It's nothing personal: On Wall Street, layoffs are a way of life (2024)

Emma Alexander was recently laid off from Goldman Sachs, along with over 3,000 other employees. Although the layoffs were unusually large this year, they are an ever-lurking prospect for people who work in finance. Allison V. Smith hide caption

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Allison V. Smith

It's nothing personal: On Wall Street, layoffs are a way of life (2)

Emma Alexander was recently laid off from Goldman Sachs, along with over 3,000 other employees. Although the layoffs were unusually large this year, they are an ever-lurking prospect for people who work in finance.

Allison V. Smith

A few days before Goldman Sachs laid off more than 3,000 employees, Emma Alexander and her coworkers were feeling nervous.

News that the layoffs were coming had already leaked, and anxiety across Goldman's global offices was high.

Then, Alexander got a message from her boss, asking her to come to the conference room.

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"And I was like, OK, great," she recalls. "I guess it's me. I guess it's happening right now."

Twenty minutes after meeting her boss, Alexander turned in her badge, and she left her office in Dallas for the last time.

She'd been swept up in the largest round of job cuts at Goldman since the Global Financial Crisis. The storied bank laid off more than 3,000 staff last month.

The high pace in Wall Street

It wasn't Alexander's dream to work in banking. She was a sociology major, who has a master's degree in public policy.

Alexander says she took the first job she could get after graduating in 2020, just when the pandemic was starting to spread. But she grew to love finance's fast-paced and competitive culture.

For Alexander, getting cut was a rude introduction to another reality of Wall Street life: layoffs.

Few sectors are more prone to layoffs than finance, where a bad year in the markets — or a lousy performance review — can mean you are out of a job.

According to a 2021 report from the Office of the New York State Comptroller, the securities industry has experienced job losses in 13 of the past 30 years when data is available, or nearly once every two years.

When your job is hitched to how markets perform

Like its rivals, Goldman Sachs has been navigating a difficult environment, with high inflation and rising interest rates, and uncertainty about the future of the U.S. economy. Michael M. Santiago/Getty Images hide caption

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Michael M. Santiago/Getty Images

It's nothing personal: On Wall Street, layoffs are a way of life (5)

Like its rivals, Goldman Sachs has been navigating a difficult environment, with high inflation and rising interest rates, and uncertainty about the future of the U.S. economy.

Michael M. Santiago/Getty Images

Getting cut is part of an understood but unwritten rule, according to Wall Street employees: The pay is high — a first-year associate at Goldman, for instance, makes more than $150,000 a year, not including a bonus — but with that compensation, comes the understanding that getting cut is an ever present risk.

"It always happens," says David Stowell, a professor of finance at Northwestern University, who spent most of his career at Goldman. "There is expected to be some cuts every single year at most Wall Street firms."

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Still, Goldman's layoffs were unusually large this year.

Because of high prices, rising interest rates, and economic uncertainty, many of Goldman's corporate clients have been sitting on the sidelines, and as a result, profits at the Wall Street firm have dropped dramatically.

The performance of financial firms is linked heavily to how markets perform, as is the fate of its staff. It's a reality on Wall Street that can be frustrating when it comes to layoffs.

"The financial markets are unpredictable and cyclical," Stowell says. "So, you live and die with the markets."

The performance review

Under the leadership of Goldman Sachs CEO David Solomon, the firm's headcount had grown dramatically. Earlier this month, Goldman laid off more than 3,000 employees. Patrick T. Fallon/AFP via Getty Images hide caption

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Patrick T. Fallon/AFP via Getty Images

It's nothing personal: On Wall Street, layoffs are a way of life (8)

Under the leadership of Goldman Sachs CEO David Solomon, the firm's headcount had grown dramatically. Earlier this month, Goldman laid off more than 3,000 employees.

Patrick T. Fallon/AFP via Getty Images

But the bigger-than-usual layoffs announced by Goldman this year also marked another facet of Wall Street life that has returned: annual performance reviews.

In Wall Street, they are are notoriously exhaustive and consequential. Not only are these assessments used to determine the size of your bonus, but also, whether you will keep your job.

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Every year, bankers are evaluated by their peers, bosses, and subordinates. The firm measures how much money they brought in, and how well they worked with their teammates.

Underperformers are regularly let go. It makes the performance review an extremely powerful tool for management, according to Stowell.

"In my experience, a little fear is good," he says. "It motivates you to do better."

It still stings

In 2016, John Gooden was part of a round of layoffs at Bank of America. "They were a part of life," he says. "I just didn't think at that point it would have been me." Courtesy of John Gooden hide caption

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Courtesy of John Gooden

It's nothing personal: On Wall Street, layoffs are a way of life (11)

In 2016, John Gooden was part of a round of layoffs at Bank of America. "They were a part of life," he says. "I just didn't think at that point it would have been me."

Courtesy of John Gooden

The prospect of getting cut may be something employees live with, but when it happens, it still stings.

John Gooden learned that lesson in 2016, when he was a second-year associate at Bank of America.

One September, on his commute to the office, he learned that his firm had started layoffs. A few hours later, Gooden met the same fate.

"I was completely caught off guard," he says. "It kind of knocked the wind out of me, and I didn't really know what to do."

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Gooden remembers staggering around the office, and saying goodbye to a few members of his team. He did some soul-searching. Then, Gooden started calling his contacts, and sending out copies of resume.

"After you kind of lick your wounds a bit, you've got to get back to it," he says. "Especially me. I had a family to support."

Gooden got back on his feet, and six years later, he is still working on Wall Street.

