While last year’s labor market was remarkably strong, the tech industry was an exception.
After a massive 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 at more than 1,000 tech companies last year, according to Layoffs.fyi, a website that has been tracking tech layoffs since March 2020.
The website’s counts – which are likely an undercount – have continued at a rapid pace into 2023, with more than 26,000 layoffs recorded so far this year.
“The actual number of layoffs is going to be much higher than what’s on the site simply because most layoffs go unreported,” Roger Lee, creator of Layoffs.fyi, told USA TODAY. “Unfortunately, I don’t see the layoffs going away any time soon.”
Which tech companies lay off?
Data from Layoffs.fyi shows that US tech companies that cut the most jobs last year include:
- Meta: 11,000.
- Amazon: 10,000.
- Cisco: 4,100.
- Carvana: 4,000.
- Twitter: 3,700.
Are tech companies freezing hiring?
Job postings for tech jobs fell nearly 30% from January to December last year, while hiring in the industry fell 23%, according to December data from the research firm. iCIMS talent acquisition.
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Why are there so many layoffs right now?
Lockdowns have had a major effect on consumer spending. Experiences like travel or restaurants were largely excluded, so people started shifting their discretionary spending to products from tech companies like Amazon and Peloton.
But it didn’t take long before consumers began to revert to their pre-pandemic spending habits, according to Rucha Vankudre, senior economist at labor markets analytics firm Lightcast.
“What we’re seeing is really just kind of a renormalization,” Vankudre said. “And that means that in many cases these companies have over-hired.”
Higher interest rates are also playing a role in layoffs, according to Daniel Keum, associate professor of business at Columbia Business School.
“It’s not that big tech is running out of cash, but they’re making huge investments in risky new lines of business. And those things have become much more expensive to fund. So they’re pulling out,” said Keum.
Will tech layoffs continue in 2023?
Lee launched Layoffs.fyi in March 2020 to help laid-off tech employees gain exposure and land new jobs.
“Honestly, in 2021, I had thought about deleting the site because I thought it had served its purpose,” Lee said. “I didn’t expect that, moving quickly from 2022 to 2023, we would see another wave of layoffs.”
As of Wednesday, Layoffs.fyi had already tracked more than 100 companies that made more than 26,000 layoffs in 2023.
Major layoff announcements so far this year include:
- Amazon: 8,000.
- Sales force: 8,000.
- Coinbase: 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 the job cuts in the industry will start to ease by the end of the year if interest rate hikes slow.
Keum said tech layoffs are likely to spread to small and medium tech companies this year as venture capitalists tighten spending.
“You’ll see kind of a gradual spread from big tech to the broader tech industry. Layoffs will become a bit more prevalent,” he said.
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Will layoffs spread to other industries in 2023?
While some industries like tech and media have seen an influx of layoffs, the broader labor market has remained strong.
The US economy added 4.5 million jobs last year and the unemployment rate in December fell from 3.7% to 3.5% to match a 50-year low.
“Across the economy as a whole, it’s not a problem that we see,” Vankudre said. “It really seems like a niche (for the tech industry) at the moment.”
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