The Tech-Layoff ‘Contagion’ – The Atlantic


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The American economy is doing well. So why are tech companies laying off tens of thousands of workers?

But first, here are three new stories from Atlantic.


imitator

Last Friday, Google’s parent company, Alphabet, laid off 12,000 employees, about 6% of its total workforce. Yesterday, Spotify announced a similar percentage of staff layoffs.

By now, you may be accustomed to the constant stream of news about job cuts by tech companies. According to one estimate, about 130,000 people have been laid off by big tech and media companies in the past 12 months. The reason for this is not clear. The unemployment rate across America is 3.5% for him, which is her lowest in the 21st century. Technology has also long been one of the country’s most dynamic industries. So why is the U.S. economy struggling in an optimistic time?

Staff writers Annie Lowrey and Derek Thompson both recently published articles on tech layoffs and offer some explanation for the trend. The first and most obvious is the Federal Reserve’s efforts to ease inflation by raising interest rates significantly over the past year. As Annie writes:

Nearly every American business in every business sector relies on some form of borrowed cash…but many technology companies have been particularly conditioned to very low interest rates. Vehicles, and thousands of startups have suffered huge losses, relying on their investors to pay their bills while they grow.

But inflation and subsequent rises in interest rates caused these companies, which had made long-term promises at the expense of short-term profits, to “break,” as Derek puts it.

Second reason: Pandemic. Annie reminds us what the economy was like when Americans were isolated.

People stopped going to the cinema and started watching more movies and shows at home. You hurt AMC, you helped Netflix and Hulu. Families stopped shopping in person and bought more online. It has depressed town centers, boosted Amazon and Uber Eats, and made many businesses pour money into digital advertising. Companies stopped hosting corporate retreats and started facilitating meetings online. This robbed hotel chains of money and bolstered Zoom and Microsoft.

Here’s Derek on how it was done.

Many believe that the digitization of the 2020 pandemic economy (streaming entertainment, online food delivery apps, the rise of home fitness, etc.) is an “acceleration” that will propel us into the future anyway. I predicted. In this interpretation, the pandemic is a time machine that hastened the 2030s and raised the valuation of technology accordingly. Adoption surged across technology as companies added tens of thousands of workers to meet the expectations of this acceleration.

But perhaps the pandemic wasn’t really the catalyst – maybe it was the bubble.

Consumer spending has normalized and Americans are returning to paying for restaurants, hotels and airline tickets. As a result, tech companies are seeing revenue declines in some of their businesses, and some executives admit their businesses are growing too fast. (Apple is an exception that might prove to be the rule, expanding more slowly than some of its competitors and avoiding layoffs so far.)

But while technology companies face a harsh reality, many are still highly profitable. And, as Annie points out, the future looks bright. Artificial Intelligence is starting to make some amazing breakthroughs… Maybe Tech Summer is just around the corner. ”

Derek, who reported on the apparent collapse of the tech industry in November, used a funny and helpful metaphor. The industry is on the verge of a midlife crisis. And that means that when the crisis ends, a new era begins. “One of the mistakes journalists can make when observing these trends, he said, is to assume that the situation will last forever, as the software-based technology industry seems to be struggling right now. ‘ he wrote. “Perhaps we are in the middle of a technological era.”

Some argue that the CEOs imitate each other while waiting for this break. Employee layoffs are not just an inevitable consequence of economic change, everyone else is doing. “CEOs are ordinary people who overcome uncertainty by mimicking behavior,” writes Derek. He quotes business professor Jeffrey Pfeffer. stanford news: “Was there a bubble in valuations? Absolutely… did Meta overhire? Probably. But is that why they’re laying people off? Of course not…these companies are all profitable They are doing it because other companies are doing it.”

Pfeffer believes this “social contagion” could spread to other industries. “Layoffs are contagious between industries and within industries,” he said. stanford news article. If so, the story of tech layoffs could be a broader story about jobs in America.

Related:


news of the day

  1. Gunmen killed seven and injured one in two shootings in Half Moon Bay, California, just two days after the shooting at a Monterey Park dance hall .
  2. Former Vice President Mike Pence’s attorney found classified documents while searching Pence’s Indiana home.
  3. The Senate Judiciary Committee held a hearing on the ticket market, where Ticketmaster’s parent company testified about Taylor Swift’s concert ticket sales issues.

night reading

Atlantic

Twitter has no answers for #DiedSuddenly

Kaitlyn Tiffany

Lisa Marie Presley died unexpectedly earlier this month, and within hours, with no evidence, Twitter users suggested her death was caused by the COVID-19 vaccine.

The Twitter account @DiedSuddenly_, which has nearly 250,000 followers, also soon began tweeting using the hashtag #DiedSuddenly. Over the past few months, anti-vaccine advocates have responded to news stories about sudden deaths and serious injuries of all kinds, including the death of sports journalist Grant Wall and the sudden collapse of Buffalo’s Bills safety center, Dummer Hamlin. A similar reaction was seen in Activist. Most of the incidents had an obvious explanation and were almost certainly not related to vaccines, but the risk of causing heart inflammation is very low, far smaller than the risk from COVID-19 itself. The idea that vaccinations are causing mass deaths was fueled by right-wing media figures and a handful of high-profile professional athletes.

Read the full article.

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‘Everything Everywhere All at Once’ by Michelle Yeoh and Jamie Lee Curtis (A24)

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PS

Layoffs are not an abstraction of people who have lost their jobs.With that in mind I leave you with the advice I read New York The magazine’s Dinner Party Newsletter: Phoebe Gavin was fired from her job as Executive Director of Talent and Development last week. vox, I have written While it may be tempting to immediately contact a loved one or acquaintance on Twitter who has been laid off, TRUE You should contact us in two weeks when you have time to process and are beginning to understand your next steps. Please mark your calendar to check in again.

— Isabel




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