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Tag: mass layoffs

  • Education Department announces new steps in downsizing push

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    The U.S. Department of Education announced new steps Tuesday in President Donald Trump’s push to downsize the federal agency. Trump signed an executive order in March that called for eliminating the Education Department, but his administration has previously acknowledged that dissolving it entirely would require an act of Congress, which created the agency in 1979. For now, the department is moving forward with plans to shift key services to other parts of the federal government through six new interagency agreements. “The Trump Administration is taking bold action to break up the federal education bureaucracy and return education to the states,” U.S. Secretary of Education Linda McMahon said in a statement. “Cutting through layers of red tape in Washington is one essential piece of our final mission.”The announcement is already facing pushback. Critics fear that the Education Department shakeup will disrupt critical services that students rely on.The National Education Association called it an “illegal plan to further abandon students.”Minnetonka Public Schools Superintendent David Law, who serves as president of AASA, The School Superintendents Association, said the reorganization could prove counterproductive. “It talks about streamlining and efficiency, and yet it’s counterintuitive to me that multiple agencies having their hand on something is more efficient,” Law said.Under the plan, the Labor Department will co-manage the Office of Elementary and Secondary Education, which administers K-12 grant programs and Title 1 funding for low-income schools, as well as the Office of Postsecondary Education, which oversees grants for institutions of higher education.The Department of the Interior will take on a greater role in administering Indian Education programs. The Department of Health and Human Services will co-manage the Child Care Access Means Parents in School (CCAMPIS) program and Foreign Medical Accreditation. The State Department will help oversee international education and foreign language studies programs. In the past, the Trump administration has also talked about moving management of other Education Department services, like the student loan portfolio and civil rights enforcement. The administration is still “exploring options,” according to a senior department official who briefed reporters on Tuesday ahead of the official rollout. Tuesday’s announcement builds on a sweeping downsizing effort that started earlier this year. The Trump administration has already launched an interagency partnership with the Labor Department to manage adult education and career and technical education programs.In July, the Supreme Court paved the way for the Education Department to move forward with roughly 1,400 layoffs.The Education Department said in an email on Tuesday that no additional layoffs are expected at this time as a result of the new interagency agreements.

    WASHINGTON —

    The U.S. Department of Education announced new steps Tuesday in President Donald Trump’s push to downsize the federal agency.

    Trump signed an executive order in March that called for eliminating the Education Department, but his administration has previously acknowledged that dissolving it entirely would require an act of Congress, which created the agency in 1979.

    For now, the department is moving forward with plans to shift key services to other parts of the federal government through six new interagency agreements.

    “The Trump Administration is taking bold action to break up the federal education bureaucracy and return education to the states,” U.S. Secretary of Education Linda McMahon said in a statement. “Cutting through layers of red tape in Washington is one essential piece of our final mission.”

    The announcement is already facing pushback. Critics fear that the Education Department shakeup will disrupt critical services that students rely on.

    The National Education Association called it an “illegal plan to further abandon students.”

    Minnetonka Public Schools Superintendent David Law, who serves as president of AASA, The School Superintendents Association, said the reorganization could prove counterproductive.

    “It talks about streamlining and efficiency, and yet it’s counterintuitive to me that multiple agencies having their hand on something is more efficient,” Law said.

    Under the plan, the Labor Department will co-manage the Office of Elementary and Secondary Education, which administers K-12 grant programs and Title 1 funding for low-income schools, as well as the Office of Postsecondary Education, which oversees grants for institutions of higher education.

    The Department of the Interior will take on a greater role in administering Indian Education programs. The Department of Health and Human Services will co-manage the Child Care Access Means Parents in School (CCAMPIS) program and Foreign Medical Accreditation. The State Department will help oversee international education and foreign language studies programs.

    In the past, the Trump administration has also talked about moving management of other Education Department services, like the student loan portfolio and civil rights enforcement. The administration is still “exploring options,” according to a senior department official who briefed reporters on Tuesday ahead of the official rollout.

    Tuesday’s announcement builds on a sweeping downsizing effort that started earlier this year.

    The Trump administration has already launched an interagency partnership with the Labor Department to manage adult education and career and technical education programs.

    In July, the Supreme Court paved the way for the Education Department to move forward with roughly 1,400 layoffs.

