On March 14, Meta announced it was cutting some ten thousand jobs from its workforce. In February, former pandemic darling Zoom made about 1,300 cuts to its employee pool. Alphabet, Google’s parent company, laid off around twelve thousand workers in January. And of course, Elon Musk’s personal decimation of Twitter’s workforce since he took control of the company has been providing content fodder since last year. In general, 2023 has been a bloodbath for workers in tech.

On the surface, this may seem like a straightforward story of once-bullish companies having to make difficult choices in the face of harsh economic realities. But there’s more than meets the eye. Recently some of these newly laid-off employees have come forward to disclose that they had been paid to perform little to no actual work. Instead, they were called to one meeting after another to be kept busy without any tasks assigned to them. Many of them took home six-figure salaries for doing essentially nothing.

Companies strategically made these superfluous hires in order to have a trust fund of talent available in anticipation of future expansion, and also to prevent rival companies from meeting their staffing needs. It’s a blatant case of labor-market manipulation, which in most cases is not favorable to workers.

Big Tech is no stranger to the practice. In 2014, Apple, Adobe, Google, and Intel settled a federal antitrust lawsuit for $415 million after a Department of Justice (DOJ) investigation found that the four companies — along with others like Pixar and Intuit — had formed agreements to not hire each other’s employees.

But the tech industry isn’t alone. In 2021 the DOJ indicted the national dialysis provider DaVita on charges that it conspired with competitors to not recruit each other’s employees. DaVita was acquitted in 2022 after successfully arguing that it’s agreements didn’t prevent competitors from hiring their talent if certain conditions were met and presenting evidence from an economist showing career growth and wages were not stunted, even though testimony from a former employee suggested otherwise. Within firms using a franchise model, non-poaching agreements that outright ban hiring between franchises are still technically legal, hence the outcome in the DaVita case.

This type of labor-market manipulation hits low-wage service-sector workers the hardest. Big Tech’s superfluous hires actually tightened the labor market and increased wages in the tech sector, an unusual instance of industry largesse made possible by abnormally low interest rates. It almost never happens that way, and workers on the lower rungs aren’t so lucky. Non-poaching and non-solicitation agreements between companies create a monopsony in the labor market, driving down wages. Employees are not usually made aware that they exist, and have no opportunity to consent. They also have little legal recourse, as demonstrated by a series of failed lawsuits brought by employees of companies like McDonald’s, Little Caesars, and Domino’s.

An even more depressing truth is that major companies don’t necessarily need to form these types of alliances with each other in order to control the labor market to their own ends. The era of mergers and acquisitions has shrunk the number of employers looking for workers. A 2017 paper looking into monopsony concluded that most labor markets in the United States are highly concentrated, and that this is contributing to the trends of wage stagnation, a decline in workers’ ability to move between jobs and locations, a decline in entrepreneurship, and the erosion of the “job ladder,” since workers have fewer opportunities to seek promotions outside of their current company.

Of course, the most widespread form of labor market manipulation is the preservation of a large reserve army of unemployed workers. In Capital, Karl Marx demonstrates how a reserve of unemployed workers allows capital to keep wages in check, serving the accumulation of profits. The Federal Reserve is open about this strategy, raising interest rates to tame inflation with the explicit goal of driving up unemployment and lowering the cost of labor. The problem for workers is that this tactic lowers wage growth far more than it does inflation. Plus, economic downturns and recessions may inspire larger, more financially stable firms to acquire small firms that are more adversely affected by higher interest rates and lower demand, thus further increasing market concentration among employers. (Ironically, this labor-market manipulation tactic led to the recent Big Tech layoffs, ending the other manipulation tactic of superfluous employment as tech companies’ stream of cheap credit dried up.)

We are frequently assured that supply and demand drive the market’s ability to fairly set wages and prices at an equilibrium. This assumes perfect competition between firms, and that workers have all the information about wages and opportunities within a sector. In the real world, firms have little interest in an unfettered market for labor. They demonstrate as much when they use anticompetitive agreements, concentrate markets through mergers and acquisitions, and promote an anti-worker economic orthodoxy to protect profits.

Capitalists have many strategies for making sure that workers are always where they want them — whether twiddling their thumbs in tech offices, barred from seeking career advancement with a competitor, or lined up at the soup kitchen. When they say they that capitalism runs on a free and voluntary exchange of labor for wages, don’t believe them.