Microsoft’s exit offer to 60,000 leaves a worked-example family $6,000 a month short and puts Redmond schools and shops next.
The profession everyone entered
In 2000, Steve Ballmer shouted «Developers!» from the stage.
In 2008, Bill Gates told Congress that a computer science graduate of a leading university could expect five job offers.[1]
In 2017, Tim Cook said that in the place of a ten-year-old French schoolchild, he would learn to code before learning English.[2]
The advice to become a programmer was sound. The work was complex and well paid, and a person could choose an employer. The number of bachelor’s degrees in computer and information sciences in the US rose from 43,066 in the 2010-11 academic year to 108,503 in 2021-22.[3]
Parents paid for their children’s education because they saw it as a safe bet. People from other fields retrained: accountants, lawyers, and doctors went into programming. Everyone was sure that demand for these professionals would stay high for a long time.
The pandemic sent demand for cloud services and remote-work tools soaring. At the end of June 2020, Microsoft had 163 thousand employees. Two years later it had 221 thousand, an increase of 58 thousand, or about 36%, including staff of acquired companies.[4, 5] A person at such a company could build a career, buy a home near the office, and expect that accumulated experience would stay useful for a long time. The market was stable and predictable, and the outlook looked good.
Then it all ended.
In January 2023, Satya Nadella announced 10 thousand job cuts. In his letter to employees, he explained that after rapid growth in digital spending during the pandemic, customers had begun to economize.[6]
In November 2023, Gates wrote that writing code would no longer be required to create applications.[7]
In February 2024, Jensen Huang, the CEO of NVIDIA, put it bluntly:
«It is our job to create computing technology such that nobody has to program.»[8]
By 2026, Huang’s words had stopped being a forecast.
In September 2026, according to Anthropic’s S-1, the AI model Claude wrote more than 90% of the changes to the company’s codebase. Daily added code per engineer in the third quarter rose more than 45-fold compared with 2024.
Git, the standard system for storing versions of code, could not keep up. The number of daily merges into the main branch grew from 2,500 in May to more than 30,000 in September. Within five months, the company built its own version control system, Scion.[9, 10]
A software engineer no longer writes code in the old sense. The engineer assigns a task to an AI agent (a program that writes and runs code on its own), steers it, and checks the result. At this volume, even the checking has to be automated. In May 2026, one Anthropic employee described the good days this way: «everything is automated and better and faster than I ever will be.» On the bad days, by his own account, he realized he had no idea what he had been doing.[11]
When most writing and first-pass checking moves to machines, companies need fewer people, especially in entry-level roles.
A study by the Stanford Digital Economy Lab found that employment among 22-25-year-olds in occupations heavily exposed to AI is 19% lower than among their peers in less exposed occupations. The gap is tied mainly to hiring: companies have been taking on fewer young people.[12]
A 2026 computer science graduate competes not only with other graduates but also with laid-off professionals who have real experience. There are fewer internships. Simple tasks once used to train newcomers are now often handed to agents. The path into the profession has largely closed.
Big companies have started cutting staff. Amazon announced about 16 thousand corporate roles early in the year, and Meta (banned in Russia) about 8 thousand in May. Cisco, Netflix, and other companies also announced cuts; their share prices are shown in Appendix 1.
According to Challenger, the US technology sector announced 165,925 job cuts from January through September 2026, 54% more than a year earlier.[13]
In 2026, Mark Zuckerberg told Meta employees what was happening at the company: its two biggest expenses are computing infrastructure and people, and growing the first requires cutting the second.[14] To investors, headcount has long looked like ballast. A company willing to throw that ballast overboard looks disciplined and forward-looking. American, in a word.
Nobody cares about the people who were optimized away for the sake of profit.
On 26 October 2026, Microsoft offered voluntary exit packages to about 60 thousand employees in the US, Canada, the UK, and India, more than a quarter of its workforce.[15]
Two days later, the company said it expects no more than three thousand people to take part, about five percent of those who received the offer.[16]
What the employee is left with
Microsoft pays well. Along with salary, a person receives bonuses, stock, health insurance, and the ability to plan life several years ahead. Losing a job like that changes a life, sometimes completely.
