Layoffs are making headlines again, but they’re concentrated in just one sector: tech. And those numbers are spiking, with November’s toll three times October’s, according to Layoffs.fyi, which tracks layoffs in the tech industry.
In fact, since the start of 2022, more workers in tech have been laid off than in 2020 and 2021 combined.
These layoffs are a peculiar outlier in an otherwise strong situation employment environment: Employers added more jobs than expected in October, according to Bureau of Labor Statistics data. The unemployment rate has hovered between 3.5% and 3.7% since April, bureau data shows. And quit rates — which reflect worker confidence — this year are consistently at some of the highest levels in more than 20 years, according to the Federal Reserve Bank of St. Louis.
Employment, at large, is doing well. But when layoffs are happening in the most visible sector on the internet, you’re going to hear about it.
What’s going on with layoffs in tech?
The biggest tech layoffs have occurred at high-profile companies like Twitter, which laid off about half of its staff soon after Elon Musk took the helm. Then on Nov. 16, Musk gave employees an ultimatum to commit to a new “hardcore” Twitter or take severance: More than 1,200 employees reportedly opted for the latter.
Wed Nov. 9, Meta, which owns Facebook and Instagram, laid off more than 11,000 employees — about 13% of its staff.
Wed Nov. 15, Amazon began laying off staff, with a reported goal of cutting 10,000 of its employees — about 3% of its corporate employees and less than 1% of its hourly workers.
Countless big-name companies have followed, and they run the gamut of what tech has to offer: crypto (Coinbase), e-commerce (Shopify), ridesharing (Lyft), online payments (Stripe), work management platform (Asana), online real estate broker (Redfin) and arguably the biggest name in computer software (Microsoft). The list goes on and on.
But countless isn’t quite the right word — it’s 873, as of Nov. 29. That count is thanks to Roger Lee, creator of Layoffs.fyi, who has been following layoffs in tech since 2020. NerdWallet turned to Lee for his perspective on what’s happening in the tech industry right now that’s different from previous years. Lee answered questions via email.
NerdWallet: When and why did you start tracking tech layoffs?
Roger Lee: When COVID-19 became a pandemic in early 2020, I (and others) realized that it was going to lead to a surge in startup layoffs. At the same time, I knew there were many tech companies (like Human Interest, the one I co-founded seven years ago) that were in a fortunate position to still be hiring.
I started Layoffs.fyi as a side project to create awareness around all of these tech layoffs, in the hopes of helping laid-off employees find a home at one of the startups still fortunate to be hiring. It turns out that the site also became a useful resource for the general tech community.
NW: Do you see layoffs coming before the general public, as in, are tech workers sending you tips?
RL: Yes, although on the website I only add layoffs that have been verified in some way (ex. reported by the media, announced by the company, etc.)
NW: I’m thinking about the lists of employees laid off. Also curious who counts as a tech worker; just everybody who works at a tech company, even if they’re performing a service role unrelated to technology?
NW: What are your parameters for including a company, or not?
RL: Needs to be a technology company. The data set also skews towards more modern companies (ie, those founded within the last 20 years or less).
NW: Your tracker shows, very helpfully, layoffs over time. In 2022 alone, more than 121,000 tech workers will have been laid off. That’s more laid-off workers than in 2020 and 2021 combined (95,991). What has happened this year compared with previous years in tech that prompted more layoffs?
RL: There are a lot more people working in tech today than in 2020 or 2021 (and therefore, more employees to potentially lay off).
Tech companies went on a hiring spree in late 2020 through 2021 as people increasingly turned to technology to work, shop and socialize. The Fed’s easy monetary policy also enabled tech companies to raise capital and invest in growth.
Both of these trends have sharply reversed in 2022. Faced with a slowdown in growth and a downturn in the broader economy, tech companies are cutting staff after realizing they over-hired in recent years.
Tech layoffs will stop when, and only when, it becomes clearer that the Fed is able to slow down inflation.
Roger Lee | Founder, Layoffs.fyi
NW: Is Twitter an outlier? What I mean is, is the reason Twitter ended up more than halving its workforce most clearly and obviously due to Elon Musk’s more “hardcore” approach to management? Or was the company already heading for layoffs anyway due to low ad sales and Musk accelerated that?
RL: It’s a bit of both. Twitter faces many of the same challenges that all tech companies face in the current environment, although unique circumstances may have caused their layoff to be more severe than it would otherwise have been.
NW: Your tracker shows a particular spike in November, particularly in the amount of employees laid off. Is that primarily because of recent events at Meta and Twitter? Or is the hurt more widespread?
November has been the worst month so far in 2022 (45,000 tech employees laid off, which is over 3x the number from October).
RL: Meta, Twitter, Salesforce and Cisco account for 19,000 of those employees.
NW: Layoffs at bigger companies seem like a golden opportunity for startups to scoop up talent from a newly created pool. Or is the startup economy itself in a slump due to rising interest rates, and VCs tightening their belts in the wake of big losses?
RL: For startups fortunate to still be hiring, the layoffs in Big Tech present a unique opportunity to recruit a caliber of talent that would’ve previously been impossible to attract.
That said, many startups are struggling alongside the bigger tech companies. In fact, earlier this year almost all of the layoffs were coming from startups. Only recently have layoffs started impacting bigger tech companies as well.
NW: Do you have a sense of what, if anything, could turn these trends around?
RL: Tech layoffs will stop when, and only when, it becomes clearer that the Fed is able to slow down inflation.