Bouncing back

Emma Alexander didn't dream of a career in finance, but she quickly came to love her job at Goldman Sachs. Allison V. Smith for NPR hide caption

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Allison V. Smith for NPR

It's nothing personal: On Wall Street, layoffs are a way of life (14)

Emma Alexander didn't dream of a career in finance, but she quickly came to love her job at Goldman Sachs.

Allison V. Smith for NPR

Alexander also remembers being "in a state of shock" after her supervisor told her she was being let go.

"I took it pretty hard," she says. "I was pretty upset."

Alexander estimates the entire ordeal lasted about 20 minutes. She had a brief meeting with her team, and then, she was escorted out of the building. Alexander didn't have time to finish up emails she was writing, and she wasn't able to hand off work in progress.

The next few days were difficult, she says. Today, she is applying for jobs in finance, mulling over what could come next.

"I'm in it now, and I love it," she says. "But I'm also wondering if maybe I should be taking some time and thinking about going back and doing something that maybe I studied for, and went to school for."

Today, Alexander is still looking for work — open to the possibility it may not be on Wall Street.

It's nothing personal: On Wall Street, layoffs are a way of life (2024)

FAQs

Why does Wall Street like layoffs? ›

For big tech companies, job cuts have been a way to reduce spending on noncore operations and extract the kind of cost savings that Wall Street loves.

Who is most prone to layoffs? ›

The workers who feel most at-risk include those in product management, quality assurance, marketing, finance, and IT roles.

Why do investors love layoffs? ›

Investors' cheering on workforce reductions isn't necessarily a novel phenomenon. Companies are profit-seeking endeavors, after all, and cutting labor costs is a signal to shareholders that executives are trying to increase those profits.

Why layoffs are bad? ›

Because each time you do a layoff, it has the same negative effect on your employees, especially those who stay," Dulski said, citing a Leadership IQ study showing that the vast majority of employees who survive a mass layoff report a decline in productivity.

Why are layoffs so common now? ›

"We're going to continue to see layoffs happen as the future of work has changed, as the future of technology has changed and as investors' appetite for risk and growth versus profitability has dramatically changed as well."

Do layoffs actually help? ›

Let's start the day by debunking a common myth: Job cuts are a surefire way to help cure a company's financial woes. While a popular theory, the data suggests otherwise, writes Fortune's Geoff Colvin in a piece this week. Mass layoffs can actually come with some hefty hidden costs.

What jobs are immune from layoffs? ›

For employees, it's essential to be aware of recession-resistant industries. These industries, like healthcare, accommodation and food services, and retail trade, historically have lower layoff rates. So, considering opportunities in these sectors could be a smart move for job security during uncertain times.

Who is most likely to get fired in 2024? ›

Who is likely to be cut? Middle managers and remote workers beware. "Companies often target middle management for cuts. They try to streamline," said Daniel Zhao, lead economist at Glassdoor.

What jobs are layoff proof? ›

68 recession-proof jobs
  • Software Engineers and Developers. The Bureau of Labor Statistics (BLS) expects job openings for Software Developers to increase by 26% between 2022 and 2032 . ...
  • Cybersecurity. ...
  • Finance. ...
  • Government jobs. ...
  • Healthcare professionals. ...
  • Law. ...
  • Education. ...
  • Mental health.
Mar 28, 2024

How do companies choose who to layoff? ›

Seniority-Based Selection

This is one of the simplest methods. The last employees to be hired become the first people to be let go. This makes sense logically. If they were recently hired, they probably haven't become as strong of organizational assets yet.

Do stocks go up after layoffs? ›

Share prices got an even bigger boost at companies that laid off more than 3% of their workforce in conjunction with announcing a strategic repositioning—changing their product lines or markets, for example. Companies in this group saw their stocks rise an average of 13%.

Are layoffs traumatizing? ›

One study found that being laid off ranked seventh among the most stressful life experiences — more stressful than divorce, a sudden and serious impairment of hearing or vision, or the death of a close friend. Experts say that it takes, on average, two years to recover from the psychological trauma of losing a job.

Which department get laid off first? ›

Who Is Most Likely to Get Laid Off? In most cases, the non-essential departments are most vulnerable.

Why layoffs are good? ›

Being laid off can provide a much-needed break from the stresses and demands of a full-time job. It allows individuals to focus on self-care, spending quality time with loved ones, and engaging in activities that bring joy and fulfillment.

Are layoffs your fault? ›

Here's why it's crucial to believe that. Losing a job often comes with social stigma and emotional baggage. It doesn't have to be that way.

Are layoffs good for stock market? ›

Trimming fat can be helpful, but cut too much, and you might be cutting bone. In general, the stock market's reaction will depend on what investors think. If they believe the move will greatly help the company, they may bid up the shares. If they see the layoffs as a bad sign, many might sell their shares.

Why are so many companies doing layoffs? ›

One reason is leftovers from the extensive recruitments of the pandemic period. According to the New York Times, from the end of 2019 until the start of the big rounds of layoffs, the number of employees at Apple, Amazon, Meta, Microsoft and Google increased by more than 900,000.

What industry is facing major layoffs? ›

A slew of companies across the tech, media, finance, and retail industries made significant cuts to staff in 2023. Tech titans like IBM, Google, Microsoft, finance giants like Goldman Sachs, and manufacturers like Dow all announced layoffs. This year is looking grim too.

Why are big companies laying off people? ›

Executives justified the mass layoffs by citing a pandemic hiring binge, high inflation and weak consumer demand. Now in 2024, tech company workforces have largely returned to pre-pandemic levels, inflation is half of what it was this time last year and consumer confidence is rebounding.

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