It was just last month that President Biden insisted the U.S. economy "is strong as hell," but thousands of employees already laid off or who are expecting bad news in the coming weeks may beg to differ.
According to Forbes, the combination of macroeconomic factors such as inflation, recession risk, and spiking interest rates are pinching corporate profits, leading, in many cases, to "agitated investors." But something else is at play—many tech companies, where a number of job cuts are occurring, overestimated their growth potential during the pandemic.
Big-name layoffs have cropped up repeatedly throughout 2022. But if it feels like more and more tech and financial firms are gearing up for massive reductions, you’re not crazy – it’s happening.
Between April and May 2022, the number of tech-based companies laying off workers more than doubled, while the number of laid off workers quadrupled. Since then, only September has seen the number of newly laid off tech employees fall below 10,000.
Though we’re only 1/3 of the way through the month, November has seen some of the largest layoffs thus far. While a “mere” 62 companies have said goodbye to workers, over 23,000 tech employees have lost their jobs this month. (Forbes)
Among the big names to announce cuts are:
- Amazon plans to cut about 10,000 employees from its devices organization, human resources, and retail division.
- Twitter chief Elon Musk halved the company's workforce, cutting about 3,700 jobs, took away the remaining employees' free lunches, and warned bankruptcy could be in the company's future.
- Meta, Facebook and Instagram's parent company, announced 11,000 employees would be laid off, with recruiting and business teams hit harder than other sectors. CEO Mark Zuckerberg acknowledged he thought the growth experienced during the pandemic would be permanent and increased spending accordingly. "Unfortunately, this did not play out the way I expected," he said. "I got this wrong, and I take responsibility for that."
- Real estate company Redfin slashed 13 percent of its workforce and shut down its home-flipping business amid a slump in the housing market.
- Despite the busiest season upon us, FedEx Freight is furloughing employees in some of its U.S. markets over "current business conditions impacting volumes." The company could bring them back depending on the environment and "as business circumstances allow."
- Payment processing platform Stripe announced it would cut 14 percent of its staff, about 1,100 employees, citing "stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding."
- Microsoft let 1,000 employees go worldwide. "Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly," the company said.
- Robinhood, a financial trading platform, laid off 23 percent of its workforce, citing a "deterioration of the macro environment, with inflation at 40-year highs accompanies by a broad crypto market crash."
- Rideshare company Lyft slashed 700 jobs, or 13 percent of its staff, this month, with the CEO pointing to inflation, increased insurance costs, and "a probable recession sometime in the next year."
- Coinbase, a crypto exchange platform, cut the size of its workforce by 18 percent "to ensure we stay healthy during this economic downturn," CEO Brian Armstrong said.
Despite Biden painting a rosy economic picture, the layoffs in these companies and scores of others are a big red flag.
Normally Amazon would be gearing up for Cyber Monday and the Christmas shopping season.
— Wall Street Silver (@WallStreetSilv) November 14, 2022
The fact that these layoffs are coming BEFORE the holidays is just about the biggest recession signal you will ever see. 🔥 pic.twitter.com/y45nL3TGN2
