While last year’s job market was remarkably strong, the technology industry was an exception.
After a massive hiring spree 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 tracking tech layoffs since March 2020.
The site’s numbers — which are likely an undercount — have continued at a brisk clip in 2023, with more than 26,000 layoffs recorded so far this year.
“The number of actual layoffs is going to be much higher than what̵[ads1]7;s on the site just because most layoffs go unreported,” Layoffs.fyi creator Roger Lee told USA TODAY. “Unfortunately, I don’t see the layoffs disappearing anytime soon.”
Which tech companies are making layoffs?
Layoffs.fyi data shows the US tech companies that trimmed the most jobs last year include:
- Meta: 11,000.
- Amazon: 10,000.
- Cisco: 4100.
- Caravan: NOK 4,000.
- Twitter: 3700.
Are tech companies freezing hiring?
Job openings for tech jobs fell nearly 30% from January to December last year, while hiring in the industry fell 23%, according to December data from talent acquisition firm iCIMS.
Bed Bath & Beyond layoffs:More layoffs at Bed Bath & Beyond looming as sales slump and bankruptcy fears loom
Why are there so many layoffs right now?
Shutdowns had a major effect on consumption. Experiences like travel or restaurants were largely off the table, so people started shifting their discretionary spending to products from tech companies like Amazon and Peloton.
But it didn’t take long for consumers to start returning to their pre-pandemic spending patterns, according to Rucha Vankudre, senior economist at labor market research firm Lightcast.
“What we’re seeing is really just a kind of renormalization,” Vankudre said. “And that means that in many cases these firms are overstaffed.”
Higher interest rates also play a role in layoffs, according to Daniel Keum, an associate professor of business at Columbia Business School.
“It’s not that big tech is short of money, but they’re making huge investments in new risky business areas. And these things have become much more expensive to fund. So they’re pulling back,” Keum said.
Will technical layoffs continue in 2023?
Lee started Layoffs.fyi in March 2020 to help laid-off tech workers gain visibility and land new jobs.
“Honestly, in 2021 I was thinking about taking the site down because I thought it had served its purpose,” Lee said. “I would not expect that we would see another wave of layoffs going forward until 2022 to 2023.”
As of Wednesday, Layoffs.fyi has already tracked over 100 companies that made more than 26,000 layoffs in 2023.
Key layoff announcements so far this year include:
- Amazon: 8,000.
- Salesforce: 8,000.
- Coin base: 950.
Microsoft also confirmed on Wednesday that it would reduce its workforce by 10,000 people this year.
Terminations from Salesforce:Salesforce to cut 10% of workforce due to broader technology layoffs
Lee is hopeful that industry cutbacks will begin to ease by the end of the year if rate hikes slow.
Keum said tech layoffs are likely to spread to small and midsize tech companies this year as venture capitalists tighten their costs.
“You will see a sort of gradual curling out from the big tech to the broader tech industry. The layoffs will be a little more widespread,” he said.
Job Report:Employment outside agriculture increased by 223,000
Will layoffs spread to other industries in 2023?
While certain industries such as technology and media have seen an influx of layoffs, the broader labor market has remained solid.
The US economy added 4.5 million jobs last year, and the unemployment rate in December fell from 3.7% to 3.5% to match a 50-year low.
“Across the economy, this is not a problem we see,” Vankudre said. “This really seems quite niche (for the tech industry) at the moment.”
Holiday bonuses:As recession fears grow and worker shortages ease, holiday bonuses shrink in 2022
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.