Tech Layoffs Signal the End of the Office Perk

Until last March, Meta employees in New York didn’t have to worry about food, transport, or laundry. There were shuttle buses waiting to take them home at the end of the day, a free dinner service with complementary to-go boxes, and courtesy laundry pickup. 

“It’s a very pampered place,” says Devi, a software developer at the company’s Manhattan campus, who asked that his name be changed to avoid jeopardizing his future career. 

In March, as part of a cost-cutting exercise, the laundry service was taken away, and the daily dinner service was pushed back by half an hour—after the last shuttle was scheduled to leave the campus—meaning that workers had to pick between a free meal and a free ride home. There was an uproar, according to Devi.

“It was funny seeing a bunch of well-paid tech folks complain about losing free food,” he says. “Some of them had rented apartments in expensive Manhattan neighborhoods since they had dinner sorted at work—they weren’t happy.”

Perks, from state-of-the-art gym facilities to private pop concerts to on-site sushi bars, have become integral to the culture at big technology companies. While they may seem excessive at a time of job losses across the industry, employees expect them, and experts say cutting them could have a real impact on companies’ ability to hire and retain in the future. 

“The problem for these companies that want to keep their megastars happy is that they’ve become used to amazing packages being offered,” says Grace Lordan, associate professor in behavioral science at the London School of Economics. “It can impact the war on talent: The companies offering the best packages will help get the best employees.” 

Tech companies began offering perks in an age when the boundaries between workers’ professional and personal lives were eroding. But Silicon Valley went further than ping-pong tables. At Facebook, some employees were provided with on-site meditation centers. Apple workers were given fortnightly “Beer Bash” parties, with the occasional surprise performance from a music legend. And, as a reward for a job well done, Googlers were offered “massage credits”—to be redeemed on campus, of course.

The idea wasn’t just to keep workers on campus for as long as possible. “Creativity and innovation often emerge in conducive environments—places where people can interact with joy even during their down time,” says Tomas Chamorro-Premuzic, professor of business psychology at University College London. “Many of the raw ingredients that make up the fabric of creative ideas and successful collaboration emerge not during formal meetings, but during informal encounters, like at the cafeteria or volleyball court.”

Since then, office perks have become part of tech companies’ pitch to talent.

“If your office looks like a five-star all-inclusive resort, you’re more likely to have employees proud to work there, inhale the culture, feel a sense of belonging, and spend more time in the office,” says Chamorro-Premuzic. “Bringing aspects of the non-work environment into the workplace cements the notion that work is an integral part of your life, including your leisure time and personal play time.”

But the pandemic, and the rise of remote and hybrid working patterns, began to limit the impact of the on-site perk. An analysis of 70,000 Glassdoor posts by UK tech workers shows that 8.3 percent of reviews in 2019 mentioned workplace benefits, such as a gym or free food; in December 2022 that was down to just 4 percent. 

“Since employees are expected in the office at least occasionally, companies are incentivized to make their experience a good one,” explains Lauren Thomas, European economist at Glassdoor. “But the data suggests the decline in perks is more closely related to employees’ time in the office.”

Over the past few months, Big Tech companies have axed tens of thousands of jobs, blaming a bleak economic outlook and overhiring during the pandemic. In that environment, it’s inevitable that perks will get cut.

“We no longer get breakfast at our daily town hall, and we apparently aren’t getting food at socials anymore,” says one London tech worker. “There are budget cuts happening, and events are being scrapped.”

While it may make sense to reduce workplace benefits if workers are being laid off and the demand for in-person amenities is lower than pre-pandemic levels, that doesn’t mean taking away free lattes or fitness classes won’t impact the workers that remain. “It can harm trust, implying that the perks weren’t offered unconditionally, rather than to coerce people to work,” says Chamorro-Premuzic. “Even if economic conditions worsen, companies risk losing out on the war for talent if they suddenly show a tough side that suggests they weren’t actually the cultural paradise they appeared to be.”

Even though tech workers are often well remunerated, many will be left upset about having to fork out for food and dry cleaning during a cost-of-living crisis, says Lordan. “It’s not just the financial expense, it’s losing the convenience of having a free, on-site service—no one likes something being taken away from them.”

Google’s parent company, Alphabet, which announced in January that it is cutting 12,000 jobs, hasn’t yet cut perks at its European headquarters in Ireland, where it still offers an on-site wellness center, baristas, and free food for employees, across multiple restaurants and snack drawers routinely topped up with protein bars. “It's very easy to develop a sense of entitlement from having these benefits so easily accessible,” says one Google worker, based in Dublin. “You end up complaining when your favorite flavor isn’t available.”

How long that will last remains to be seen. 

“The message from CEOs like Elon Musk and Mark Zuckerberg is that there’s been too much bloat,” says Lordan. “Taking away the more fun benefits signals it’s now a serious place to work, that it’s time to get back to innovating for the next cycle at the company.”

Twitter has discontinued even the most basic employee allowances, as well as laying off half of its employees since Elon Musk took over the social media company in October 2022.

However, experts said that while many perks may end up being taken away, the ongoing competition for top talent means that core wellness packages—benefits like health insurance and extra vacation days—are likely to remain. What’s on the block is anything that appears frivolous.

“That’s why the dry cleaning has gone and the well-being incentives remain,” says Lordan. “The cuts we’re seeing are perks that rivals aren’t offering anyway. They’re picked strategically so they’re not pushing their top talent out the door to search for their favorite perk elsewhere: If your competitors don’t offer free laundry, it’s easier to remove it.”

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