Tech Layoffs Reach Highest Level Since Dot-Com Crash, But Job Market Remains Strong
The tech sector has been cutting jobs for months, and these cuts are the highest since the dot-com crash in the early 2000s. As a result of economic uncertainty and digital advertisers spending less, Big Tech firms have been forced to course correct by reducing headcount.
More than 500 tech companies have announced layoffs since July 2022, with Google, Meta, Microsoft, and Amazon each cutting more than 10,000 jobs. The latest round of layoffs in the tech industry follows a period of rapid growth during the COVID-19 pandemic.
Data from the Bureau of Labor Statistics (BLS) shows that there are 11 million job openings across the US. Currently, for every unemployed worker in the United States, there are 1.9 job openings available. In January, there was a notable rise in hiring, with employers creating 517,000 jobs. This is good news for laid-off tech workers, as data shows that most of them are landing new jobs relatively quickly after losing their jobs.
On Friday, Alphabet, the parent company of Google, announced that it will be eliminating 12,000 employees – representing 6% of its employees – making it the largest layoff in its history. Additionally, the parent company of Facebook laid off 11,000 people, about 13% of its workforce, in November of 2022. Snap, the company behind Snapchat, said in August that it was letting go of 20% of its staff, equating to about 1,200 employees.
Nearly 60,000 tech jobs have been cut in the last month alone, but many of the laid-off tech workers are bouncing back quickly and finding employment at a faster pace compared to before the pandemic.
In a separate report out Monday, the economics team at Goldman Sachs indicated there are three characteristics shared by the big name companies that have recently announced large numbers of layoffs: many are in the technology sector, many hired aggressively during the pandemic, and many have seen more sizable declines in their stock prices.
At the end of the day, tech layoffs are not recessionary. The Goldman economists said that tech increased its headcount 41% above its pre-pandemic levels versus the 2% job growth the rest of the economy has seen. Plus, the job finding rate among unemployed individuals has been high by historical standards.
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