Tech Layoffs in 2021: A Look at the Impact on Silicon Valley
By The tech industry has seen unprecedented levels of layoffs over the past few years, and 2021 was no exception.[0] According to Layoffs.FYI, an online database cataloguing job cuts globally, over 100,000 tech workers lost their jobs across 344 firms in the first six weeks of the year, and more than 216,000 tech employees have been laid off since the start of 2022.[1] Google's parent company Alphabet Inc. laid off over 12,000 of its employees, Microsoft Corp. announced plans to lay off 10,000, Yahoo laid off 20%, and Amazon, Salesforce, and IBM were also among the notable layoffs.[2]
The effects of these layoffs are felt not only in the tech sector, but beyond. Joint Venture Silicon Valley recently released its annual Silicon Valley Index, a high-level overview of the region’s economy and health in the past year.[3] Silicon Valley is defined in the report to include Santa Clara and San Mateo counties, as well as Fremont, Newark, Union City in Alameda County, and Scotts Valley in Santa Cruz County.[4] The report revealed that while Silicon Valley added 88,000 jobs from mid-2021 to mid-2022, a growth rate of 5% that outpaced the nation, the tech sector accounted for 16,000 of those jobs.[3]
The layoffs have also had an impact on the area’s population, with 91,000 people leaving Silicon Valley over the past two years.[5] The remote work phenomenon is likely playing a role in the exodus, as 35% of people in Silicon Valley worked from home in 2022, up 7% from 2021.[6]
The report also revealed staggering wealth gaps in the region, with 85 billionaires in 2021, and 220,000 households with less than $5,000 in their bank accounts.[7] In San Mateo and Santa Clara counties, the top 0.001% of households hold an estimated 4% of the collective wealth, and the top 1% hold about 37% of the wealth.[7] This highlights the stark differences between those who are able to capitalize on the tech industry and those who are unable to benefit from its success.
The covid-19 pandemic was a “bonanza” for tech companies, leading to an increase in hiring.[8] But as the pandemic has moderated, tech companies have had to recalibrate and reduce their workforces.[8] This has led to a flood of talent in the market, creating a hiring crisis.
0. “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
1. “How layoffs, lottery worries with H-1B visas are steering people to the EB-5 Visa” Economic Times, 13 Feb. 2023, https://economictimes.indiatimes.com/nri/work/how-layoffs-lottery-worries-with-h-1b-visas-are-steering-people-to-the-eb-5-visa/articleshow/97823423.cms
2. “Zoom to lay off corporate employees – The Ticker” The Ticker, 16 Feb. 2023, https://theticker.org/10111/business/zoom-to-lay-off-corporate-employees
3. “As Big Tech cuts workers, other industries are desperate to hire them” MarketWatch, 17 Feb. 2023, https://www.marketwatch.com/story/as-big-tech-cuts-workers-other-industries-are-desperate-to-hire-them-87cf6590
4. “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
5. “New Silicon Valley Index Report Released” NBC Bay Area, 18 Feb. 2023, https://www.nbcbayarea.com/news/local/silicon-valley-index-released/3160713
6. “State of the Valley report for 2023 shows region in state of ‘flux' – Silicon Valley Business Journal” The Business Journals, 15 Feb. 2023, https://www.bizjournals.com/sanjose/news/2023/02/15/p4-cover-state-of-the-valley.html
7. “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/
8. “Fresh tech layoffs erase 400 more Bay Area jobs, overall total hits 20,000” The Mercury News, 14 Feb. 2023, https://www.mercurynews.com/2023/02/14/tech-job-layoff-palo-alto-san-ramon-san-francisco-economy-sap-twilio
