Musk's Red Pill Journey

Within a matter of days, Elon Musk announced that Tesla employees would have to return to in-person work at the office, followed almost immediately by an announcement that 10% of them would be laid off nevertheless.

Tesla CEO Elon Musk wants to slash 10% of jobs at the company due to his “super bad feeling” about the economy, according to a Friday report from Reuters.

The United States economy shrank at a 1.5% annualized rate in the first quarter of 2022, according to the Bureau of Economic Analysis, which associates recessions with two consecutive quarters of negative growth.

In a Thursday email to executives seen by Reuters, Musk instructed Tesla to “pause all hiring worldwide” and said that the company needs to cut 10% of jobs. Tesla currently has more than 99,000 employees, The New York Times reported.

Before the most recent news on economic activity, the U.S. had been recovering from COVID-19 and the lockdown-induced recession — growing at a strong 5.7% in 2021 after contracting 3.4% in 2020. The economy, however, has also been troubled by numerous phenomena — including persistent inflation, high gas prices, and the Russian invasion of Ukraine.

The message comes two days after Musk said in another email that “remote work is no longer” acceptable at Tesla.

It's hard for me not to see an underlying relationship. If times get hard, it's always time to trim the fat. The big piece of fat that's staring everyone in the face is that the staff -- or wait, the entitled, credentialed staff -- has been working from home. The assembly line workers, well, no. It's the social media analysts, the diversity and inclusion specialists, the corporate communications coordinators, who've been working from home, or at least pretending to.

So we might anticipate that the 99,000 Teslans will be coming in to the office again, whereupon there will be an immediate effort to determine which of them is "essential". Oh, wait, didn't we go through that effort just a little over two years ago? Doesn't HR already have a list of "essential" workers that they can maybe just dust off and update? Wasn't the whole "essential" exercise intended to identify who needed to come in for work no matter what, and the rest could stay home?

I would think the people you could lay off would match pretty closely with the ones who've been "working from home" for the past two years. But I think we can surmise that's not how this is gonna work. In the 1980s and 1990s, my wife and I went through phase after phase of downsizings, at a time when "working from home" was pretty unusual.

One of the first rules of thumb was that, short of union contracts that laid out clearly how it must be done, the least essential employees were never the ones who got laid off. Over and over in the course of downsizings, I heard the observation that they couldn't lay off old Joe, he'd never be able to find another job. So they'd lay off Frank, who they knew would land on his feet. Except, of course, Frank was probably the guy you actually needed to keep.

Even the downsizing consultants that companies would hire to prepare their staffs for the cuts never quite figured this out. I went through this at one point in the 1990s when I was old enough to know how it worked. I went to the company-sponsored seminars on how to write a resume and so forth, with the whole process geared to steer those who were cut straight back to the consultants who'd counsel them some more when they got the bad news.

I had fun that day. They called me in to the little room and said, "John, we're here to tell you there won't be a place for you at the dynamic new _____." I grinned with delight, unhooked my pager from my belt, and handed it to my new ex-boss in a grand gesture. It's a shame they don't have pagers any more, and nobody can do that now.

But it wasn't over. The next step was to escort me across the street to the outplacement lady, who already knew me from the resume seminar. "I don't understand" she said. "I'm just flabbergasted. Of all the people I worked with, you're the one I was sure I wouldn't be seeing here." It wasn't my job to explain to her how this stuff actually worked. In fact, if you think about it, the company hired her as a consultant precisely because, at least in theory, she was supposed to be the one who knew how these things worked.

Or anyhow, maybe she was. On the other hand, someone who actually did know how these things worked wouldn't want her job, because they wouldn't have her illusions.

I think this is going to be another phase of Elon Musk's red pill journey. Let's hope he's a quick study in figuring out whom to lay off at Tesla. If he is, maybe he'll have something to teach the rest of us.