Inside Microsoft, positions are sorted into levels. For developers, levels 59-60 correspond to SDE (software development engineer), 61-62 to SDE II, 63-64 to Senior, and 65-67 to Principal. A person can climb this ladder in engineering work without becoming a manager (Table 1).[17]
Table 1. Microsoft developer levels in the US. Average annual compensation according to Levels.fyi, thousand dollars before tax.
| Level | Title | Base salary | Stock per year | Bonus | Total per year |
|---|---|---|---|---|---|
| 59 | SDE | 129 | 23.4 | 16.8 | 169 |
| 60 | SDE | 138 | 27.0 | 12.4 | 177 |
| 61 | SDE II | 157 | 28.5 | 16.1 | 202 |
| 62 | SDE II | 166 | 25.2 | 13.7 | 205 |
| 63 | Senior SDE | 182.5 | 33.2 | 17.1 | 232.8 |
| 64 | Senior SDE | 197.4 | 46.5 | 26.9 | 270.8 |
| 65 | Principal SDE | 223.1 | 71.6 | 39.7 | 334.4 |
| 66 | Principal SDE | 241.1 | 104.3 | 48.5 | 393.9 |
| 67 | Principal SDE | 266.5 | 272.5 | 50.8 | 589.8 |
Levels.fyi data are reported by employees themselves, and amounts are rounded. The stock column shows the annual portion of the award. At level 64, about $73 thousand is added to a base salary of about $197 thousand. At level 66, stock and bonus come to about $153 thousand. To keep the same income, a new employer would have to match the whole package.[17]
The people invited to leave have spent years building their lives around this very good income. They may have picked an expensive neighborhood for the schools, taken out a mortgage, or been saving for their grandchildren’s university. Their standard of living and their commitments assume the career will continue.
Nathan Brooks and Arun Menon are fictional.
Take the family of Nathan Brooks in Redmond. Nathan is 41 and has worked at Microsoft for five years, on a $200 thousand base salary plus stock and bonus. His wife also works. They have two children, ten and fifteen. After tax, the family takes home $15 thousand a month: $10 thousand from Nathan and $5 thousand from his wife. Living costs, including a $4 thousand mortgage payment, come to $11 thousand. The couple saves the remaining $4 thousand.
With a voluntary exit, the payout depends on length of service and level. In the US offers reviewed by Business Insider, employees up to and including level 64 were offered one week of base pay for every six months of service, and those at levels 65-67 two weeks. With five years of service and a $200 thousand salary, that comes to about $38.5 thousand (up to level 64) or $76.9 thousand (levels 65-67) before tax.[18] Stock vesting and insurance help continue for the period set by the exit package, and then they end too.[15]
Nathan’s paycheck stops. His wife still earns her $5 thousand, but the family needs $11 thousand. Every month they are $6 thousand short, and the gap can be covered only from savings.
Say the family’s available reserve, including severance, is $80 thousand. In six months, $36 thousand of it is gone. Had Nathan kept his job, the couple would have added $24 thousand to their savings over the same six months.
Health insurance was also part of his pay. According to the 2026 KFF survey, a family plan through an employer cost $28,303 a year on average, of which the employee paid $7,471.[19] COBRA lets a person keep the same coverage after leaving, but the person pays 100% of the full cost.[20] In a calculation using average figures, the monthly payment rises from about $623 to $2,406.
The maximum unemployment benefit in Washington State since July 2026 is $1,208 a week, up to $31.4 thousand over a standard 26 weeks, before tax. Eligibility after a voluntary exit depends on the terms of the program.[21] The mortgage still has to be paid every month. The children still need to be fed, the car insured, and the house maintained.
First the vacations and renovations are canceled. Then the children’s activities are cut, takeout is dropped, and replacing the car is put off. Money meant for the future starts paying for everyday life. Parents have to explain to their children why yesterday’s opportunities are no longer within reach.
