Confirmation of May Layoffs at Goldman Sachs with an Average Severance Pay of $80,000

In May, Goldman Sachs will reduce its workforce. Today, the company affirmed that it intends to refine its "pyramid" and implement its "annual performance review process". It anticipates paying a $150 million severance fee in the process. Dennis Coleman, the CFO of Goldman, stated on 15 April's investor call that $150 million will be spent on severance expenses during the second quarter. As it was previously reported in the media, Goldman plans to reduce its workforce by 3-4% in Q2, which translates to approximately 1,900 job losses. According to reports, Goldman is urging other VPs and managing directors (MDs) to relocate to less expensive areas like Salt Lake City, as vice presidents are anticipated to be the first to be fired. Goldman will pay severance payments of about $80,000 per person on average if it fires 1,900 employees in May. In the first quarter, Morgan Stanley laid off 2,000 employees and reported paying $144 million in severance costs, or $72k per employee. Goldman aims for an operating margin or efficiency ratio of 60%. The efficiency ratio for the first quarter was 60.6%.

No Fundamental Shift in the Business: Solomon

David Solomon, CEO of Goldman Sachs, also discussed the future, stating that there is no sign of a "fundamental shift" in the company's operations since the imposition of tariffs and that any possible repercussions would probably be minor. He reaffirmed that Goldman is still a "big, diverse, strong-earning business"; he joked that this description may also work as a catchy tagline should he ever go back to his previous side profession as a DJ. This most recent round of layoffs is part of a larger trend by which international financial institutions are readjusting their workforces in response to changing business requirements and economic challenges. Although the impacted employees will surely feel unsettled as a result of the layoffs, Goldman Sachs is making a larger effort to remain flexible, profitable, and competitive in a difficult market climate.

Layoffs have Become a Common Scenario in 2025

With big companies like Google, Microsoft, and others continuing to reduce their workforces, layoffs in the tech sector are not expected to halt in 2025. Companies are still cutting employees in an effort to simplify operations, save money, and emphasise automation and artificial intelligence, even though these figures are much lower than the major layoffs that occurred between 2022 and 2023. Layoffs.fyi, a website that tracks layoffs in the industry, reports that 93 organisations have laid off nearly 23,500 tech workers so far this year, and the number is still growing. Google and Microsoft are apparently contemplating a new round of layoffs, according to the most recent job reduction reports. According to reports, AI-led restructuring and performance-based terminations are part of the corporations' goals to increase the effectiveness of their personnel.