Tens of thousands of tech workers were laid off within days, as tech giants including Meta, Twitter, Salesforce, and others lost staff over the last period of the year. At least 20,300 U.S. tech workers were fired from their jobs in November and more than 100,000 since the start of the year, according to Layoffs.fyi, which tracks the layoffs in the field.
Tech workers reported huge dips in confidence in their job security over the summer, as news of layoffs, hiring freezes and revoked offers put a damper on what has so far been a recovery from the Covid-led pandemic. workers.
But the latest stocks are converging all at once as companies adjust the hiring course and recognize how rising interest rates are hindering their growth plans, says Julia Pollak, chief economist at ZipRecruiter.
He says the numbers of layoffs, even in the thousands, “aren’t surprising” given how the Fed’s hike in interest rates has made it harder to borrow companies, caused share prices to drop, and US products too expensive for overseas markets.
The latest economic volatility disproportionately affects technology and could impact other industries downstream, adds Pollak.
How technology layoffs could impact the economy
The cuts to the tech sector will have a ripple effect: fewer companies prepare to go public, so investment banks take a hit. Businesses work to quickly save money by cutting advertising spend, which also impacts media companies. Businesses shrink their workforce and suddenly no longer need HR staff and recruiters.
And lower-tier workers will be hardest hit “as companies strengthen their hiring needs and focus on experienced talent as they fill new roles,” says Josh Brenner, CEO of the Hired technology jobs market.
That said, layoffs “have so far been concentrated in tight sectors in Silicon Valley and Wall Street,” Pollak says, and are “still offset by tremendous economic resilience on Main Street,” where employers are struggling to hire for keep pace with consumer demand in the travel, hospitality, leisure and other services sectors.
Hiring is still strong despite economic headwinds, according to the Department of Labor’s latest job report, and Pollak says employers are adding 60% more jobs each month than before Covid. Jobs in the healthcare sector and in large corporations with over 5,000 workers are doing particularly well. Layoffs remain historically low at 1.3 million, or less than 1% of the workforce, and there are still nearly two jobs for every available worker.
Pollak says that starting October 2022 is the best year on record (since 2000) for having the lowest number of layoffs per month. That could change in the last months of the year, at which point it could remain just below the record number of layoffs of 2021.
Even with tens of thousands of tech workers laid off this month, “overall, it’s still largely offset by what’s happening in the blue-collar industries and manual service sectors where companies hoard workers and are very reluctant to let them go.” , says Pollak.
Redundant workers still have opportunities, but perhaps not in the tech sector
Newly laid-offs will face increased competition on the labor market, which since 2021 has favored workers able to negotiate big wage increases, better hours, flexible hours and generally better jobs.
That said, says Pollak, “many tech companies with strong profit margins are either seeing their revenues grow or are stable and still hiring. In companies struggling to find talent over the past year, talent acquisition teams are sitting. al ready to download the spreadsheets listing the redundant workers and start making calls. “
Brenner agrees, referring to Hired’s Technology Salary 2022 report showing “the window to acquire tech talent has narrowed and employers continue to broaden their talent pipeline to ensure they get the best talent needed.”
Tech workers and tech company workers will still have plenty of job opportunities in smaller companies and outside the tech sector, Pollak says, including healthcare, retail, government, and even agriculture. People looking for tech jobs on Hired are also pouring into jobs in financial services, Brenner adds.
Most tech job seekers stay in the industry, but have other options. According to data from ZipRecruiter, 74% of tech workers who started a new job in the past six months remained in the tech industry, according to an October poll of 2,500 Americans.
Of the 26% who found jobs in other industries, 6% entered retail or e-commerce, 5% went to work for a financial technology company, 2% moved into service and 2% switched to professional business services.
“Workers will likely have to accept less attractive offers than they found in the heart of the tech sector,” he adds, “but these will continue to be relatively highly paid jobs with attractive prospects for professional growth, enormous flexibility and autonomy.”
One final thought, adds Pollak, is how the turmoil in the tech industry can motivate some people to start their own businesses.
“Many of today’s best tech companies were born in the shadow of the Great Recession,” he says, such as Airbnb, Uber and Dropbox. “This is obviously not the best financing environment to start a business, but we may still see some people becoming entrepreneurial out of necessity. With a lot of tech geniuses dumped on the street at the same time, they could find themselves and create a shoddy tech startup that could become. the next FAANG company. “
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