While last year’s job market was remarkably strong, the tech industry was an exception.
After a huge wave of hiring 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 following technology layoffs since March 2020.
The site’s counts — which are likely an undercount — have continued apace into 2023, with over 26,000 layoffs recorded so far this year.
“The actual number of layoffs will be much higher than what’s on the site, just because most layoffs go unreported,” Layoffs.fyi creator Roger Lee told USA TODAY. “Unfortunately, I don’t see layoffs going away any time soon.”
Which tech companies are making layoffs?
Data from Layoffs.fyi shows that the US tech companies that cut the most jobs last year include:
- Target: 11,000.
- Amazon: 10,000.
- Cisco: 4,100.
- Carnival: 4,000.
- Twitter: 3,700.
Are tech companies freezing hiring?
Tech job openings were down nearly 30% from January to December last year, while hiring in the sector was down 23%, according to December data from talent acquisition firm iCIMS.
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Why are there so many layoffs now?
The lockdowns had a big effect on consumer spending. Experiences like travel or dining were pretty much out of the question, so people started shifting their discretionary spending towards products from tech companies like Amazon and Peloton.
But it wasn’t long before consumers began to revert back to their pre-pandemic spending patterns, according to Rucha Vankudre, senior economist at labor market analytics firm Lightcast.
“What we’re seeing is just a kind of renormalization,” Vankudre said. “And that means that, in many cases, these companies have over-hired.”
Higher interest rates also play a role in layoffs, according to Daniel Keum, an associate professor of management at Columbia Business School.
“It’s not that the big tech companies are short on cash, but they’re making big investments in risky new areas of business. And those things have become much more expensive to finance. So they’re pulling back,” Keum said.
Will layoffs in tech continue into 2023?
Lee started Layoffs.fyi in March 2020 to help laid-off tech workers gain visibility and land new jobs.
“Honestly, in 2021, I thought about taking the site down because I thought it had served its purpose,” Lee said. “I didn’t expect that, fast forward to 2022 to 2023, we would see another wave of layoffs.”
As of Wednesday, Layoffs.fyi has already tracked more than 100 companies that made more than 26,000 layoffs in 2023.
Key resignation announcements so far this year include:
- Amazon: 8,000.
- Sales force: 8,000.
- Coinbase: 950.
Microsoft also confirmed on Wednesday that it would reduce its workforce by 10,000 this year.
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Lee is hopeful that manufacturing job cuts will start to ease by the end of the year if interest rate hikes subside.
Keum said tech layoffs are likely to spread to small and medium-sized tech companies this year as venture capitalists tighten their spending.
“You’ll see sort of a gradual spread from 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 such as technology and media have seen an influx of layoffs, the broader job market has remained robust.
The US economy added 4.5 million jobs last year, and the unemployment rate fell from 3.7% to 3.5% in December, matching a 50-year low.
“On the economy, it’s not a problem we’re seeing,” Vankudre said. “That seems like a pretty nice niche (for the tech industry) right now.”
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You can follow USA TODAY reporter Bailey Schulz on Twitter @bailey_schulz and subscribe to our free Daily Money newsletter here for personal finance tips and business news every Monday through Friday.
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