While last year the job market was remarkably strong, the tech industry was an exception.
After a huge hiring spree in the first two years of the pandemic, industry giants like Amazon and Meta reversed course in 2022. There were at least 154,000 layoffs from more than 1,000 tech companies last year, according to Layoffsa website that tracks tech layoffs since March 2020.
The site’s numbers — likely undercounted — continued at a rapid clip in 2023, with more than 26,000 layoffs recorded so far this year.
“The number of actual layoffs will be much higher than what’s on the site just because most layoffs go unreported,” Roger Lee, creator of Layoffs.fyi, told USA TODAY. “Unfortunately, I don’t see the layoffs ending anytime soon.”
What tech companies are laying off workers?
Layoffs.fyi data shows that the US technology companies that cut the most jobs last year include:
- Meta: 11,000.
- Amazon: 10,000.
- Cisco: 4100.
- Karvana: 4000.
- Twitter: 3,700.
Are tech companies freezing hiring?
Technical job opportunities dropped nearly 30% From January to December last year, while industry hires fell 23%, according to December data from talent acquisition firm iCIMS.
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Why are there so many layoffs now?
Lockdowns have had a huge impact on consumer spending. Experiences like travel or restaurants were pretty much off the table, so people started shifting their discretionary spending to products from tech companies like Amazon and Peloton.
But it didn’t take long before consumers started to return to their pre-pandemic spending patterns, according to Rocha Vancodri, chief economist at labor market analytics firm Lightcast.
“What we’re seeing is really a kind of re-normalisation,” Vancodry said. “This means that in many cases, these companies have hired too much.”
Higher interest rates also play a role in layoffs, according to Daniel Keum, associate professor of business administration at Columbia Business School.
“It’s not that they’re short of cash, but they’re making huge investments in risky new business areas. And it’s getting more expensive to fund those things. So they’re holding back,” Keum said.
Will Tech Layoffs Continue in 2023?
Lee started Layoffs.fyi in March of 2020 to help laid-off tech employees gain visibility and land new jobs.
“Honestly, in 2021, I considered taking the site down because I thought it served its purpose,” he told me. “I didn’t expect that, fast forward from 2022 to 2023, that we would see another wave of layoffs.”
As of Wednesday, Layoffs.fyi has already tracked more than 100 companies that have made more than 26,000 layoffs in 2023.
Major layoff announcements so far this year include:
- Amazon: 8,000.
- Sales force: 8,000.
- Coin: 950.
Microsoft also confirmed on Wednesday that it will cut its workforce by 10,000 people this year.
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Lee is hopeful that job cuts in the industry will start to fall by the end of the year if the rise in interest rates slows.
Tech layoffs are likely to spread to small and medium-sized tech companies this year, Keum said, as venture capitalists tighten their spending.
“You’re going to see kind of a gradual spillover from big tech into the broader tech industry. The layoffs are going to get a little bit more widespread,” he said.
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Will layoffs spread to other industries in 2023?
While some industries like technology and media have seen an influx of layoffs, the broader job market has remained strong.
The US economy added 4.5 million jobs last year, and the unemployment rate fell in December from 3.7% to 3.5%, matching a 50-year low.
“Across the economy, this is not an issue that we see,” Vancodry said. “This really seems like a very niche (for the tech industry) right now.”
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