Ongoing hostile economic conditions have caused droves of mass layoffs to sweep across the tech industry, with more than 174,000 tech workers across 609 companies having already lost their jobs this year.
With a slowdown in economic activity over the last several months, from advertisers cutting their spending dollars, to investors and venture capitalists pausing their elaborate funding, big tech is now reckoning with widespread workforce reductions.
January 2023 was perhaps the most brutal month of the year, seeing around 84,714 tech employees being laid off. So far this year, an average of close to 50,000 tech workers have already had their jobs on the chopping block.
While big tech layoffs continue to dominate headlines, research by the think tank and business membership organization, The Conference Board projects that layoffs will only become increasingly worse in the coming months, slowly spilling into other industries outside of technology.
According to their projections, and the current widespread macroeconomic decline, employees in information services, transportation, warehousing, and construction are currently at high risk of losing their jobs this year.
Several factors, such as exposure to monetary policy, education levels, labor shortages, and job function, among others, are used to calculate the possibility of employees losing their jobs in these sectors.
The looming layoffs have left many employees scrambling to secure new employment, as the once-red-hot labor market begins to unravel.
What’s more concerning, is that once you start widening your peripheral view, you start noticing that layoffs are a much bigger problem than what many have thought it would be.
Overall, more than 3.3 million workers have already lost their jobs this year. These numbers reveal a striking image of how bad economic conditions have gotten since last year.
It’s however not just big tech companies, small startups, and mobile application companies that have been making employee cutbacks.
The professional and business services, which provide services such as facilities management, security services, consulting, research and technical services, and accounting among other things have recorded more than 900,000 layoffs over January and February this year, marking a 13% increase from the same period last year.
Firms in this sector of the economy have been battling to keep heads above water, as aggressive monetary tightening increased the cost of borrowing, and consumers dive deeper into debt as they try to keep up with the soaring cost of living.
In other sectors of the economy, trade, transportation, and utilities experienced the second-highest number of layoffs this year, with over 615,000 employees being booted.
Further down the list, firms and businesses in construction, leisure, hospitality, and retail trade have also slowly been cutting back their head count as consumers are starting to spend less on these services due to higher costs.
Yet, despite these staggering figures, the total number of employees in these categories has not decreased over time, as the number of those that have been let go against the total number of new hires over recent months has remained relatively similar.
Then there are non-essential jobs in services such as arts, entertainment, and recreation that currently also have a high risk of layoff due to their direct exposure to sensitive economic conditions.
Estimates predict that employees in these fields have a risk layoff rate of 2.89%, with a possible 69,400 jobs lost per month.
Other services in the information sector, which encompasses jobs in motion picture production, music recording, broadcasting, data processing, and telecommunications, among others have also been hit with layoffs this year so far.
Over January and February 2023, roughly 3.4% of workers in this sector were involuntarily discharged. The unemployment rate for the information sector has risen by 1.2% since last year already.
Elsewhere in the job market, cash-strapped electric vehicle (EV) startups have also said farewell to thousands of employees since the start of the year. Layoffs are seen across different organizational levels, and include manufacturers of car battery brands, electrical components, and legacy automakers.
The UK-based EV startup, Arrival, said back in January that it will cut nearly 50% of its workforce, winding down its UK operations to refocus on the U.S. market.
High-end luxury EV company, Lucid Group, announced at the end of March that they’re planning to cut 18% of its workforce, affecting roughly 1,300 workers at all organizational levels.
Even Ford Motors have cut close to 4,000 jobs in Europe, the most being in Germany and the UK, as the legacy automaker looks to refocus its efforts on EV transition and electrifying its production line up as demand for EVs continue to gain momentum.
The list doesn’t end there, as Faraday Future, Nikola and even Rivian have all reduced their headcount in recent months due to ongoing price wars with EV industry giant, Tesla, and broader macroeconomic problems reverberating from the tech sector.
Across the board, it seems as if companies are tightening their belts even further this year to make up for the frantic hiring spree they enjoyed during the last several years, and following the red-hot post-pandemic labor market.
While companies are letting go of thousands, if not tens of thousands of employees nearly every week, employment figures in the United States are currently at the best they have been in more than five decades following the most recent employment situation data report by the Bureau of Labor Statistics (BLS).
Recent figures showed that unemployment figures have remained relatively low, compared to the high number of layoffs.
Overall, employers added more than 236,000 new non-farm payroll jobs in March 2023, keeping the unemployment rate at 3.5%.
Both the unemployment rate and the number of unemployed people, roughly 5.8 million, have changed little since the start of 2022 and have remained near the lower end for much of 2023 so far.
Furthermore, the labor force participation rate has continued trending upward following the most recent data from March. The participation rate remains steady at 62.6 percent, still somewhat below pre-pandemic levels at 63.3 percent recorded in February 2020.
All the while thousands of employees remain worried that their job might be next on the chopping block, several indications reveal that HR officers and experts remain relatively optimistic about hiring in the coming months.
According to The Conference Board CHRO Confidence Index, some three in four chief HR managers are expected to increase their hiring in the next six months.
However, on the other hand, many remain worried about the high possibility of employees leaving or quitting, despite economic uncertainty and a looming recession.
Roughly one in five chief HR officers are concerned that employees may quit over the next coming months, either completely leaving the workforce or looking to find different employment opportunities.
In a time where layoffs are red-hot, and some companies are now urging their employees to return to the office, following nearly three years of remote working, 45% of HR leaders have claimed that employee engagement has steadily increased in the last six months, while 14% said that engagement has gone down.
Following months of pandemic-related workplace trends, from The Great Resignation, Quiet and Rage Quitting to Rage Applying, it now seems as if employees have become complacent with economic hardships, and are willing to stick out longer until the worst of the storm has passed.
What about jobs in sectors that are more resilient against a mild recession?
For the most part, it seems as if positions in public and governmental services, private education, health care, medicine, accommodation, and food services look to be on the safer side of things at the moment
Companies in these sectors are considered to be more resilient against possible job cuts, even if a mild recession does happen.
Unlike their peers in big tech and information services, these companies didn’t indulge in over-hiring sprees over the last several years, giving employees somewhat more job security considering the tumultuous economic downturn.
In some cases, it even seems as if some businesses in the food and service industry are still looking to recover the jobs that they lost during the pandemic back in 2020.
The latest estimates by the U.S. Travel Association indicate that there are currently more than two million open roles in the leisure and hospitality industry. This comes even after the sector added more than 105,000 new jobs in February, accounting for over a third of the 311,000 all-new jobs added during the period.
And while layoffs continue, those that have been booted in recent months have already taken up new roles in different sectors. Many have opted for different opportunities in new fields including cybersecurity and healthcare, among other industries.
It’s however not that easy for many foreign-born workers that are here on temporary work visas. Now that their once beloved tech employer has let them go, many of them are faced with navigating the already complex, and seemingly outdated U.S. immigration system.
Instead of staying longer, and having to look for new employment to sponsor their visas, foreign tech talent are heading abroad to places like Australia, Canada, China, and the U.K. For others, however, the situation has led them to self-deport, as the job market becomes increasingly stringent, and new employers aren’t willing to pay for visa sponsorships.
The lack of job security and worsening economic conditions have seen widespread uncertainty in the labor market. And while it was upheld to one corner of the economy for a while, it’s starting to flow over into other sectors, quickly becoming an epidemic that’s now coming for thousands of jobs.