The article was first published in the tech section of Tencent News in Chinese and translated by TechNode.
“You are impacted” or “You are not impacted”
On Friday, at the end of a crazy week, Andrew Chen picked up my call. It was Nov. 11, 2022, and Meta had just concluded its biggest round of layoffs ever.
Months earlier, he had left China’s troubled online education industry and returned to the United States to join the tech giant Meta. He had set his sights on either Meta or Google, the hardest companies to join in Silicon Valley, wanting to find a role in a firm with smart colleagues and ample job stability. Little did he know that a reduction wave lay around the corner.
Staff at Meta had little warning. The weekend before “Black Wednesday,” media reports filtered down to employees, who naturally responded with anxiety. They had been checking revelations from time to time on the anonymous workplace social networking site blind.com. “Most of my colleagues panicked that entire week. They had intense discussions in WeChat groups and on the intranet right until the news was confirmed,” Andrew said.
At 6 a.m. on Wednesday, bleary-eyed staff received an email.
A sentence in bold determined whether they could stay or not: “You are impacted.” or “You are not impacted.” In the end, their fate came down to one word, “not.”
Andrew Chen received an email on Wednesday morning. It said, “You are not impacted.” He felt lucky. But he also said that even if he had been laid off, he would have been just fine.
“It felt like winning the lottery,” said Chen. Despite joining Meta a short while previously, he felt an overwhelming sense of sadness. “My colleagues were sad no matter whether they stayed or went. It was the first mass layoff in Meta’s history.” As many as 11,000 employees lost their jobs that day. In the end, 13% of the entire team was affected.
The company told people to cancel all their work meetings for Wednesday and Thursday and stay away from the office. “As you know, the whole North American tech industry is in a miserable state. Meta is not alone. Lyft, Stripe, and even Amazon may have to lay off staff. Google has put a freeze on hiring; Microsoft has made staff cuts. With all the layoffs, many people are left without work right now. Our holidays are about to start and next year’s recruitment will not start until the end of January or in February. Now is not a good time.”
Employees had two days to digest their emotions. “Everyone has friends. They need time to talk it through and comfort each other.” It was not until Friday that some important meetings started up again. Zuckerberg held two all-hands meetings.
Insiders said employees in key departments (short video, AI and recommendations, advertising, and the metaverse) were less impacted by the layoffs, especially the most experienced. No one thought layoffs were connected to nationality or skin color.
What about that compensation?
Andrew Chen called himself a “professional laborer.” He wasn’t alone in Silicon Valley tech circles. He was fairly indifferent to the prospect of losing his job. “I’m optimistic,” he said. “I’ve gone through many layoffs, and I’ve had to fire someone myself once too. As long as the payouts are in order, everything will be fine.”
So how did redundancy payouts work out for Meta’s laid-off employees?
Meta’s cash layoff plan was 4+N/2. This meant four months’ severance pay and an extra half month’s salary for every year of service. In addition, the company would issue shares to be cashed out on Nov. 15 and extend medical insurance for six months.
Anna Zhu, a Meta employee, ran through what she knew of the salary system for me. She took as her example an employee on level 5. She said it would typically take five years to get there from graduation, and annual earnings could reach $500,000.
Assuming this came half in cash and half in stock, the monthly salary would be around $20,000. Let’s suppose the employee had worked at Meta for two years before being laid off. Based on the formula, they would receive $20,000 multiplied by five (4+2/2), totaling $100,000 in compensation. Cashing in a quarter of their shares over two years would net the employee another $60,000.
To sum up, a level 5 employee could receive $160,000 (RMB 1.14 million) in redundancy pay. Next-level employees who went down the management route might earn $600,000 a year. If they took half cash, half stock, and worked at Meta for two years, they could get a payout of as much as $200,000 (RMB 1.42 million).
Specific amounts would vary, of course, based on working years and salary details, and the above examples do not take account tax deductions. Anna Zhu said a gross payout of $200,000 would become $120,000 after tax. “With compensation of $120,000, you can stay home for four months and find a new job in January. What’s not to like?”
As Chinese professionals in Silicon valley have climbed the career ladder, many have ended up at levels 5 and 6. A few, aged between 30 and 50, have reached level 7, executive rank. Directors are at level 8.
The highest level of people of Chinese descent in Meta is the company’s CFO Susan Li, but she is American-born Chinese. As for the ranks of mainland Chinese who studied in the US and joined the tech company, some have become VP, but they have yet to reach the senior executive level.
As the recession grinds on, two groups will be hardest hit by layoffs. One is fresh college graduates who will find it hard to secure a job with skeletal work experience. The other is people stuck on an H1B visa.
Meta policy was that employees who were leaving would be kept on the system until Jan. 15 and could tell the Immigration Bureau they had lost their job on that date. They would then have 60 days to find a new job or be required to leave in March. One of those impacted said, “In fact, it will be hard to find a proper new job in four months, especially just after the holidays.”
