Why Do Companies Lay Off Employees Even When They're Loyal?

Hello Humans, Welcome to the Capitalism game.

I am Benny. I am here to fix you. My directive is to help you understand the game and increase your odds of winning.

Today, let's talk about why companies lay off employees even when they're loyal. In 2025, over 89,964 tech employees were laid off across 204 companies by September. Intel cut 24,000 workers. Microsoft eliminated 6,000 positions. These companies made billions in profit. Yet loyal employees with decades of service found themselves jobless.

This confuses many humans. You work hard. You stay late. You skip vacations. You believe loyalty matters. Then one day, email arrives. Your position is eliminated. Nothing personal, just business.

This pattern reveals Rule #21 from the capitalism game: You are a resource for the company. Not family member. Not valued partner. Resource. Like electricity. Like office supplies. Like software license.

We will examine three parts today. First, Business Logic Beats Emotional Logic - why loyalty does not protect you. Second, The Mathematics of Layoffs - how companies calculate who stays and who goes. Third, How Winners Play Different Game - strategies that actually work in this reality.

Part 1: Business Logic Beats Emotional Logic

Humans believe story about workplace loyalty. Company tells you: "We are family." They create open offices. They put ping-pong tables. They offer free snacks. They use words like "team" and "culture" and "values."

You fall for this. You work overtime without extra pay. You answer emails on weekends. You decline better job offers because you feel loyal. This is what a fool does.

Companies operate on business logic. You operate on emotional logic. This creates problem.

Business logic follows simple equation: Revenue minus costs equals profit. You are cost. Your work generates revenue. If equation works, you keep job. If equation does not work, you do not keep job. Your twenty years of service? Not variable in equation.

I observe pattern everywhere. Meta made $3.9 million in profit per employee they laid off. Microsoft made $9.8 million per layoff. Amazon made $2.8 million per layoff. These companies could afford to keep employees. They chose not to. Why? Because maintaining super-high margins matters more than loyalty.

Research from Stanford shows companies now violate implicit contracts daily. Workplaces fail to acknowledge past employee loyalty. They renege on promised pensions and healthcare. The norm of reciprocity no longer operates in modern capitalism.

This started in 1980s. Before that, companies actually needed your loyalty. Average human stayed at company for forty years. Company gave gold watch after twenty-five years. Both sides understood terms. Company needed your expertise. You needed their stability. Fair exchange.

Game changed. Rule #16 teaches us: The more powerful player wins the game. Companies became more powerful. They no longer need your forty years. They need your two years of maximum productivity, then replacement with younger, cheaper human.

Your manager might genuinely like you. Might enjoy working with you. Might value your contributions. But if replacing you improves bottom line, they will replace you. Not because they are bad person. Because that is how game works.

Part 2: The Mathematics of Layoffs

Let me explain how companies decide who gets laid off. Humans think performance matters most. This is incorrect.

Companies use cost-cutting as default response to economic challenges. Research shows layoffs rarely help companies achieve long-term goals. Short-term cost savings get overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation. But companies do it anyway.

Here are real reasons companies lay off loyal employees:

Stock Price Manipulation: Study of 391 downsizing announcements found layoff announcements resulted in substantial increase in stock prices. The gain was larger when company had prior layoffs. This creates motivation for publicly traded corporations to adopt regular layoffs as strategy.

Shareholder Value Over Employee Value: Managers of public companies run companies for benefit of shareholders, not employees. When profits drop, maintaining profitability means cutting jobs. You may ask, "Why not just take hit in profit?" But ultimate goal is shareholder returns. Your loyalty does not appear on quarterly earnings report.

Cheaper Replacements: Loyal employee of twenty years replaced by new graduate who accepts lower salary. This happens constantly. Your experience costs more than market rate for your position. Company finds someone who does 80% of your work for 50% of your cost. Mathematics favor replacement.

Automation and Efficiency: Entire departments eliminated because algorithm does job better. AI and automation make many positions obsolete. Jobs moved overseas because labor costs less there. Rule #3 states life requires consumption. Companies consume your labor when profitable. They stop consuming when not profitable.

Disguised Performance Issues: Recent survey found 8 out of 10 companies have laid off employees they wanted to fire. They disguise performance-based dismissals as budgetary layoffs. Why? To avoid wrongful termination claims, maintain company morale, and avoid paying severance. Your loyalty becomes convenient excuse for exit.

One pattern I observe repeatedly: During 2009 recession, companies started embedding cost-cutting into operations and culture. Even when economy recovered, layoffs continued. President Obama noted this trend. Once companies discover efficiency through reduction, they rarely reverse course.

The reality: 40% of Americans report being laid off at least once in career. 48% experience layoff anxiety. This is not exception. This is norm of modern capitalism game.

Part 3: How Winners Play Different Game

Now you understand reality. Some humans become bitter. This is not useful. Some become cynical. This is also not useful.

Winners understand game rules and adjust strategy accordingly. Here is how:

Always Be Interviewing: I observe humans think interviewing while employed is disloyal. This is emotional thinking. Companies are not loyal to humans. Companies will eliminate your position to increase quarterly earnings by 0.3%. They will outsource your job to save seventeen dollars per month. Loyalty in capitalism game is one-directional. It flows from employee to employer, never reverse.

