Microsoft Layoffs and STEM Shortage Claims (2009-2017)

Bill Gates
Bill Gates at the World Economic Forum in 2012

Microsoft and its former CEO and founder Bill Gates are prominent in claiming that there is a severe shortage of STEM (Science, Technology, Engineering, and Mathematics) workers in the United States.  Bill Gates testified on this claim to the House Committee on Science and Technology in 2008.

I know we all want the U.S. to continue to be the world’s center for innovation. But our position is at risk. There are many reasons for this but two stand out. First, U.S. companies face a severe shortfall of scientists and engineers with expertise to develop the next generation of breakthroughs. Second, we don’t invest enough as a nation in the basic research needed to drive long-term innovation.

Bill Gates

Remarkably, Microsoft appears to have laid off about 35,000 of these allegedly rare, difficult to find STEM workers since 2008, with even more planned layoffs announced a few weeks ago.

Microsoft Layoffs

In January 2009, Microsoft announced planned layoffs of 5,000 employees, about five (5) percent of its workforce over the next eighteen months.

In July 2014, Microsoft announced layoffs of 18,000 employees.  Most of these employees, reportedly about 12,500, were part of the Nokia mobile phone division, many in Finland.  In 2015 Finland students were ranked sixth (6th) worldwide in math and science compared to the United States twenty-eighth (28th).  In 2001 Finland was tops in the PISA international tests.  The engineers and other STEM workers laid off by Microsoft would have been educated in Finland’s schools in the early 00’s when Finland was at or near the top.

In July 2015, Microsoft announced layoffs of 7,800 employees, also mostly related to Nokia.

In May 2016, Microsoft announced layoffs of about 2,000 employees, including about 1300 from Nokia.

In July 2016, Microsoft announced layoffs of about 2,850 employees.

In July 2017 (a few weeks ago) Microsoft confirmed reports of planned layoffs without confirming reports that about 3,000 employees would lose their jobs, primarily in sales.

Thus, Microsoft appears to have laid off about 35,000 employees with more cuts likely in the coming year since Bill Gates testimony to the House Committee on Science and Technology.  Microsoft reported to the SEC that it had about 114,000 full time employees in 2016.

Stack and Rank

Up until 2013, Microsoft overtly practiced a stack and rank employment system where employees were graded on a curve compared to co-workers and “low performers” apparently laid off or fired.  This stack and rank system was the subject of a highly critical article in Vanity Fair by Kurt Eichenwald in July 2012 which probably contributed to the decision to shelve the system.  It is unclear how many allegedly difficult to find and replace STEM workers were laid off, fired or constructively discharged due to stack ranking.

Microsoft has been sued over allegedly using stack ranking to discriminate against female employees.

Microsoft like other industry leaders such as Google, Facebook, Apple, and Amazon is noted for being extremely picky about who it even interviews for jobs and for a grueling, highly demanding interview process.  Nonetheless, Microsoft appears to have had a policy of laying off a certain percentage of these highly qualified STEM workers every year despite repeatedly claiming to have great difficulty in finding these same STEM workers!

Conclusion

Microsoft is not alone in announcing sizable layoffs at the same time that it claims a STEM worker shortage.  Many other  large STEM worker employers do the same thing.  In an exchange on Bloomberg TV in August 2014 interviewer Alix Steel confronted industry funded “immigration reform” PAC FWD.us then chief Joe Green on the inconsistency between numerous layoff announcements and the shortage claims.  His answer was especially unconvincing and he soon resigned as chief of FWD.us probably at the behest of his friend and colleague Facebook CEO Mark Zuckerberg.

It is difficult to know what to make of this.  On a short term quarterly basis replacing a highly experienced and more expensive STEM worker with a less experienced, cheaper, more error prone STEM worker is likely to make the quarterly and sometimes annual earnings numbers look better.  However, there is a reason more experienced STEM workers are on average more expensive than less experienced STEM workers.  Some problems simply require more experience to solve; two less experienced STEM workers is not always equivalent to one more experienced STEM worker.

I personally don’t doubt that these bizarre hiring and employment practices have seriously negative consequences in the longer term.  Many of Kurt Eichenwald’s unnamed sources in his Vanity Fair article on Microsoft’s stack and rank employment system blamed the system for Microsoft’s faltering fortunes.  Would Microsoft not have been better off reassigning its highly skilled workers in Finland to new projects?

Nonetheless, despite the STEM shortage claims and despite what seems like common sense, many major STEM worker employers like Microsoft continue to lay off, fire, or constructively discharge large numbers of the qualified STEM workers they claim they want.

(C) 2017 John F. McGowan, Ph.D.

Credits

The picture of Bill Gates at the World Economic Forum 2012 in Davos, Switzerland is from the World Economic Forum by way of Wikimedia Commons.  It is licensed under the Creative Commons Attribution 2.0 Generic license.

About the author

John F. McGowan, Ph.D. solves problems using mathematics and mathematical software, including developing gesture recognition for touch devices, video compression and speech recognition technologies. He has extensive experience developing software in C, C++, MATLAB, Python, Visual Basic and many other programming languages. He has been a Visiting Scholar at HP Labs developing computer vision algorithms and software for mobile devices. He has worked as a contractor at NASA Ames Research Center involved in the research and development of image and video processing algorithms and technology. He has published articles on the origin and evolution of life, the exploration of Mars (anticipating the discovery of methane on Mars), and cheap access to space. He has a Ph.D. in physics from the University of Illinois at Urbana-Champaign and a B.S. in physics from the California Institute of Technology (Caltech).