Insider Today: Companies' loyalty problem

Plus: DeSantis ends presidential bid, and a big red flag for the economy.

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January 22, 2024 • 5 min read with Dan DeFrancesco Welcome back! Have a trip coming up where you’re stuck in the middle seat? Don’t sweat it. The middle seat is actually underrated. In today’s big story, we’re looking at how there’s no more loyalty in corporate America between employers and their workers. What's on deck Markets: How to invest as earnings season ramps up. Tech: More AI-powered tools mean more stuff we’ll have to pay for. Business: People are feeling good about the economy for the first time in a while. But first, all’s fair in love and the job market.

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Kiersten Essenpreis for BI The big story These employees ain’t loyal Do you feel loyal to your employer? Many of you probably don’t have an undying allegiance to your corporate overlords. The days of #hustleharder ended long ago. You might even work for multiple companies. It wasn’t always this way, though. Elder generations tout the benefits of sticking with one employer. (Of course, they often gloss over the disappearance of pensions, which helped keep people at the same company for decades.)  Business Insider’s Aki Ito, who has covered workplace trends better than anyone, dove into the deterioration of loyalty in corporate America. She uncovered the breaking of the psychological contract between employer and employee: There isn’t a shared understanding of expectations, leading each to believe they’re getting a raw deal. The employer-employee relationship first started breaking down with the rise of globalization. Corporations, fearing overseas competition, started viewing their workers more transactionally.  More recently, employees have gained power from the rise of quiet quitting, job hopping, and workers’ reluctance to return to the office.  The resulting environment is one where loyalty is in short supply, and both sides are at odds. The best example of the deterioration of loyalty in corporate America these days is in Big Tech. Many Americans became disillusioned with their employers long ago, but tech was an outlier. Workers enjoyed healthy perks, a strong culture, and eye-popping compensation packages.  Cracks in the foundation formed early last year when many tech companies made deep cuts for the first time. The layoffs left some blindsided. But others couched it as a one-off event due to pandemic overhiring and tough economic conditions. One year later, Big Tech’s layoffs are back and could become the new normal, Business Insider’s Peter Kafka writes.  Instagram is cutting a management level, and employees at parent company Meta are bracing for similar reductions, BI’s Kali Hays reports.  Amazon has made layoffs across several divisions, including Audible, Prime Video, and Amazon MGM Studios. Some employees fear the cuts could be even deeper via “quiet firing” tactics, BI’s Eugene Kim and Ashley Stewart report.  However, the best representation of the growing employee-employer chasm in Big Tech is at Google. Long considered tech’s gold standard, the company had a rough 2023 that left insiders feeling like its culture had been destroyed. This month, Google laid off hundreds of employees across teams, from advertising sales to central engineering. CEO Sundar Pichai reportedly said in an internal memo that there will be more “role eliminations” throughout the year to remove "layers to simplify execution and drive velocity in some areas." In response, some Google employees are fighting back against their “glassy-eyed leaders” by organizing protests, BI’s Hasan Chowdhury writes. “They can fire you any time (and will, if it's the business interest) and you do the same and leave any time (when it's your personal interest),” Gergely Orosz, a software engineer and tech commentator, wrote on X. “Forget ‘loyalty’ or ‘commitment’ both ways.”

News brief Your Monday headline catchup A quick recap of the top news from over the weekend: Florida Gov. Ron DeSantis, who was once seen as the biggest threat to Trump's 2024 White House bid, ends his presidential campaign. 2 Navy SEALs declared dead after going missing during night mission off the coast of Somalia. Mexico's one big advantage over the US right now could stall the 'Made in America' push. Japan has landed a spacecraft on the moon for the first time, but the mission didn't go exactly according to plan.

3 things in

Markets 🔔 Before the opening bell: US stock futures rise early Monday after the S&P 500 hit a record high Friday. OsakaWayne Studios 1. How to make sense of — and invest during — earnings season. Investment chiefs weigh in on what to look out for as companies report their fourth-quarter earnings. They also shared the sectors with the most on the line as the numbers roll in. 2. A big red flag for the economy just popped up. New Fed data shows bank credit levels have fallen for three straight quarters, a first since 2010. That’s a sign companies are borrowing less, which means less spending on projects that lead to economic growth. 3. Bank of America’s chief offers some advice for the Fed. Brian Moynihan said his bank predicts four rate cuts this year and in 2025. The aggressive approach is necessary “so the economy can keep growing,” Moynihan said.

3 things in

Tech Bill O'Leary/The Washington Post via Getty Images 1. The generative AI future will not be free. Many of our favorite internet services have been free for years, but with generative AI, that era could end. Look at Mark Zuckerberg’s GPU flex — it could cost Meta as much as $128 billion by the end of this year. But there’s a chance quantum tech could fix all these costs. 2. It appears to be true: Search engines like Google are getting worse. Researchers say it's because aggressive SEO tactics are ruining search results, making it harder for people to access helpful information online.  3. Meet the OpenAI Mafia. These 17 former OpenAI employees founded startups that have collectively raised nearly $8 billion. The list includes the founding teams of Anthropic and Covariant, which already have hundreds of employees.

3 things in

Business Frederic J. Brown/Getty Images 1. American consumers haven’t been this upbeat about the economy since 2021. Both Democrats and Republicans expressed more optimism, according to a consumer sentiment gauge. Year-ahead inflation expectations softened to 2.9%, hitting the lowest since December 2020. 2. Streaming music is a brutal business — just ask Spotify. It’s the most dominant force in streaming music. But it’s a very difficult business to make money in. That’s why the company has spent so much time and money trying to do things beyond streaming music. 3. Tips on how to get a job in 2024 now that the labor market is cooling. Experts said that job seekers should do research, consider how they network, and do things — possibly even submitting a video — to stand out from the crowd.

In other news Mark Zuckerberg is sitting on a mountain of the hottest commodity in tech right now. DocuSign, Zoom, and Twilio thrived in the pandemic-era stock market. In 2024, they're some of cloud software's most likely M&A targets. How Alec Baldwin is facing an involuntary manslaughter charge — again. Exclusive: Menopause care startup Midi is raising $60 million, just 4 months after its last funding round.

What's happening today Paris Fashion Week Haute Couture kicks off today. Christian Dior and Schiaparelli are among the brands debuting their Spring/Summer 2024 lines today. Earnings today: United Airlines and other companies.

The Insider Today team Dan DeFrancesco, deputy editor and anchor, in New York. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Jordan Parker Erb, editor, in New York. Get in touch insidertoday@insider.com To read unlimited articles, subscribe to Business Insider. Download the Business Insider app Email sent to: mrkay@idiot.cloudns.cc Manage your email preferences | Unsubscribe | Terms of service | Privacy policy | Advertise with us © 2024 Insider Inc. 1 Liberty Plaza, New York, NY 10006