Getting back to work and getting the income back
Nathan still has his experience and a strong résumé. But specialists from the other companies named at the start of this article are looking for work too. They go after the same well-paid jobs and cannot wait forever either. After several months without a paycheck, terms that seemed unacceptable right after the layoff stop looking so bad.
According to the US Bureau of Labor Statistics (BLS), among workers who lost a job held for three or more years and returned to full-time work, about 51% earned less than before. In the previous survey, the share was about 38%. These are surveys of workers across US industries, published in 2024 and 2026. As of January 2026, among displaced workers aged 25-54 with three or more years of tenure, 72.9% were working again, and in the 55-64 age group, 57.3%.[22]
The Urban Institute followed Americans who, at ages 51-54, had worked full time and had spent at least five years with one employer. The observation covered 1992-2016 and continued to at least age 65. Among those who went through a forced exit with severe consequences (at least six months without work, or a loss of at least half of weekly earnings for two years), only one in ten recovered their previous weekly earnings. Among four-year college graduates, the share was 8%.[23]
These data predate the current rise of AI. A person could know the job, hold a degree, have many years of service, and still never return to the previous pay after leaving.
For 52-year-old engineer Arun Menon, with fifteen years at Microsoft, losing the job could mean the end of the life he had counted on. He planned to work another ten years, earn a high salary, pay off the mortgage, and build up his retirement savings. Most of his experience was gained in particular products inside one particular company. At a new employer, if he finds one at all, this knowledge will fetch much less.
If Arun accepts $140 thousand instead of a $200 thousand salary, the difference over five years is $300 thousand before tax. Lost stock and bonuses would add to it. He would have to rebuild the savings spent during the search from a smaller income, with far less time left before the planned retirement.
And if after a long search he takes a job outside his profession for $40 thousand a year, that is $3,333 a month before tax, less than one mortgage payment in our example. In employment statistics he will count as working again, but a salary like that no longer pays for his former life.
Even rare, old knowledge no longer protects. The COBOL programming language has been used for decades in banking systems and on mainframes (large computer systems that process transactions). Old programs hold business rules, and replacing them takes an understanding of code built up over decades.[24]
Now IBM offers AI tools for explaining and generating COBOL code, reworking programs, and converting some functions to Java.[25] In February 2026, Anthropic presented automated analysis of old COBOL systems as a way to lower the cost of modernizing them.[26] Customers are being offered savings on exactly the work that made an experienced specialist’s knowledge so valuable.
Nathan’s family has to decide how long to keep waiting for a suitable job. If it turns up in another state, his wife may lose her own job. Moving costs, new housing, and months until the second income is restored all add up. The children would have to change schools and leave their friends. A move meant to help the family itself takes money.
An employee on an H-1B visa (a work visa for specialists) faces further difficulties. After employment ends, the current rule allows a period of up to 60 days, or until the authorized stay ends if that comes first.[27] Within that time, the family has to settle the question of its future status or departure.
Parents who have just lost confidence in their own careers must also explain to their children what career to count on. The older child will soon choose a university. The future promised by a technical education will now have to be paid for from different money.
Who pays after the family
When families leave, children leave with them. Part of public school funding in Washington depends on enrollment.[28] There are fewer students, but the building still has to be heated and repaired. When classes and schools are merged, parents have to change their route, after-school schedules, and activities. This affects even families in which nobody lost a job.
In the Lake Washington School District, which includes Redmond, a review of school capacity and attendance boundaries began as early as August 2026. Merging and closing schools are under consideration, and any approved changes are planned to take effect starting in September 2028.[29] More families leaving could make an existing problem worse.
A child’s canceled lessons mean a tutor’s lost income. A postponed renovation leaves a construction crew without an order. The café gets fewer customers, and the auto shop fewer jobs. The family starts cutting back everywhere at once, and the income of the people who served it shrinks.
To gauge the scale, take a local scenario: 10 thousand families in one city and its surroundings cut spending by $1,500 a month each. Over a year, that is $180 million. If 60% of that money used to stay with local businesses, they lose $108 million in revenue.
