What a “Tech Recession" Could Mean for U.S. Tech Workers

Founder's Corner

Dear All,

The long-awaited buyout of Twitter by Tesla CEO Elon Musk finally happened and as hinted, Musk immediately fired the CEO, Parag Agrawal, and the company's Chief Legal Officer, Vijaya Gadde.

Both executives, coincidentally immigrants from India, were accused of mishandling the company and working with certain government agencies to censor speech under the blanket of “disinformation”. Gadde was one of the key officials involved in the decision to permanently suspend former U.S. President Donald Trump’s Twitter account following the January 6 attack on the U.S. Capitol.

But it wasn’t only the top dogs who got their walking papers. Musk took a scythe to the entire company cutting almost 50% of its workforce. Among the layoffs were foreign visa workers and while it’s difficult to confirm their visa status, a Google document being circulated among former employees provides us insight.

The document, an informal sign-up sheet designed to facilitate networking and job hunting includes the names and pertinent data of almost 500 workers. Of those, roughly 30%, acknowledged they would require future visa sponsorship. It’s a tiny amount considering Twitter has sponsored over a thousand H-1B visa petitions in the last three years. Of course, the number could be much higher; we just don’t know how many of those laid off and in need of visa sponsorship added their names to the list. Overall, it’s even harder to say what percentage of visa workers remain at Twitter.

As is often the case with major Big Tech companies, most managers will retain visa workers during layoffs because:

They’re cheaper than Americans
They feel pity knowing termination could lead to a temporary employment visa holder’s deportation.

When it came to cutting Twitter staff, I don’t believe Musk cared about visa status. However, I do think he prioritizes productivity and innovation, along with profitability and to that end, was prepared to separate the wheat from the chaff and rid himself of non-essential overhead to ensure the future profitability of his $44 billion investment.

The great tragedy of the past two decades, though has been that most technology company CEOs resort to using H-1B visas to reduce their overhead costs and goose earnings per share in the short term. Musk has certainly followed suit and contributed to this calamity; see the number of H-1B visas Tesla sponsored here.

Aside from Twitter announcing major layoffs this week, many tech companies, including some of the FAANGS (Facebook, Amazon, Apple,Netflix and Google) are also making significant workforce reductions, or like Apple and Amazon, have imposed hiring freezes. Even though unemployment data seems to indicate laid off workers are readily being absorbed back into the labor market, rumors abound of rough times ahead for the technology industry.

Interestingly, tech industry layoffs present a novel dynamic. With access to public markets, lots of cheap money thanks to low interest rates, and with investors deluded by the promise of “tech”, companies took on more workers than needed. They grew fat and lazy versus lean and nimble.

A fat workforce created the illusion of growth and higher valuations. After all, why chase cashflow when you can chase earnings per share! But with the Federal Reserve increasing interest rates, money is no longer cheap, and the chickens are coming home to roost.

In their rush to demonstrate growth, many tech companies created jobs that had no economic right to exist and then bemoaned when millions of those jobs went unfilled. That surplus then served as justification to push for more immigration to solve the so-called “labor shortage”. It was all a scam.

The scam needs to end and I offer these cautionary words to those Big Tech companies announcing layoffs while simultaneously requesting more H-1B visa workers. Don’t do it. It’s illegal! You are violating U.S. immigration law. Unlike the past, we now have access to pretty good data on the number of jobs being vacated and the individuals being fired from them, and U.S. Tech Workers will be watching you!

In 2001, I was interim CEO of Predixis, a start-up technology company. When the dotcom bubble burst, it was rough going as I and others searched for employment. The coming “tech recession” will no doubt be similar except twenty years ago, displaced tech workers didn’t have to compete with an army of foreigners here on temporary work visas.

In these difficult economic times, CEOs will undoubtedly up their intake of H-1B visa holders. They’ll think they’re getting a cheaper and more compliant worker which will allow them to reduce corporate expenses even more. Hiring a foreign worker on H-1B visa status is a very tempting proposition given the dire straits these workers find themselves in.

Just think how easy it is to take advantage of a newly laid off H-1B worker from Twitter who must find a job and someone to sponsor their visa, in 60 days. This kind of bargaining power is why employers will always prefer H-1B workers over Americans.

I would never begrudge anyone the opportunity for a good paying and secure job. But I believe American workers living here need to be prioritized first for all open jobs. A person in the U.S. on a temporary work visa is just that – temporary and should only be hired after all attempts to find and hire an American worker have been exhausted.

In the end, though, should a company persist in pushing out American workers while simultaneously filling their ranks with foreign workers on temporary work visas, U.S. Tech Workers will see to it that justice is served through the courts.

In closing, if you find yourself in the position of being displaced by a foreign worker or being disqualified from being hired because a company preferred to hire a foreign worker, reach out to us. We can help you file a lawsuit.

In Solidarity.