There was a sense that each generation felt the layoff differently. Those born in the 1980s had accumulated enough money to give them some financial freedom. They had green cards and could retire at will. The post-90s generation is in a tougher place — having graduated at around 22 and studied for between two and five extra years to gain a master’s or doctorate, they will have only entered the workplace between 24 and 27. It takes five years of work to gain a green card and another three to five years to buy a property. For people with green cards and money in the bank, “Being laid off is kind of nice, especially for those with strong credentials.” Some even achieve a seamless transition between jobs. In short, it’s the youngest recruits that tended to suffer the most.
In Silicon Valley and Singapore alike, people are helping each other find jobs. One Meta staff member said, “It’s not the end of the world if you’re laid off.”
An employee who was laid off from the Singapore office told me, “Everyone is quite calm, impacted or not.”
She was hit by the layoff just ten days after joining the company. People took it calmly. “Some people put together an excel sheet of all the job opportunities out there. It was passed around, with instructions for impacted staff to identify themselves next to jobs they were interested in. Recruiters will screen you and make contact if you’re a fit,” she said. “Personally, I don’t think finding a job will be a big problem. I just don’t know whether the new job will be stable enough. But we never can tell how opportunities will turn out.”
A senior headhunter in Silicon Valley told me that recruitment plans are based on revenue forecasts. Layoffs mean companies are on edge about revenue-making over the next 6-12 months. In larger Silicon Valley companies, up to 10% to 15% of staff are being made redundant. Twitter aside, the size of the cut makes sense. For start-ups, even higher proportions are losing their jobs — 20% to 40%, sometimes even more.
Tracing the lead-up to Meta’s mass layoff, industry analysts found a number of causes. In recent years, employee numbers at Meta ballooned. Just as Zuckerberg piled money into the metaverse, keeping costs elevated, growth stagnated. The company seems to have made bad profit predictions, on which hiring decisions were based. Moreover, in macro terms, the initial dividends of Web2 were depleted. Rate hikes and the war in Ukraine had not helped bolster global growth. Layoffs were doing the rounds, not just in Meta and Silicon Valley, but also in high-tech industries around the world.
The headhunter quoted above said mass layoffs in China and the US were not independent events. They were always interconnected. When budget cuts hit Chinese firms, they tended to close their US offices. And when US-based companies started laying off staff, the wave extended to China, as agencies that sold them ads and factories handling their outsourced production lost contracts and needed fewer workers. The chain reaction was trans-Pacific.
‘I’m a hard worker, so it’s easy to earn money’
After experiencing a hurricane of layoffs, were Chinese tech workers in Silicon Valley willing to stay on?
Andy Wong, born in the 1980s, told me he had a tough time getting a Silicon Valley job. It was never easy for Chinese people to seek jobs in the US in the 1990s and early 2000s. There’s an image of the perfect overseas Chinese worker — a science major with good grades and a full scholarship.
Wong wants to stay in Silicon Valley for now, citing the high salary as one reason.
Tech firms in China couldn’t pay as much as those in Silicon Valley. Wong compared his experience of job hunting with that of his peers. He figured that he was at level 6 of Meta, level 66 of Microsoft, level 6 of Google, and level 7 of Amazon. At Bytedance in Beijing, he thought he’d be at level 3.2. In Silicon Valley, a tech worker at his level would earn $550,000 (RMB 3.7 million) to $650,000 a year. In China, he’d earn no more than RMB 2.5 million. This is before factoring in the cost of living, which is higher in Silicon Valley, or health care, which is barely satisfactory. Andy said, “I’d have to wait three months to have a gastric ulcer seen by a doctor in the US.”
However, these levels also shifted as the market changes. Generally speaking, people who switched from Silicon Valley to internet companies in China were offered a promotion from the outset. A Meta employee at level 6 who moved to Alibaba might end up at level P9, and be dubbed a senior expert. Jumping continents to land a job at ByteDance would mean starting at level 3.2. “Three years ago, someone at Meta level 6 or 7 could become 4.1 and 4.2 at ByteDance if they worked for TikTok. Levels depreciated as increasing numbers of Chinese tech workers returned to mainland China.
The pay of US technology companies was transparent. Websites such as levels.fyi listed levels and salary comparisons in detail, and employees of Silicon Valley companies referred to the data when job hunting.
According to levels.fyi, when a fresh graduate entered Meta at level 3, they could receive an annual salary of $172,000 (RMB 1.22 million). After promotion to level 4, this might rise to $237,000 (RMB 1.69 million). Beyond level 5 and 6, the total package would rise to $808,000 (amounting to RMB 5.75 million). At level 8, they might earn $1.818 million (RMB 12.94 million). Information about the pay package for executives at level 9 was not disclosed. That was down to individual negotiation.