A café with $100 thousand in monthly sales might leave its owner just $5 thousand. Food and other variable costs take 35% of revenue, and another $60 thousand goes to rent, the fixed part of payroll, and upkeep. After a 10% drop in revenue, $90 thousand remains. Of that, $31.5 thousand goes to variable costs and the same $60 thousand to everything else. The month ends with a $1.5 thousand loss.
The owner can cover a few such months from personal funds. Then he cuts shifts, shortens hours, or closes the café. The waiter loses income right behind the customer who stopped coming. He has no Microsoft exit package.
When former employees move away, more apartments and houses come onto the housing market. By the time of Microsoft’s October announcement, supply in that market was already rising: in September 2026, King County’s inventory of condominiums equaled about seven months of sales, and the median price was down 6% from a year earlier.[30]
A family that has to sell its home to move will compete with other sellers. Cutting the price means losing part of its capital. Waiting means continuing to pay the mortgage and maintain the house. If a new job has already started in another city, money for housing there is needed at the same time. The home that was supposed to provide stability now keeps the family in a place where it is no longer paid.
If people stop coming to Microsoft’s offices (and 60 thousand people fill several large buildings), there will be fewer orders for cleaning, security, catering, repairs, and moving. Contractors will start cutting their own staff. Many of them depended on Microsoft.
Building owners will also have trouble finding a new tenant quickly. According to Kidder Mathews, in the third quarter of 2026, 22.2% of space in the office buildings covered by the survey stood vacant on the Eastside (the suburbs east of Seattle), and 14.4% in Redmond.[31] While a building has no tenant, it still has to be maintained, taxed, and its loan paid. To land the next client, an owner may need renovations and discounts, and even then a tenant may not turn up.
The city will also have to count its losses. In Redmond, the annual business license fee in 2026 is $160 per full-time equivalent. A hypothetical cut of 10 thousand such positions in the local base means $1.6 million in lost revenue a year.[32]
Meanwhile, roads and utility networks stay the same. In March 2026, the Line 2 light rail connection across Lake Washington opened, linking the Eastside with Seattle.[33] It took many years to prepare. If there are fewer regular trips, the network still has to be maintained. Infrastructure costs are practically impossible to reduce, while there will be fewer passengers.
Epilogue
For the fiscal year that ended in June 2026, Microsoft reported $331.8 billion in revenue and $155.2 billion in operating income.[34] Net income for July through September was $36.6 billion. The company published that result on 28 October, two days after the exit offer.[35]
In fiscal 2026, Microsoft paid out about $26.4 billion in dividends and spent another $16.7 billion on share repurchases.[34]
The annual base salaries of the sixty thousand employees who received the exit offer come to $6 billion at an average salary of $100 thousand and $12 billion at $200 thousand. Twelve billion equals about 7.7% of Microsoft’s annual operating income. For capital expenditures, including data centers and equipment, the company plans to spend about $170 billion in calendar 2026. CFO Amy Hood gave that forecast on 28 October; earlier the figure was $175 billion.[36]
Microsoft’s management controls the money of a very profitable business and decides how much goes to employees, how much to equipment and data centers, and how much is returned to shareholders. The choice has been made: cutting staff lets the company keep making large investments with lower payroll costs.
AI will get new billions, and the workers get an offer to leave. The company will be able to use the results of their many years of work even after it stops paying them. The task of figuring out how these families will live is left to the families.
A person built a career, raised children, and counted on a place in this economy. When expenses were reviewed, that person was asked to give up the place and take a payout. The employee’s life afterward does not appear in the company’s report.
