Amazon denies speculation of companies cutting staff to regain paying power

Tech giant Amazon has denied speculation among analysts and recruiters that companies are slashing their workforce to regain wage bargaining power they have lost in recent years following the wave of hiring during the pandemic.

“This speculation is completely false. The job eliminations have not significantly changed our overall compensation costs and, unlike other companies, we are not reducing pay for any employees. We remain committed to our compensation philosophy as a means of attracting, retaining and motivate employees,” an Amazon spokesperson told Insider.

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

The agency also reached out to other major tech companies for comment, and while Microsoft had nothing to share, Meta and Google did not respond.

A recruiter identified only as Keri by Insider said that salary offers for job seekers today are much lower than they were before the pandemic and before big tech companies engaged in a widespread hiring spree.

“I think there’s a lot to be said for companies that make strategic decisions to put power back in their hands and put their feet on the ground,” Keri pointed out.

Another recruiter, Heather Colvin, told the paper that she believes there will be “a reset in terms of pay” as some companies “recognize that they were paying above market value for people”.

Senior Researcher at the WE Upjohn Institute for Employment Research, Aaron Sojourner said, “Certainly, layoffs reduce workers’ bargaining power.”

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

Other observers noted that most tech layoffs may stem from the need to cut operating costs due to the global economic downturn, Forbes reported. On the other hand, the vehicle also cited a survey by 365 Data Science, in which it was suggested that cutting older positions with higher salaries could help companies meet financial goals.

Margaret O’Mara, a professor at the University of Washington, told Axios that the layoffs could also be a result of the technology industry, which invested in the habits and behaviors created during the pandemic, now returning to the pre-pandemic scenario.

This year’s most recent resignations include Dell, Yahoo, Affirm, Ebay and Zoom. Amazon also announced plans to cut 18,000 jobs early last month.