    The Education Department said in an email on Tuesday that no additional layoffs are expected at this time as a result of the new interagency agreements.

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  • Trump Regards Millions of Americans As Enemies of the People

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    Russ Vought’s coming for you!
    Photo: Jim Watson/AFP/Getty Images

    There are a lot of developments that can be cited to illuminate the crucial differences between the first and second Trump administrations, ranging from the simple idea that “practice makes perfect” to the observation that the president has carefully ensured no one around him will exercise a restraining influence over his darker impulses. But the government shutdown has brought to light one very specific change that is especially ominous, as Toluse Olorunnipa and Jonathan Lemire explain at The Atlantic:

    Thirty-four days into the previous government shutdown, in 2019, reporters asked President Donald Trump if he had a message for the thousands of federal employees who were about to miss another paycheck. “I love them. I respect them. I really appreciate the great job they’re doing,” he said at the time. The following day, caving after weeks of punishing cable-news coverage, he signed legislation to reopen the government, lauding furloughed employees as “incredible patriots,” pledging to quickly restore their back pay, and calling the moment “an opportunity for all parties to work together for the benefit of our whole beautiful, wonderful nation.”

    Doesn’t really sound like the same guy, does it?

    It sure doesn’t. Trump has greeted the 2025 shutdown as a heaven-sent opportunity to fire hundreds of thousands of employees at what he calls “Democrat Agencies” at the behest of his budget director, Russell Vought, the government-hating religious zealot whose nihilistic suggestions in the Heritage Foundation’s Project 2025 were considered so politically radioactive that Trump claimed to know nothing about the initiative. Now he’s posting AI video of Vought as the Grim Reaper come to life to get rid of bureaucrats who aren’t engaged in the holy MAGA trinity of killing, jailing, or deporting people.

    Yes, the president loves trolling people, and Vought swears by the value of “traumatizing” the denizens of the “deep state” who resist or simply get in the way of the administration’s agenda. But this is by no means an isolated incident of the vastly expanded list of Americans Trump now considers his current enemies and future victims. If you want to understand the most crucial difference between Trump 1.0 and Trump 2.0, look to the targets of his wrath.

    Coming out of the 2024 election, there were many justifiable fears that Trump would act on his frequent threats of vengeance against highly placed “enemies” ranging from Republican “traitors” such as Liz Cheney, to the federal prosecutors who tried and failed to hold him accountable, to “fake news” media executives, to conspiracy-theory suspects like vaccine scientists. Likely targets included whole institutions thought to have betrayed him (like the FBI) and “radical left” policies like DEI and climate change that were campaign-trail hobgoblins.

    True to his malicious word, Trump has urged prosecutors and investigators and his social-media bullies to “go after” all these prominent symbols of the hated opposition. But now the ranks of “enemies of the people” has expanded far beyond the liberal elites and Never Trumpers who were objects of so much presidential ire in the past. Enemies now include whole categories of Americans deemed guilty by association with institutions and causes deemed inimical to the mission of “saving America.” Trump has signaled that entire cities will become “training grounds” for the U.S. military, denied self-governance and basic civil liberties because of their inherently perfidious nature as “the enemy within.” Major sectors of civil society, most obviously higher education, have been declared presumptively hostile and subject to shakedowns and forced takeovers. Anyone voicing opposition to the administration’s mass-deportation program is being treated as consciously treasonous and the ally of “invaders.” And most recently, in the wake of the assassination of MAGA and Christian-nationalist icon Charlie Kirk, the president, the vice-president, the top White House policy adviser, and the attorney general have all suggested that any strongly worded criticism of the administration might be treated as illegal incitement to violence or “terrorism.”

    Looking at all these phenomena, it should be clear that we are witnessing not just a rhetorical escalation of MAGA attacks on Trump enemies now that a supine Republican Party controls the federal government. The battleground is widening dramatically even as Trump wins more and more turf. Perhaps the president’s threats to lay waste to his own executive branch reflect a hitherto-unknown fidelity to old-school small-government conservatism of the sort that Vought and his friends in the House Freedom Caucus have fused with MAGA culture-war preoccupations into a radical ideology of maximum destruction. But more likely he understands that he has just three years left to consummate his lifelong war against those who opposed or underestimated him, and wants to leave as high a body count as possible. The “enemy within” could grow to encompass half the nation.