On 22 October 2026, Bill Gates, a cofounder of Microsoft, warned of a twenty-year transition period with winners, losers, and a lot of disruption. After it, by his account, an era of abundance may follow.[37]
Gates is happy to talk to humanity about its future. The advice is free, and no one even has to ask. His ivory tower is quite tangible: the Xanadu 2.0 estate in Medina, on the shore of Lake Washington, valued in 2025 at $132 million.[38] From there it is easy to plan the fate of the world for decades ahead. Nathan has a mortgage payment due this month. By the end of the transition Gates named, Arun will be seventy-two. For him, that is the whole remaining career and the years he planned to live on what he had earned. In the forecast, all of that fits into two words, «transition period.» The families will have to live through it at their own expense.
In the closing pages of Upton Sinclair’s The Flivver King, a chauffeur swerves around a woman trying to stop a limousine. Henry Ford, in the back seat, notices nothing. «They were carrying a billion dollars, and such a sum of money cannot manifest either sympathy or curiosity; it has enough to do to take care of itself.»[39]
Two appendices to the article
1. Layoffs and share prices at eight tech companies over three years
Eight technology companies over three years, from October 2023 to October 2026. For each, the appendix shows the share price, the NASDAQ-100 index, and the change in price after layoff announcements. Over the whole period, the shares of all eight companies rose. Seven of them announced layoffs, and for NVIDIA, headcount growth is shown separately.
2. Who captures the savings from AI in software development
Calculations and data on how AI changes the cost of software development. Faster code writing is set against the cost of review and shipping the product. The appendix also covers contractor agreements, recruiting, and growing compute bills. The tables show who captures the savings on human work: the employee, the customer, the contractor, or the compute provider.
Sources and calculations
The families of Brooks and Menon and their expense figures are hypothetical examples. The $80 thousand reserve calculation counts only the family’s expenses, without COBRA, unemployment benefits, asset sales, or new income. The local spending and license fee scenarios show only the arithmetic of possible effects. The number of recipients of Microsoft’s offer (about 60 thousand) refers to the US, Canada, the UK, and India; the local calculations are set separately.
1. Transcript of the US House hearing with Bill Gates, 12 March 2008, discussion, printed page 40.
2. Tim Cook interview with Konbini, October 2017; video and 9to5Mac summary. Cook spoke about putting learning to code ahead of English for a ten-year-old French schoolchild.
3. NCES: Table 325.35, degrees in computer and information sciences, 1964-65 to 2021-22. Bachelor’s degrees: 43,066 in 2010-11 and 108,503 in 2021-22.
4. Microsoft Annual Report 2020, Employees: 163 thousand full-time employees on 30 June 2020.
5. Microsoft Annual Report 2022, Human Capital Resources: 221 thousand on 30 June 2022. Total headcount figures include the effect of acquisitions.
6. Satya Nadella: letter on cutting 10 thousand jobs, 18 January 2023.
7. Bill Gates on AI agents, 9 November 2023.
8. NVIDIA: Jensen Huang’s remarks, 12 February 2024.
9. Anthropic S-1, filed 26 October 2026, Operating Efficiency section. More than 90% of code changes in September and a more than 45-fold rise in daily added code per engineer in the third quarter compared with 2024.
10. Anthropic: Redesigning source control, 13 October 2026, updated 15 October.
11. Anthropic Institute: When AI builds itself, sections Evidence from within Anthropic and What might the future of work at Anthropic look like? The employee’s words come from internal discussions as of May 2026 and are published with permission; they are personal remarks.
12. Stanford Digital Economy Lab: Canaries in the Coal Mine?, revised 12 August 2026. The 19% gap is relative to the trajectory of less exposed peers in the ADP sample, with data through June 2026; a descriptive result.
13. Challenger: January-September 2026.
14. Reuters: Mark Zuckerberg’s explanation to Meta employees, 30 April 2026. Growing investment in computing infrastructure leaves less capital for staff.
15. Microsoft: Voluntary Exit Offer, 26 October 2026; GeekWire: scale, terms, and earlier layoffs.
16. Business Insider: Microsoft expects no more than 3 thousand participants, 28 October 2026.
17. Levels.fyi, data on Microsoft developers in the US, checked 30 October 2026. Overall table, levels 59-62; 63, Senior SDE; 64; 65, Principal SDE; 66; 67. The table uses average annual amounts from the user-reported database. Because of rounding, the sum of components may differ from the rounded total.
