Layoffs Show That Tech Jobs Aren’t Sacred Anymore

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Layoffs Show That Tech Jobs Aren’t Sacred Anymore

By Antonia Mufarech and Drake Bennett | Bloomberg Businessweek | February 7, 2024

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The tech industry is also getting used to job cuts. Starting in late 2022, technology companies began conducting rounds of layoffs that were deeper and broader than anything in recent memory. So far this year, over 32,000 tech workers have lost their jobs. Alphabet, Amazon.com, Microsoft, Salesforce, Snap and Zoom have all announced head count reductions in recent weeks. On Feb. 7 Bloomberg reported that Tesla staff are bracing for potential jobs cuts.  The cuts have caused a sense of unease throughout tech, which has long been one part of the economy where work has been easy to come by, well-paid and safe. 

Nevertheless, these don’t necessarily add up to a national trend in USA. Unemployment is below 4%, and the US economy continues to add jobs. US companies increased their payrolls by 353,000 in January, the highest number in a year, surpassing predictions. The latest data from the US Bureau of Labor Statistics show that “layoffs and discharges” are at the same low levels where they spent much of 2023.

The information industry, which in the BLS’s classification includes tech, media and publishing, has fared better than many others. Tech companies themselves have continued to hire even as they’ve let some workers go, with the industry ending January with 18,000 more employees than the month before.

Still, the latest round of cuts does suggest something has changed. There has long been a cultural taboo around layoffs in Silicon Valley, where employers went to great pains to woo and pamper talent.  That taboo has now been broken. Some industry leaders have characterized the shift as a return to a purer kind of tech enterprise not managers managing managers as put by Marck Zuckerberg.

However, there’s another interpretation: The industry is just becoming more like the rest of the economy. During the pandemic, tech seemed to inhabit its own reality. While other businesses struggled as global supply chains fragmented and people were trapped at home, the industry boomed. Profits were fat, and companies furiously hired engineers, project managers and software salespeople to try to keep up with demand. Tech CEOs proclaimed the world had entered a new era—not only of remote work, but of tech-centered virtual human interaction.

With plans to change the world and easy access to cheap capital, Silicon Valley companies have a reputation for spending big to develop technologies and lock in customers without regard for short-term profits.  The job cuts are a sign that things are now swinging the other way. Growth at tech companies has slowed, and higher interest rates have choked off much of the money that for years fed startups, even as the broader economy continues to expand at a healthy clip. And so Silicon Valley is settling into a pattern familiar in many industries: Companies hire when times are good, let people go when they’re not—and sometimes let people go even when they’re not so bad.

3 key takeaways from the article

1. The tech industry is also getting used to job cuts. Starting in late 2022, technology companies began conducting rounds of layoffs that were deeper and broader than anything in recent memory. So far this year, over 32,000 tech workers have lost their jobs.  Nevertheless, these don’t necessarily add up to a national trend in USA. Unemployment is below 4%, and the US economy continues to add jobs.
2. Still, the latest round of cuts does suggest something has changed. There has long been a cultural taboo around layoffs in Silicon Valley, where employers went to great pains to woo and pamper talent. 
3. That taboo has now been broken. Some industry leaders have characterized the shift as a return to a purer kind of tech enterprise not managers managing managers as put by Marck Zuckerberg.  However, there’s another interpretation: The industry is just becoming more like the rest of the economy. 

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Topics:  Technology, Employment, Economy