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    Ed Kilgore

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  • Shutdown Layoffs Threat Shows Limit of GOP’s Fear Tactics

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    Photo: Aaron Schwartz/Bloomberg/Getty Images

    One of the reasons congressional Democrats are unwilling to accept a “clean” stopgap spending bill that would avert a government shutdown until November 21 is the pattern of lawless power grabs by the Trump administration, and particularly by OMB director and Project 2025 co-architect Russell Vought. Indeed, the Democratic counterproposal to the GOP’s “clean” continuing resolution includes a demand that spending clawbacks by Vought be reversed and forsworn. But as the two parties drift toward a government shutdown in five days, with no negotiations in sight, Vought has now thumbed his nose at the Democrats, all precedents, and congressional authority over the federal government by announcing that agencies disfavored by the administration will have massive “reductions in force” if funding runs out on September 30. These RIFs would have the effect of turning the temporary furloughs of “nonessential” federal employees that typically accompany a shutdown into permanent layoffs, with the precise targets and levels of firings dependent on OMB’s judgment about what’s necessary to promote the “president’s priorities.”

    This legally shaky directive builds on earlier OMB instructions to federal agencies to prepare RIF plans to terminate as many as 30 percent of their employees, and in some cases, on DOGE assessments of unnecessary programs and personnel. For the most part, the RIFs haven’t materialized, and in some cases, agencies have even hired back employees chased off by the kiddie software warriors of DOGE, which has itself largely given way to Trump-appointed agency heads and OMB. These zombie slash-and-burn efforts are now roaring back to life.

    The RIFs would only apply to programs that are funded through annual appropriations, so they would exclude “mandatory” entitlement programs like Social Security and Medicare. OMB has also indicated politically sensitive programs like veterans benefits and Trump pet issues like ICE and border control will be exempt. There are a lot of questions left unclear by Vought’s big move, reflecting his characteristic strategy of using fear and uncertainty to keep the federal workforce under his thumb. And there is nothing much murkier than the law governing RIFs, particularly during a government shutdown.

    Whatever its actual effects, it’s clear the administration’s mass-layoff threats are intended to ratchet up the pressure on Democrats to change their position and vote to keep the government open. What Vought is signaling is that he will take exactly those destructive steps Chuck Schumer feared he might take had a shutdown occurred in March, a major factor in the Democratic Senate leader’s controversial decision to abandon the filibuster against the last stopgap spending bill. The key issue isn’t just which side gets blamed for a shutdown, but how bad a shutdown would be for programs and constituencies important to Democrats.

    Having said all that, the immediate Democratic reaction to Vought’s announcement has been fist-shaking defiance, as the Hill reported:

    “Donald Trump has been firing federal workers since day one — not to govern, but to scare. This is nothing new and has nothing to do with funding the government. These unnecessary firings will either be overturned in court or the administration will end up hiring the workers back, just like they did as recently as today,” Schumer said in a statement late Wednesday.

    House Democratic Leader Hakeem Jeffries was blunter:

    “Listen, Russ, you are a malignant political hack,” Jeffries said. “We will not be intimidated by your threat to engage in mass firings.

    “Get lost.”

    Jeffries, of course, has nothing beyond an advisory role in the Senate Democrats’ decision to filibuster the CR or surrender again. The latter decision would undoubtedly enrage Democratic activists and divide the party at a moment when it needs unity more than ever. The idea of giving a victory to Vought and a gloating Donald Trump is for the moment more painful than the shutdown with long-term consequences that may be just over the horizon. A variable yet to be measured is whether congressional Republicans chafe at the mass layoffs and encourage a deal that cancels them. So far this year, their willingness to buck the White House and its agents has been as small as the hope that a government shutdown can be avoided altogether.


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    Ed Kilgore

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  • After two ambitious years, TikTok parent ByteDance starts mass layoffs in gaming

    After two ambitious years, TikTok parent ByteDance starts mass layoffs in gaming

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    ByteDance’s gaming ambition has been an expensive, short-lived pursuit.

    In late 2021, the TikTok parent’s plans for video games came into the spotlight after it became one of the firm’s six core business units, posing a new threat to incumbents such as Tencent and NetEase and rising star MiHoYo. Nonetheless, after two years of tepid performance, the gaming department, called Nuverse, is significantly scaling back its operations in a move that has surprised many employees.

