Why companies like Amazon and Meta cut jobs in 2022

The labor market was very strong last year, with the exception of the tech industry.

After massive job spikes in the first two years of the pandemic, industry giants such as Amazon and Meta have reversed course in 2022. We have been tracking tech layoffs since March 2020.

The website tally, perhaps underestimated, continues to grow rapidly in 2023, with more than 55,000 job cuts recorded so far this year.

Layoffs.fyi creator Roger Lee told USA TODAY: “Unfortunately, I don’t think furloughs will go away anytime soon.”

Which tech companies are laying off staff?

According to data from Layoffs.fyi, the US tech companies that cut the most jobs last year were:

  • Meta: 11,000.

  • Amazon: 10,000.

  • Cisco: 4,100.

  • Caravan: 4,000.

  • Twitter: 3,700.

Google layoffs: Google lays off 12,000 employees, latest tech giant cuts thousands of jobs

After massive job spikes in the first two years of the pandemic, industry giants such as Amazon and Meta have reversed course in 2022.

Are tech companies freezing hiring?

December data from talent acquisition firm iCIMS shows that job openings in tech jobs fell nearly 30% from January to December last year, while industry hiring fell 23%.

Bed Bath & Beyond layoffs: Bed Bath & Beyond layoffs imminent as sales plummet and bankruptcy threatens

Why are so many people leaving their jobs now?

The lockdown has had a major impact on private consumption. Experiences like travel and restaurants were barely talked about, so people started shifting their discretionary spending towards products from tech companies like Amazon and Peloton.

But it didn’t take long for consumers to start returning to their pre-pandemic spending patterns, according to Lucha Bankdre, senior economist at labor market analytics firm Rightcast.

“What we’re looking at is actually a kind of renormalization,” Vankudre said. “And that often means that these companies are overhiring.”

Rising interest rates are also contributing to the layoffs, said Daniel Kuum, an associate professor at Columbia Business School.

“It’s not that big tech companies are running out of cash, but they’re making huge investments in new, riskier areas of business. And those businesses are becoming much more expensive to raise. So they are pulling out,” said Keum.

Google layoffs: Google lays off 12,000 employees, latest tech giant cuts thousands of jobs

Will tech layoffs continue in 2023?

Mr. Lee started Layoffs.fyi in March 2020 to help laid-off technical employees increase their visibility and find new jobs.

“Honestly, I was thinking of closing the site in 2021 because I thought it served its purpose,” says Lee. “We didn’t expect another wave of layoffs in 2022-2023.”

As of Monday, Layoffs.fyi has already tracked over 170 companies that will lay off 55,970 people in 2023.

Here are the major layoff announcements so far this year:

  • Google: 12,000.

  • Microsoft: 10,000.

  • Salesforce: 8,000.

Spotify announced on Monday that it would lay off about 6% of its employees across the company.

Microsoft layoffs:: Microsoft will lay off 10,000 employees starting Wednesday.Approximately 5% of employees affected

Salesforce layoffs: Salesforce cuts headcount by 10% amid broader tech layoffs

Lee hopes that by the end of the year, industry layoffs will begin to taper if interest rate rises slow.

Keum said tech layoffs are likely to spread to smaller tech companies this year as venture capitalists tighten spending.

“You’re going to see ripples gradually trickle down from big tech to the broader tech industry. Layoffs are going to spread out a bit more,” he said.

Job report: 223,000 more jobs in the non-farm sector

Will layoffs spill over to other industries in 2023?

Layoffs continued in certain industries, such as technology and media, but the broader labor market remained strong.

The US economy added 4.5 million jobs last year and the unemployment rate fell to 3.5% from 3.7% in December, reaching its lowest level in 50 years.

“For the economy as a whole, this is not the problem we are seeing,” Vankudre said. “At the moment, this seems very niche[for the tech industry].”

Holiday bonus: Holiday bonuses have been reduced in 2022 as recession fears have eased and labor shortages have eased.

You can follow USA TODAY reporter Bailey Schultz on Twitter. @Bailey_Schultz For personal finance tips and business news every Monday through Friday, subscribe to our free Daily Money Newsletter here.

This article originally appeared in USA TODAY: Tech Layoffs Coming in 2023.Why companies lay off employees

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