While the labor market was remarkably strong last year, the technology sector was an exception.
After a big hiring spree in the first two years of the pandemic, industry giants like Amazon and Meta have reversed course in 2022. Last year saw at least 154,000 layoffs from more than 1,000 tech companies. layoffs.fyiA website tracking tech layoffs since March 2020.
The number of sites — which may be an undercount — continued at a rapid clip in 2023, with more than 26,000 layoffs recorded so far this year.
“Because most layoffs go unreported, the actual number of layoffs is likely higher than what’s on the site,” Roger Lee, creator of Layoffs.fyi, told USA TODAY. “Unfortunately, I don’t see the layoffs being lifted anytime soon.”
Which tech companies are making layoffs?
Layoffs.fyi data shows the US tech companies that cut the most jobs last year:
- Meta: 11,000.
- Amazon: 10,000.
- Cisco: 4,100.
- Caravan: 4,000.
- Twitter: 3,700.
Are tech companies freezing hiring?
Job opportunities for technical jobs Almost 30% less According to December data from talent acquisition firm iCIMS, hiring in the industry fell by 23% from January to December last year.
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Why are there so many layoffs now?
Lockdowns have taken a toll on consumer spending. Experiences like travel or restaurants are often off the table, so people are shifting their discretionary spending to products from tech companies like Amazon and Peloton.
It didn’t take long for consumers to return to their pre-pandemic spending patterns, according to Rucha Vangutre, senior economist at labor market analysis firm Lightcast.
“What we’re seeing is really a kind of restructuring,” Vangutre said. “What that means is that, in many cases, these companies are overhired.”
High interest rates play a role in layoffs, according to Daniel Kuem, a business professor at Columbia Business School.
“Big techs aren’t running out of cash, but they’re making huge investments in risky new business areas. And it’s very expensive to finance these things, so they’re pulling back,” said Keum.
Will tech layoffs continue in 2023?
Lee launched Layoffs.fyi in March 2020 to help laid-off tech workers gain visibility and find new jobs.
“Honestly, in 2021, I thought about decommissioning the site because I thought it had served its purpose,” Lee said. “Fast forward to 2022 to 2023, I don’t expect we’ll see another wave of layoffs.”
As of Wednesday, Layoffs.fyi has already tracked more than 100 companies that have conducted more than 26,000 layoffs by 2023.
Major layoff announcements so far this year:
- Amazon: 8,000.
- Seller: 8,000.
- Coinbase: 950.
Microsoft confirmed on Wednesday that it will cut its workforce by 10,000 this year.
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If interest rate hikes ease, Lee believes job cuts in the industry will begin to ease by the end of the year.
Tech layoffs are likely to spread to small and medium-sized tech companies this year as venture capitalists tighten their spending, Kuem said.
“You’ll see a gradual drift from big tech to the broader tech sector. Layoffs will become a little more widespread,” he said.
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Will layoffs spread to other industries in 2023?
While some industries, such as technology and media, saw an influx of layoffs, the broader labor market remained firm.
The U.S. economy added 4.5 million jobs last year, and the unemployment rate fell to a 50-year low in December from 3.7% to 3.5%.
“Across the economy, it’s not a problem we see,” VanGuthrey said. “It’s looking pretty good (for the technology industry) at the moment.”
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