Why are all of these tech companies laying off so many people? What does it say about the economy?
Throughout the 2010s, even though the labor market wasn't at its best, tech saw major growth.
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Recently, major tech companies have been laying off thousands of employees, with each layoff announcement accounting for thousands of jobs at once. This January alone, Alphabet, Microsoft and Vox Media have all announced massive layoffs – with Alphabet just announcing a cut of 12,000 jobs. Amazon, Twitter, Meta, Snap, Robinhood, Lyft… the list goes on. So many tech firms have nixed jobs in a super short period of time, and while a lot of industries have been feeling a strain in this economic climate, Big Tech has been hit unusually hard.
Throughout the 2010s, even though the labor market wasn't at its best, tech saw major growth. And during the earlier days of the pandemic, when the global economy was in shambles, tech boomed. But now, according to Challenger, Gray & Christmas economic survey numbers, the tech industry increased its job cuts by 649%, with a total of 97,171 cuts in 2022.
One reason for tech job cuts is a misreading of the post-COVID economy. After announcing 11,000 layoffs in November, Meta CEO Mark Zuckerberg said the company was wrong to think that pandemic profit gains would continue indefinitely. Payment company Stripe's co-founders John and Patrick Collison were similarly wrong and had to lay off 14% of their workforce last November. But, they also blamed "stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding."
These companies were hiring like crazy to meet demand that's cooled down since the 2010s and early pandemic days. So now, they have to start cutting their staff. "We're seeing the hiring mania of the pandemic being corrected for — not the popping of a bubble," said Andy Challenger, senior vice president of Challenger, Gray & Christmas.
But, "While layoffs from high-profile firms make the headlines, plenty of firms are desperate for more workers, especially tech workers. Those workers are in high demand from the auto industry to … not-for-profits," said Robert Frick, corporate economist at Navy Federal Credit Union.
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