- Layoffs tend to peak in January. In many cases, it makes sense for companies to adjust their budgets.
- Many tech companies are now laying off in anticipation of a recession.
- Amazon has told employees it will cut 18,000 jobs, the largest layoff in the company’s history.
Happy new year! Don’t hit the door on the way!
For all the layoffs that swept American companies in the final months of 2022, this month is poised to bring even more layoffs. January has historically been the worst month for job cuts, according to U.S. government data, with some companies looking to cut costs ahead of a possible recession.
At the very least, it’s a double blow that could make for a tougher than usual January for tech companies that grew big early in the pandemic.
Amazon CEO Andy Jassy has already told staff that the company will cut just over 18,000 employees, making it the largest layoff in the company’s history. Compass, a real estate broker, also informed employees that it will be laying off for the third time in eight months. Salesforce announced this week that it will cut his 10% of its workforce.
Technology setbacks have set this industry apart from many others where reductions are not widespread. In fact, new numbers on Friday show that the US economy continued to add jobs at a reasonable pace in his December. Still, some corporate leaders worried about this year prefer playing it safe.
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There are many reasons why January tends to be a popular month for layoffs, Cary Cooper, a professor of organizational psychology at the University of Manchester, told Insider.
Since January 1 marks the start of a new fiscal year for most businesses, it makes tax sense for companies to adjust their budgets to cut labor costs, he said. It is also a time for employers to ask themselves:
Companies also often cut jobs after the holidays “so they don’t look like Scrooge,” Cooper said. “There’s an element of not wanting to do it during the Christmas season,” he said.
Another reason for the sober outlook
For many companies, recession fears justify a cut-now approach. After much of the global economy shrank overnight with the onset of the pandemic, it’s no surprise that some business leaders fear a slowdown again. In fact, his 70% of economists surveyed by Bloomberg predict the US will slip into recession in his 2023.
This mix of recession fears and CEO desires to cut costs means more layoffs are likely.
Investment bank RBC said Wednesday that the latest job cuts at Salesforce are likely to see other software companies — especially those like Salesforce, which have grown too big too quickly in recent years — look to cut bloated labor costs. warned that it indicates
So far, the shrinking tech sector has had no impact on the broader job market. Overall layoffs remain low, according to the latest Labor Department data. The economy beat economists’ expectations as he added 223,000 jobs in December. In 2022, the United States added her 4.5 million jobs.
Some observers believe the upcoming recession could be mild — Moody’s Analytics predicts a “slow session” in which the economy will soften but not contract. — Business leaders want to make sure they’re not underprepared.
“Even if the U.S. isn’t in a recession, the companies we do business with are in a recession and are trying to keep labor costs down to stay competitive,” Cooper said.
The first cut is not always the deepest
Carrying out multiple layoffs is not common practice, but neither is it unheard of. Of the 433 tech companies tracked by Crunchbase, about 9% will have multiple layoffs in his 2022.
Compass isn’t the only company that’s had multiple layoffs over the past year, including Salesforce, Stitch Fix, Vimeo, Lyft, Snap, and Better.
Amazon’s 18,000 job cuts affect about 6% of the company’s roles, exceeding the 10,000 job cuts the company was expected to make in the fall, but Jassy warns there could be more. I was. The company began laying off thousands of employees last year, The Wall Street Journal reported.
Repeated layoffs can make staff anxious because they may or may not wake up to ominous emails from HR. Not to mention that his second or even third layoff in a matter of months could damage the brand’s reputation.
Nolan Church, who led the talent teams at Carta and DoorDash, said, “If I were an employee of a company that was unexpectedly going through multiple layoffs, I would lose faith in the business and You will be living in fear,” he said. His Vedantam on Crunchbase News.
Joel Gascoigne, CEO of social media management platform Buffer, previously told Insider that one of the best pieces of advice he received when he was laying off staff in 2016 was, “Just know this is the end of the company. Please tell me enough,” he said. Crisis when the layoffs are over”.
It is important to give the rest of the staff a sense of stability as much as possible. Gascoigne said it’s important to “reduce enough and cut costs enough so that from three months he can be confident that in six months he doesn’t need to do anything else.” I was.