Examining the Impact of Tech Layoffs in Silicon Valley
The tech industry has been hit hard by job losses over the past year, with more than 2.5 lakh tech employees laid off worldwide since January 2023. This is due to the pandemic-induced recession and the tech industry's massive over-hiring during the pandemic. Major companies like Amazon, Microsoft, Google, Salesforce, and others have been the main contributors to this job loss, with more cuts expected in the coming months.
Silicon Valley, in the southern San Francisco Bay Area of California, is home to the world's top tech firms and accounts for 13.1 percent of California's total gross domestic production or GDP, and contributes to 9.6 percent of total employment in the province. Despite the layoffs, the area added at least 22,000 more jobs through the end of the year, with Apple CEO Tim Cook calling layoffs a “last resort kind of thing.”
However, Apple is firing contractors outright, sources said, as a way to thin out the workforce without having to pay severance or face potential litigation from employees alleging wrongful termination. This has caused tech layoffs to become more widespread than ever before, and could ruin big tech's chance at courting the best of the best down the road.
The Silicon Valley Index, an annual overview of the region's economy and health, found that the region added 88,000 jobs between mid-2021 and mid-2022, a faster rate than the rest of the country. But economists and industry watchers have increasingly pushed back on the gloom these layoffs have created, noting that tech companies still employ more people today than they did three years ago, at the beginning of the pandemic.
The report also noted the wealth gap in the region, with the top 0.001% of households holding an estimated 4% of the collective wealth, when “ultra-high net worth” households are included. Eight Silicon Valley residents in San Mateo and Santa Clara counties hold more wealth than the bottom 50% combined, or nearly 500,000 households.
The pandemic has also changed the way people work in Silicon Valley, with about 35% of people in Silicon Valley working from home in 2022, up 7% from 2021, representing the highest concentration of remote workers in the nation.
Overall, the tech industry has still grown at nearly twice the rate of overall employment in the region, the study found.
0. “Booms and busts: Silicon Valley economy divided – San José Spotlight” San José Spotlight, 14 Feb. 2023, https://sanjosespotlight.com/booms-and-busts-silicon-valley-santa-clara-county-san-jose-economy-divided/
1. “Silicon Valley's economy not in ‘crisis'” San Francisco Chronicle, 15 Feb. 2023, https://www.sfchronicle.com/tech/article/silicon-valley-s-economy-crisis-17784109.php
2. “Apple has begun firing contractors amid mass tech layoffs: sources” New York Post , 16 Feb. 2023, https://nypost.com/2023/02/16/apple-has-begun-firing-contractors-amid-tech-layoffs-sources
3. “Apple may be cutting contractors in an effort to slash costs” AppleInsider, 16 Feb. 2023, https://appleinsider.com/articles/23/02/16/apple-may-be-cutting-contractors-in-an-effort-to-cut-costs
4. “Have Sweeping Layoffs Broken Employee Trust in Big Tech?” Tech.co, 16 Feb. 2023, https://tech.co/news/layoffs-employee-trust-big-tech
5. “What Layoffs? Data Shows Silicon Valley Is More Boom Than Bust” CNET, 15 Feb. 2023, https://www.cnet.com/culture/what-layoffs-data-shows-silicon-valley-is-more-boom-than-bust
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