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 from 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 tallies – which are likely an undercount – have continued at a fast clip in 2023, with more than 26,000 layoffs recorded so far this year.
“The number of actual layoffs is going to be much higher than what’s on the site just because most layoffs don’t get reported,” Layoffs.fyi creator Roger Lee told USA TODAY. “Unfortunately, I don’t see the layoffs going away anytime soon.”
Which tech companies are doing layoffs?Layoffs.fyi data shows the U.S. tech companies that trimmed 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 openings for tech jobs dropped nearly 30% from January to December of last year, while hires in the industry were down 23%, according to December data from talent acquisition company iCIMS.
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Why are there so many layoffs right now?Lockdowns had a major effect on consumer spending. Experiences like travel or restaurants were largely off the table, so people began to shift their discretionary spending to products from tech companies like Amazon and Peloton.
But it didn’t take long before consumers started reverting to their pre-pandemic spending patterns, according to Rucha Vankudre, a senior economist at labor markets analytics firm Lightcast.
“What we’re seeing is really just sort of a renormalization,” Vankudre said. “And that means that in many cases, these firms over-hired.”
Higher interest rates also play a role in layoffs, according to Daniel Keum, an associate professor of business at Columbia Business School.
“It’s not that big techs are running short on cash, but they’re making huge investments into risky new business areas. And these things have gotten a lot more expensive to fund. So they’re pulling 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 had thought about taking the site down because I thought it had served its purpose,” Lee said. “I did not expect that, fast forward to 2022 to 2023, we would see another wave of layoffs.”
As of Wednesday, Layoffs.fyi has already tracked upward of 100 companies conducting more than 26,000 layoffs in 2023.
Major layoff announcements so far this year include:
Amazon: 8,000.Salesforce: 8,000.Coinbase: 950.Microsoft on Wednesday also confirmed that it would be reducing its workforce by 10,000 people this year.
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Lee has hope that job cuts in the industry will start subsiding by the end of the year if interest rate hikes slow down.
Keum said tech layoffs will likely spread to small- and medium-sized tech companies this year as venture capitalists tighten their spending.
“You will see sort of a gradual rippling out from the big tech to the broader tech industry. The layoffs will become a little bit more widespread,” he said.
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Will layoffs spread to other industries in 2023?While certain industries like tech and media have seen an influx of layoffs, the broader labor market has remained sturdy.
The U.S. 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, this is not a problem that we’re seeing,” Vankudre said. “This seems really pretty niche (for the tech industry) at the moment.”
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