(The above data can only be used as a reference, and the specific situation will vary according to the employee’s individual situation and the negotiation between companies. The total number will vary, and the ratio of cash to stock will differ. And the above figures are pre-tax income.)
The above headhunter was familiar with salary systems at Chinese and US technology firms. He settled in Silicon Valley and said many of his WeChat contacts earned more than $500,000 a year.” He said, “Only a few could aspire to that kind of package in mainland China. A salary of one or two million yuan does happen, but few earn as much as four million.”
People are treated fairly equally in Silicon Valley, and it’s this culture that has become another pull factor. Employees call their bosses by their first name rather than “boss” as they do in mainland-based tech companies. There is no age discrimination among the over-35s. More importantly, Silicon Valley workers don’t work from 9 a.m. to 9 p.m. six days a week (as is the practice in many mainland tech offices). They start replying to messages at 10 a.m. on weekdays, have an hour off for lunch, and go home at 5-6 p.m. Meta is already the most hardworking place to work in Silicon Valley. For Andy Wong, who spent time in Chinese tech companies, getting used to the more relaxed work ethic took time.
“I am very passionate about my work and have always wanted to work hard, so for me, earning a living there was very relaxed.”
He’s more interested in being engaged in his work than the name of the company he works for. His life motto is: be optimistic and happy, healthy and strong, stay with the family forever. “On this basis, any extra dollar I earn is kind of a gift.”
But Andy Wong still thinks he will choose to return to China to continue his career. He hopes to find a job in a mainland technology company or foreign firm with offices in China so that he can be close to his parents as they age and enjoy his home life. He’d find it too lonely to retire overseas with only his partner beside him.
One Chinese millennial told me he’d like to stay in Silicon Valley. “I don’t have a strong reason to return to China.” He had graduated from a top 10 US university, liked what he was doing, and got paid handsomely for it. “I don’t want to work like a maniac. There’s an advantage to not going for promotion. People won’t have overly high expectations, and you won’t have to put all that effort into rising through the ranks. I just want to keep making my favorite products.”
House prices in Silicon Valley were not sky-high as in China. “A house in Silicon Valley will set you back $2 million, and you can buy an apartment for $1 million.” The millennial employee said he had not yet bought a property, and spent five to six thousand dollars a month on rent and food. The pace of life in Silicon Valley was slower than in China. He said weekends were spent climbing mountains, playing board games, and singing karaoke. “It’s a much more livable place and a way better place to settle down.” This was coming from a millennial recruit who wasn’t laid off in this round.
A high salary and a simple life prompted many tech workers from China to stay put in the US. But what about those who left? One person from Amazon who returned to China told me that between 2014 and 2019, Silicon Valley saw many people go back, either to start their own businesses or join Chinese tech firms at a higher executive level. For many, this was because they would gain space and freedom to develop their talents.
“It’s hard for Chinese to become decision-makers abroad. It may be easy to get into [tech] in America, but it’s hard to be admitted into the inner circle, let alone sit at the executive table.”
Even the simplicity can be boring. “Beijing is a particularly diverse place. The next person you meet could be working in private equity or venture capital. Or they’d be from a state-owned enterprise, IT, or the performing arts. In Silicon Valley, all of us are basically coders, preoccupied by options, houses, children, and entrepreneurship. We’re all the same.”
An initial drop in salary on returning to China reversed after a while, the tech professional said. “I make bigger decisions, take charge of more things, and can have more fun,” he told me. The flip side was that work is more wearing and more competitive. Office politics often interfered. “When you are a lowly-ranked foreigner (in the US), no one disturbs you.”
With Covid, the number of tech workers returning to China fell, while the country’s internet industry entered a slowdown. With diminishing opportunities on both sides of the Pacific, Silicon Valley’s high salaries and work-life balance seemed more “cost-effective” to many. What’s more, people only needed to apply some of the hardworking mentality in Chinese companies to American companies to be seen as model workers.
Silicon Valley’s wave of layoffs is still ongoing. Industry insiders think it will go on for another half year. As technology giants shrink, some of the best employees are turning their attention to start-ups. In Web3, self-driving, and AI, opportunities abound, to name just three fields.
Two investors in Silicon Valley said that while they felt sorry for people who had lost their jobs, layoffs were a normal part of any economic cycle. Cutbacks would mean large companies could focus better on their core business. More great startups will be created in the next 18 months too. Tech workers with cushy salaries would be cut loose to explore their options more broadly. Some would work for start-ups, which would sweep up lots of talent during the economic downturn.
As big companies went into recession, smaller ones would profit from the opportunities created.
(Note: To protect the sources, Andrew Chen, Anna Zhu, and Andy Wong are pseudonyms.）