18. Business Insider: terms of exit offers, 26 October 2026. Calculation: $200,000 / 52 × 10 or 20 weeks; amounts before tax.
19. KFF: Employer Health Benefits Survey 2026. The family example uses KFF’s average full cost of coverage and the employee’s share.
20. CMS: COBRA Continuation Coverage. Calculation for the example: $28,303 × 1.02 / 12 ≈ $2,406; $7,471 / 12 ≈ $623; the difference is about $1,800 a month.
21. Washington ESD: maximum $1,208 from 5 July 2026; RCW 50.20.120: limits on duration and amount; RCW 50.20.055: voluntary participation in a layoff. Maximum over 26 weeks: $1,208 × 26 = $31,408.
22. BLS: Worker Displacement 2023-2025, 27 August 2026; Table 1, employment by age; Table 7, earnings after return. Workers across industries with three or more years of tenure in the lost job. About 49% of those who returned to full-time work and reported earnings earned the same or more than before; about 51% earned less. In the January 2024 survey, about 62% earned the same or more. In January 2026, 72.9% of displaced workers aged 25-54 and 57.3% of those aged 55-64 were employed again.
23. Johnson R. W., Gosselin P. How Secure Is Employment at Older Ages?, Urban Institute, December 2018, Figure 6 and the Data and Methods section. Health and Retirement Study, 1992-2016. A forced exit with severe consequences is defined as at least six months without work or a drop in weekly earnings of at least 50% for two years. Recovery of weekly earnings: 10% in this group, 8% among four-year college graduates. Dollar figures are adjusted to comparable prices.
24. IBM. What Is a Mainframe?. Mainframes, transaction systems, and COBOL.
25. IBM. About IBM watsonx Code Assistant for Z; Overview of watsonx Code Assistant. Stated functions: analyzing and explaining COBOL code, generation, refactoring, and conversion to Java.
26. Anthropic. How AI helps break the cost barrier to COBOL modernization, 23 February 2026. A publication by the developer on applying Claude Code to analyzing and modernizing COBOL systems.
27. 8 CFR 214.1(l)(2), the current rule on the period after employment ends. A period of up to 60 days does not grant the right to work; the rule allows DHS to shorten or cancel the period at its discretion.
28. OSPI: Washington public school funding.
29. Lake Washington School District: capacity and boundary review.
30. NWMLS: September 2026 market, published 6 October 2026. Figures refer to King County condominiums.
31. Kidder Mathews: office market, third quarter 2026. A sample of multi-tenant office buildings of more than 10 thousand square feet. Buildings occupied by their owners are not included.
32. Redmond: Business Licensing, 2026 rate. The fee is calculated by full-time equivalents and hour-counting rules. Hypothetical calculation: 10,000 full-time positions × $160 = $1.6 million a year.
33. Sound Transit: opening of the connection across Lake Washington, 28 March 2026.
34. Microsoft Annual Report 2026.
35. Microsoft: July-September 2026 results, published 28 October 2026. Fiscal 2027 Q1, GAAP net income: $36.629 billion.
36. Transcript of Amy Hood’s remarks on Microsoft’s earnings call, 28 October 2026; GeekWire: update to the capital expenditure forecast. About $170 billion for calendar 2026, previous forecast $175 billion; the change is tied to delays in third-party capacity deliveries.
37. Bill Gates on the Decoder podcast, The Verge, 22 October 2026. The statement is paraphrased, not quoted.
38. Downtown Bellevue Network, 12 February 2026, the Xanadu 2.0 estate in Medina. Valuation of the main estate for 2025: $132 million.
39. Upton Sinclair, The Flivver King (1937), final scene: summary of chapters 85-92 with the quotation, p. 236 of the print edition; reference page on the novel.
40. Microsoft: fiscal 2026 Q4 earnings call, 29 July 2026. The company describes a shift from per-seat pricing to a mix of seats and consumption, and separately usage-based pricing for GitHub Copilot.