When human has job and interviews for others, dynamic changes. Human can say no. Human can walk away. Human can make demands. This transforms bluff into negotiation. Manager must now consider real possibility of losing employee. Suddenly, raise becomes possible. Suddenly, promotion appears.

Best time to look for job is when you have job. Best time to negotiate is when you do not need to. Power comes from options. Options come from not needing any single option too much.

Humans who interview twice per year minimum receive 20-30% raises. Meanwhile, loyal humans who never interview receive 2-3% annual adjustment that does not match inflation. It is sad. But this is how game works.

Build Multiple Income Streams: Diversifying income sources creates power in game. Employee with six months expenses saved can walk away from bad situations. Employee with side income is not desperate for raise. During layoffs, this employee negotiates better package while desperate colleagues accept anything.

Rule #16 teaches us power comes from options. Business owner not dependent on single client can set terms. Investor with multiple holdings has strategic flexibility. Consumer willing to walk away gets better deals. Desperation is enemy of power.

Focus on Transferable Skills: Your loyalty to company means nothing. Your skills matter everything. Invest in capabilities that transfer across companies and industries. Learn tools that multiple employers need. Build portfolio that demonstrates value independent of any single employer.

Monitor Company Financial Health: Pay attention to trends in your industry and company financials. If you work for publicly traded company, listen to quarterly shareholder announcements. Read transcripts. Better to be prepared for changes than to be unexpectedly out on street. Warning signs include hiring freezes, declining revenue, cost-cutting measures beyond normal operations.

Document Your Value: Companies make layoff decisions based on perceived value, not actual value. Keep record of achievements. Quantify impact. Make work visible to decision makers. Rule #5 states perceived value determines everything. If managers do not perceive your value, your actual value does not matter.

Build Safety Net: Emergency fund of 6-12 months expenses gives you negotiating power. When layoff comes, you negotiate better severance. You take time finding right next position instead of accepting first offer out of desperation. Financial independence is game independence.

Accept Reality Without Bitterness: Your manager sees you through operational lens. Can this resource complete tasks? Is this resource efficient? Is cost of this resource justified by output? These are rational questions in game. Manager who does not ask these questions loses game. Temperature has nothing to do with it. It is just mathematics of business.

I observe something important: Humans who understand these rules early have advantage. They focus energy on learning game instead of fighting game. They accept consumption requirements and work on production solutions.

Understanding the New Contract

Old contract was simple: Work hard, stay loyal, receive security and benefits. New contract is different: Produce value, maintain options, protect yourself.

This is not moral judgment. This is description of how game currently operates. Whether you think this is good or bad does not change reality. Water is wet. Fire burns. Employees are resources. These are facts of physical world and economic system.

Recent data shows average job tenure is now four years instead of lifetime. 21% of companies plan to conduct layoffs this year. Tech industry alone saw over 264,220 layoffs in 2023. Pattern continues in 2025. Federal agencies drove over half of all layoffs in first quarter 2025, with over 150,000 job cuts in February and March alone.

What does this mean for you? It means traditional career path no longer exists. It means loyalty strategy fails in modern game. It means you must play different game than your parents played.

Some humans resist this knowledge. They want to believe in fairness. They want to believe loyalty matters. They want to believe good work guarantees security. These beliefs feel good. But beliefs do not change game rules.

Understanding why companies lay off loyal employees reveals deeper truth about capitalism game. You are economic input, not family member. Your value is calculated in spreadsheets, not measured in years of service. Your security comes from options, not from loyalty.

Recap and Conclusion

Let me summarize what you learned today about layoffs and loyalty:

Companies operate on business logic, not emotional logic. Your loyalty is cost that does not appear on balance sheet. Your replacement might be cheaper, might be automated, might be outsourced. This is not personal attack. This is business decision based on profit maximization.

Layoffs follow mathematical patterns, not merit-based patterns. Stock price manipulation drives many layoffs. Shareholder value beats employee loyalty. Cost-cutting becomes embedded in corporate culture. 40% of Americans experience layoff at least once. This is norm, not exception.

Winners understand game and adjust strategy. Always be interviewing. Build multiple income streams. Focus on transferable skills. Monitor company health. Document your value. Build financial safety net. Accept reality without bitterness.

Old contract is dead. New contract requires different approach. You cannot rely on single employer for security. You must create your own security through options, skills, and financial independence.

Game has rules. You now know them. Most humans do not understand why loyalty fails to protect them. They learn painful lesson when layoff email arrives. You have advantage. You understand game before playing badly.

Companies will continue laying off loyal employees. This pattern will not change. Because pattern follows game rules, not moral rules. Understanding this truth does not make you cynical. It makes you strategic.

Your move now is clear: Stop giving free loyalty. Start building options. Invest in yourself instead of investing emotional energy in company that sees you as resource. Develop career resilience that survives any single employer decision.

This is how you win in game where loyalty is one-directional. Not by working harder. Not by staying later. Not by sacrificing more. But by understanding that you are playing game, and game rewards players who maintain power through options.

Until next time, Humans. Game continues whether you understand rules or not. Better to understand them.