    “We regularly review our businesses and make adjustments to center on long-term strategic growth areas. Following a recent review, we’ve made the difficult decision to restructure our gaming business,” a ByteDance spokesperson told TechCrunch in a statement.

    This round of mass layoffs started on Monday and many members of Nuverse are still anxiously awaiting a verdict on their future, people familiar with the matter told TechCrunch. It’s unclear how many employees will be affected by the restructuring eventually, but Nuverse had quickly grown to around 3,000 people in 2021 and has largely remained that size over the past few years, according to Chinese tech news outlet LatePost.

    ByteDance has also spent heavily on acquisitions, including a $4 billion purchase of a promising Shanghai-studio studio called Moonton. Reuters reported earlier this month that the firm is looking to divest the studio and has met with a Saudi Arabia-based firm for discussion.

    Reuters first broke the news about the layoffs on Monday morning, reporting that ByteDance would soon announce the “winding down of its Nuverse gaming brand and full retreat from mainstream video games,” citing sources. But ByteDance’s comment suggests that portions of the team will be retained.

    ByteDance’s debacle in video games — and its virtual reality endeavor Pico — casts doubt over the universal applicability of its data-driven, A/B testing strategy that has catapulted TikTok to global dominance. Through its short video apps, ByteDance has amassed an unparalleled wealth of consumer insights. The success of video games, however, demands a much longer, more patient creative process and is arguably less predictable than the instant gratification delivered by dopamine-fused video clips. Both of its rivals Tencent and NetEase have been pouring more resources into games with longer development cycles.

    Without a breakthrough title or commercial success after two years, Nuverse’s positioning as one of ByteDance’s key revenue drivers is likely under close examination by the firm’s management team. ByteDance remains one of the rare Chinese internet giants that have not gone public, partly due to its entanglement in rising U.S.-China tensions.

    The mass layoffs at Nuverse add more bad news to the Chinese internet industry which is reeling from a widespread regulatory crackdown in recent years, leading to dampened businesses and slashed workforces. The video gaming sector in particular was hit hard by a hiatus in license approvals, and even though the process has resumed, the space’s recovery has been limited by macroeconomic challenges.

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  • Mass layoffs are terrible for shareholders, a study finds

    Mass layoffs are terrible for shareholders, a study finds

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    Do mass layoffs reflect poor management? That’s up for debate. But a new analysis suggests the practice harms shareholder returns, and companies should instead consider tactics like a four-day workweek to cut costs.

    CFOs tend to underestimate the “organizational drag” that’s created as a result of layoffs, according to the research and advisory firm Gartner. This can inadvertently reduce shareholder returns in the long term instead of protecting them, an analysis finds.

    “The first thing to recognize is that there is an immediate upfront cost to layoffs as a business will need to reorganize itself around a smaller group of employees and typically incur costly upfront severance payments,” Vaughan Archer, senior director of research and advisory in the Gartner Finance practice, said in a statement. And what will follow is an increased need for contractor hiring, which can be costly, and remaining employees have a ton of more work and more demands for increased compensation, according to Archer.

    Within three years, the forecasted savings from layoffs tend to become offset by the unforeseen consequences, Gartner said. Even if a business avoids “a vicious cycle of employee turnover” driven by overworked staff and low morale, any cost savings from layoffs will likely be lost. And when businesses start to rehire at some point, it will likely be at higher rates than the employees who were laid off.

    “In the more negative scenarios, the factors detailed here are also going to harm growth in existing and new business, and ultimately a firm will start losing its customers,” Archer said.

    Four days instead of five

    A four-day workweek is one of the 10 cost savings actions companies can take instead of mass layoffs, Gartner suggests. Trimming the traditional workweek model to four days is “not about cutting pay, but may control pay growth and staff turnover as employees find better work-life balance and increased productivity as burnout is reduced,” the firm noted.

    This work dynamic has certainly been a hot topic of discussion. Monster conducted a survey of 868 workers in March focusing on work productivity. Sixty-one percent said they’d rather have a four-day workweek and 33% say they’d leave their job for one with a shortened week. 

