The recent trend of tech sector companies laying off employees is a shot across the bow for the broader economy. Experts fear that the combination of job losses and continued interest rate hikes forecast tough economic sledding for 2023.
Most industries enjoyed a strong labor market last year, but technology is lagging and in many cases shrinking its workforce.
Tracking site Layoffs.fyi reported over 150,000 tech jobs were lost last year, while Crunchbase News reported the U.S. tech sector laid off over 90,000 workers. Examples of current issues abound across the industry.
Electric vehicle giant Tesla implemented a hiring freeze and announced a series of layoffs beginning next quarter.
Amazon already had plans to lay off 10,000 workers from its corporate offices and to initiate its own hiring freeze. Just this week the e-commerce giant declared that it will trim another 18,000 jobs.
Ride-sharing company Lyft will slash some 700 jobs to bolster its bottom line, and Stripe, a large payment firm, is cutting roughly 14% of its labor force, or over 1,000 positions.
Tech Layoffs III (Dec-Jan 4, 2023)
Amazon: 18k (6% corp)
Salesforce: 8k (10%)Doordash 1250 (15%)
Kraken 1200 (30%)
Vimeo 130 (11%)
Airtable 250 (20%)
Plaid 260 (20%)150k+ in just 2022. Holiday season might be coming to an end, but winter isn’t going anytime soon.
— Deedy (@debarghya_das) January 5, 2023
Meta is laying off over 11,000 employees, the largest cutback in its almost 20-year history.
And Salesforce announced recently that it will shrink by 10% of its workforce.
Greg Selker, managing director for executive search firm Stanton Chase, said companies learned lessons from both the dot-com bubble and the Great Recession of 2008. He believes firms are “trying to protect themselves so that they’re not caught in the 2008-2009 cycle.”
Tech companies are experiencing a sharp reversal of their pandemic patterns. While COVID-19 shut down economies around the globe, tech giants increase their hiring to keep up with new demand in the shifting economy. That shift has ended.
According to executive coaching firm Challenger, Gray & Christmas, job cuts in the tech sector increased 649% over figures from 2021.
Another factor in the new job losses is the steep rise in the cost of borrowing. This led to many employers realizing they may have gone overboard with pandemic hires.
All of these challenges circle back to the Biden administration and its inflationary policies. Interest rates have skyrocketed due to trillions in wasteful spending, and the results are now felt across major tech companies. It warns of bad times ahead for the overall economy.
