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Fortune
Fortune
Paolo Confino

Alphabet spent $2 billion on layoffs. Here’s how much job cuts cost Meta, Amazon, and 7 other companies

A picture of the Amazon headquarters. (Credit: David Paul Morris—Bloomberg/Getty Images)

Meta CEO Mark Zuckerberg anointed 2023 the “year of efficiency” on an earnings call earlier this month. He’s not the only one. All too often, talk of corporate efficiency foretells the possibility of mass layoffs—or is a direct aftereffect of job cuts.  

Although layoffs are touted as cost-saving measures, they often incur sizable short-term expenses because companies must pay for hundreds, sometimes thousands, of severance packages at once. “Layoffs are expensive from day one. And before they save an employer money, they cost a bundle,” writes Fortune’s Geoff Colvin

U.S. law does not mandate severance pay, which can vary significantly by industry and employer. Salaries make up the bulk of severance packages and are the easiest cost to measure. But benefits packages include costs more complicated to assess than wages, such as regularly scheduled bonuses, accrued vacation days, medical benefits, and stock options—which can vary based on performance, seniority, and other individual factors. The U.S. Small Business Administration estimates the actual cost of an employee is between 1.25 and 1.4 times their salary, meaning companies that lay off employees have to cover these latent costs. 

Supplemental benefits that companies provide to employees also carry costs, including career services and immigration support. All told, some of the largest companies have spent over $7 billion on layoffs. 

Here’s how much Amazon, Microsoft, and Meta—along with seven other companies—have allocated per laid-off employee:

Alphabet

Number of employees laid off: 12,000

Total cost: Alphabet estimates the cost of its January layoffs will be between $1.9 billion and $2.3 billion. 

Average cost per employee: $158,333–$191,666

Meta

Number of employees laid off: 11,000

Total cost: Meta reported $975 million dollars in “severance and other personnel costs” in the fourth quarter. The tech giant noted that the costs were “not material after offsetting with the savings from the decreases in payroll, bonuses, and other benefits expenses.”

Average cost per employee: $88,636

Microsoft

Number of employees laid off: 10,000

Total cost: Microsoft expects a roughly $800 million charge to its fourth-quarter 2022 earnings as a result of severance packages and benefits due former employees.

Average cost per employee: $80,000 

Amazon

Number of employees laid off: 10,000 in Q4 2022, with 8,000 more planned in 2023

Total cost: Amazon spent $640 million in severance costs for the roles eliminated in the fourth quarter of 2022. It hasn’t yet announced the severance costs expected as a result of this year’s layoffs, which started on Jan. 18.  

Average cost per employee: $64,000

Cisco

Number of employees laid off: 4,100 

Total cost: Cisco projects $600 million in severance costs through October 2022. 

Average cost per employee: $146,341

Credit Suisse

Number of employees laid off: 2,700

Total cost: Credit Suisse reported $196 million in layoff costs through the third quarter. It expects an additional $272 million in restructuring costs. 

Average cost per employee: $173,333

Snap

Number of employees laid off: 1,280 

Total cost: Layoffs cost the social media company about $158 million in severance and other benefits in 2022, according to fourth-quarter earnings

Average cost per employee: $123,438

Twilio

Number of employees laid off: 1,390

Total cost: Twilio estimates its February layoffs will cost between $100 million and $135 million in the first quarter of 2023.

Average cost per employee: $71,942-$97,122

Robinhood

Number of employees laid off: 1,110

Total cost: Robinhood reported $51 million in severance and benefits costs for the employees it laid off in April and August of last year. The company said it does not expect further costs from its personnel cuts.

Average cost per employee: $45,946

Coinbase

Number of employees laid off: 1,100

Total cost: The crypto exchange reported about $41 million in severance and personnel costs last year. It does not expect to incur future costs from its layoffs.  

Average cost per employee: $37,474

Shopify

Number of employees laid off: 1,000

Total cost: Shopify’s July 2022 layoffs cost the company $30.5 million.

Average cost per employee: $30,500

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