    Britain announced in February the results of the world’s biggest trial of a four-day working week, Fortune reported. The six-month pilot included over 60 companies and just under 3,000 to feedback on the “100:80:100” working model: 100% pay for 80% of the time, in exchange for 100% productivity. The results included a 65% reduction in the number of sick days, maintained or improved productivity at most businesses, and a 57% decline in the likelihood that a worker would quit, improving job retention.

    Andrew Barnes is the cofounder of the nonprofit 4 Day Week Global, helping organizations in various countries, including the U.K., pilot shorter schedules. Barnes also owns Perpetual Guardian, one of New Zealand’s largest corporate trustee companies. During MIT Sloan Management Review’s virtual summit on May 4, he talked about his company’s experience. 

    “We implemented the four-day workweek five years ago,” he said. “We’re twice as productive on a per capita basis now as our nearest competitor. We’re not seeing any adverse impacts.”

    Voluntary reduction in hours, internal redeployment, reducing executive compensation, remote work, voluntary leave of absence, a hiring freeze, benefit cuts, organization-wide pay cuts, and sabbaticals are the other options companies can take instead of mass layoffs, Gartner advises.

    If the livelihood and well-being of employees and shareholder returns are on the line, there’s a lot to consider before deciding on a major workforce reduction.

    Sheryl Estrada
    sheryl.estrada@fortune.com

    Big deal

    Microsoft has released its 2023 Work Trend Index report, “Will AI Fix Work?” The pace of work has accelerated faster than humans can keep up, and it’s impacting innovation, according to the report. “This new generation of A.I. will remove the drudgery of work and unleash creativity,” Satya Nadella, Microsoft chairman and CEO, said in a statement. The report shares three key insights for business leaders: digital debt is costing innovation, there’s a new A.I.-employee alliance, and every employee needs A.I. aptitude.

    Amid fears of A.I. job loss, when asked what they would most value A.I. for, business leaders were two times more likely to choose “increasing employee productivity” (31%) than “reducing headcount” (16%).

    The findings are based on 31,000 people in 31 countries, an analysis of both Microsoft 365 productivity signals, and labor trends from the LinkedIn Economic Graph.

    Going deeper

    “A.I. Can Be Both Accurate and Transparent,” a new report in Harvard Business Review, examines the question: Is there always a tradeoff between accuracy and explainability in artificial intelligence? The research tested a wide array of A.I. models on nearly 100 representative datasets and found that 70% of the time, a more-explainable model could be used without sacrificing accuracy. In many applications, less transparent models come with substantial downsides related to bias, equity, and user trust, according to the report.

    Leaderboard

    Sarah Wells was promoted to CFO at Spruce Power Holding Corporation (NYSE: SPRU), an owner and operator of distributed solar energy assets across the U.S., effective May 19. Wells succeeds Don Klein, who is departing in connection with the previously announced transition from XL Fleet to Spruce Power executive management. She joined Spruce Power in 2018, and most recently served as SVP of finance and accounting and head of sustainability. Before joining the company, she held various financial roles including finance and SOX manager at Cornerstone Building Brands (formerly NCI Building Systems, Inc.). Earlier in her career, Wells served as a senior auditor at PKF Texas.

    William Bardeen was promoted to EVP and CFO at The New York Times Company (NYSE: NYT), effective July 1. Roland A. Caputo, who announced his planned retirement as CFO in December 2022, will remain with the company through Sept. 30 for a transition period. Bardeen, 48, joined The New York Times Company in 2004. He’s served as chief strategy officer since 2018, also overseeing investor relations on an interim basis since March. Before that, he was SVP of strategy and development from 2013 to 2018. Bardeen has also served in various other leadership roles at The Times in corporate development, business development, and strategic planning. Before joining the company, he was a management consultant.

    Overheard

    “My personal belief is it will be like that movie Her with Scarlett Johansson and Joaquin Phoenix: Humans are a bit boring, and it’ll be like, ‘Goodbye’ and ‘You’re kind of boring.’”

    —Emad Mostaque, CEO of the fast-growing London-based startup Stability AI, which popularized the text-t0-image generator Stable Diffusion, hopes A.I. will find us “a bit boring” but acknowledges that in the worst-case scenario it “basically controls humanity,” he told BBC in an interview. 

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    Sheryl Estrada

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