watson has publicly reported a surge in applicants for both in-house and government tech roles at her firm.

The State of California is seeking to fill 2,500 tech positions to help with the modernization of the state. This could be an excellent fit for those big tech workers who didn’t move when their companies shifted to remote work (although many did). The city of San Francisco is even advertising open tech-based positions for its local government that only require one day of work in the office per week!

The job board Tech Jobs for Good focuses on listing open positions for employers who are mission focused on change-based issues and has seen a 70% increase in job seeker profiles since May 2022. In response, governments, NGOs, non-profits, and non-tech companies are all trying to find ways to woo former big tech employees to help modernize their organizations.

How a Financial Advisor Can Help Guide You

Getting the dreaded “pink slip” can feel like a completely debilitating experience, filled with emotional trauma and worries of what one’s future financial outcome may look like. Many of the big tech firms have worked very hard to build their own internal culture, within which coworkers begin to feel like family. If you’ve been in your position for long enough, it’s not a stretch to say that being laid off from a job you love is similar to a spouse telling you that they want a divorce.

In reality, however, these layoffs are purely a result of numbers and metrics, not performance or how much your coworkers like you – although your emotions may have a hard time seeing it that way.

Because this can be such an emotional event, you run a serious risk of making emotionally-charged decisions. You may be angry and in a fit of passion decide that you’re just going to sell all of your vested stock because the company will surely fail without you! Not considering the tax consequences of such an action could potentially haunt you for quite some time.

Speaking of tax consequences, some may think it wise to take loans from their retirement plans to make ends meet. This may sound like a great idea if times get rough, but your tax bracket (which is calculated based on the earnings before you were laid off) may make the tax penalties that this brings forth into making it a poor decision. Not to mention the fact that you would have to repay the loan and also find ways to contribute the same percentage you were prior to facing unemployment, once you land in your new role.

You may not understand how to calculate how long you can afford to go on a sabbatical, when you need to be in a new job somewhere else, or if your current quality of life would even allow you to take a public sector job. If any of these questions sound like those that you have been (or may be soon) asking yourself, there is good news: there are professionals who can not only answer them but help you develop a solid plan for the future as well.

While it may seem like a great idea to take some time off to start your new career path with a clean and rested slate, this may not be an opportune time to do so. As we are most likely entering a turbulent economic period (recession or not), the job market may be extremely tight when you begin the job hunt again. Any positions that may be available when you begin to look could require a significant salary cut, if there are any available. 

Even if the Federal Reserve is able to tame inflation, we will likely be dealing with a higher-than-average cost of living for the near term. If you’ve been living very comfortably thanks to a high wage or perks at your big tech job that help tamp down your daily costs, it may come as a surprise to you just how much higher the cost of basic necessities have risen.

A financial advisor can help you make an honest, unbiased assessment of your financial situation from a 360-degree perspective and with an eye on the future. If you need to make any adjustments to your lifestyle, they can often see places where you can put your financial house in order to prepare for what may come. We are often blinded to things that we enjoy doing, but when honestly judged are frivolous expenses that could be a drain on our finances at times when we need to batten down the hatches.

Every major change in our lives brings opportunity, and being laid off from a big tech job is no different. Due to the public sector actively working to court former big tech employees, nice severance packages, and the potential of vested stock options, big tech employees who have been or are facing layoffs are in a much better position than many Americans who have been laid off from companies in other sectors.

The intricacies of your financial decisions cannot be made haphazardly, lest you run the risk of throwing away a great opportunity. To find out exactly what your options and best plan of action are, you should meet with a financial advisor who can walk you through those options.

If you need help finding a financial advisor, please use our search tool at AdvisorCheck Search. If you would like to continue expanding your financial literacy and take control of your finances, become a free AdvisorCheck member.

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Written by Robert Lewis

Fact checked by Billy Quirk

Reviewed by KJ Kim

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