🇺🇸 That’s A Lot of Layoffs

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ECONOMY

That's A Lot of Layoffs

More layoffs are announced in the tech sector practically every day, as high interest rates, slowing growth, and a return to post-pandemic norms have made an outsized impact on the industry. This is true of newer companies like Zoom, industry leaders such as Amazon, and even IBM – which has been in business for over 100 years.

Reporting from the Left: How Big Tech's pandemic bubble burst (CNN)

Reporting from the Right: Google workers demand 'psychological safety' after layoffs (New York Post)

From the Flag: As economists, journalists, investors, and employees try to make sense of the current conditions, here’s more from both sides of the political aisle.

RIGHT-LEANING SENTIMENT

Big Tech Is Coming Down Off Pandemic-Era Sugar High

• Despite current struggles, the Biden administration is attempting to punish Big Tech companies because of past successes.

• The tech sector exploded during the pandemic and investment capital flowed in freely, but now that’s come to a screeching halt.

• After years of complaints from investors concerning dividends and stock buybacks, Silicon Valley is “paying Wall Street back” while laying off its workers.

“Biden is coming for your job” Carl Szabo, Fox News Opinion: “Layoffs in America’s technology sector have dominated 2023 business news already as stock values of these companies have plummeted. … And yet, Biden’s DOJ just filed a lawsuit against Google, claiming it is some unstoppable Goliath. The FTC is citing antitrust concerns to block Meta’s acquisition of a virtual reality business and Microsoft’s acquisition of a video game company. Two plus two doesn’t equal five – it’s clear that one of these things is wrong, either the facts or the FTC/DOJ lawsuits. … Make no mistake: politics and ideology are driving this war on American tech, not consumer protection. … This is merely a pattern from lifetime government bureaucrats put in place by President Joe Biden. It is a ‘by any means necessary’ approach to governance that tends to set aside facts, the law and the Constitution in pursuit of political goals.”

“The tech companies have no clothes” Om Malik, The Spectator: “The entire technology ecosystem… after nearly a decade of unprecedented boom, is afflicted by the disease of wealth. It’s grown fat, rich and bloated. Especially during the pandemic, the total headcount for Silicon Valley was on the way up. Yet the economic downturn, slowing growth, the end of cheap money, and an increasingly bellicose investment community are making Silicon Valley now pause and undertake layoffs, a word we have not heard in these parts since the 2008 financial crisis. … When the pandemic hit, a lot of businesses got pulled forward, meaning companies spent like crazy to grow and capitalize. Everyone felt happy about the hiring binge. Free-flowing revenues, a stock market rewarding tech giants with trillion-dollar valuations, capital easier to find than a decent espresso in San Francisco… The tech industry’s lack of moderation is often followed by a reality check.”

One more opinion piece from the Right: Zuckerberg and Intel are shipping the proceeds from their layoffs straight to Wall Street Therese Poletti, MarketWatch Opinion

LEFT-LEANING SENTIMENT

Big Tech Is Down Bad, and Its Workers Are in New Territory

• Employees of many tech firms have been treated very well in recent years, so current struggles are compounded by culture shock.

• Big Tech soared during the pandemic as e-commerce exploded, and too many workers were hired – this is a correction.

• If the Fed pushes too hard in its fight against inflation and layoffs spread to other sectors, the economy will be in trouble.

“The Era of Happy Tech Workers Is Over” ​​Nadia Rawlinson, New York Times Opinion: “Silicon Valley as we know it — with its radically transparent company cultures, empowered employees, flat hierarchies and rarefied perks like nap pods and free food — is quickly disappearing. And it’s unlikely to return. For nearly two decades, tech companies heralded an approach that centered on making workers happy with benefits that were intended to seamlessly integrate work and life. … unlimited vacation… high salaries and equity packages… (all) to dominate the war for talent. The rapid growth and success of Silicon Valley companies, driven in part by their unique people practices, reimagined workplace culture for a generation. Times, as they say, are a-changin’. … Tech chief executives are now optimizing more for profitability than for growth at all costs, sometimes at the expense of long-held organizational beliefs.”

“What the mass tech layoffs mean for the US economy” Heather Long, Washington Post Opinion: “Hardly a day goes by that there aren’t announcements of mass layoffs at marquee tech firms… This is a warning for the economy. … the consumer spending boom is fading. … There’s a reality check going on in the tech sector that’s not happening elsewhere. Tech didn’t just rebound rapidly from the 2020 pandemic recession; it benefited from so many people being stuck at home and spending more time on devices. Americans’ desperation to order toilet paper and find distractions for their kids was a boon for Big Tech, and the industry responded accordingly. Amazon, for example, doubled its head count… and the sector overall went on a hiring spree of the sort not seen since the late 1990s. … Executives said that they believed the economy had changed forever and that they needed to win the talent war in the hard-to-find-workers era.”

One more opinion piece from the Left: Think Big Tech’s thousands of layoffs indicate a coming recession? Think again Dean Baker, Los Angeles Times Opinion

FLAG THIS

Big Tech Layoffs by the Numbers

Since the year began, 334 tech firms have laid off 101,617 employees, according to a startup founder that’s been tracking tech layoffs since COVID-19. Of those companies, 37% are based in the San Francisco Bay area.

2023’s most significant job cuts have been at Google-parent Alphabet (12,000), Microsoft (10,000), Salesforce (8,000), and Amazon (8,000). Meanwhile, in the wake of the FTX crash, cryptocurrency firms have laid off a combined 2,187 workers.

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