Current:Home > NewsNearly 25,000 tech workers were laid in the first weeks of 2024. What's going on?-InfoLens
Nearly 25,000 tech workers were laid in the first weeks of 2024. What's going on?
View Date:2024-12-23 16:03:09
Last year was, by all accounts, a bloodbath for the tech industry, with more than 260,000 jobs vanishing — the worse 12 months for Silicon Valley since the dot-com crash of the early 2000s.
Executives justified the mass layoffs by citing a pandemic hiring binge, high inflation and weak consumer demand.
Now in 2024, tech company workforces have largely returned to pre-pandemic levels, inflation is half of what it was this time last year and consumer confidence is rebounding.
Yet, in the first four weeks of this year, nearly 100 tech companies, including Meta, Amazon, Microsoft, Google, TikTok and Salesforce have collectively let go of about 25,000 employees, according to layoffs.fyi, which tracks the technology sector.
All of the major tech companies conducting another wave of layoffs this year are sitting atop mountains of cash and are wildly profitable, so the job-shedding is far from a matter of necessity or survival.
Then what is driving it?
"There is a herding effect in tech," said Jeff Shulman, a professor at the University of Washington's Foster School of Business, who follows the tech industry. "The layoffs seem to be helping their stock prices, so these companies see no reason to stop."
Shulman adds: "They're getting away with it because everybody is doing it. And they're getting away with it because now it's the new normal," he said. "Workers are more comfortable with it, stock investors are appreciating it, and so I think we'll see it continue for some time."
Interest rates, sitting around 5.5%, are far from the near-zero rates of the pandemic. And some tech companies are reshuffling staff to prioritize new investments in generative AI. But experts say those factors do not sufficiently explain this month's layoff frenzy.
Whatever is fueling the workforce downsizing in tech, Wall Street has taken notice. The S&P 500 has notched multiple all-time records this month, led by the so-called Magnificent Seven technology stocks. Alphabet, Meta and Microsoft all set new records, with Microsoft's worth now exceeding $3 trillion.
And as Wall Street rallies on news of laid-off tech employees, more and more tech companies axe workers.
"You're seeing that these tech companies are almost being rewarded by Wall Street for their cost discipline, and that might be encouraging those companies, and other companies in tech, to cut costs and layoff staff," said Roger Lee, who runs the industry tracker layoffs.fyi.
Stanford business professor Jeffrey Pfeffer has called the phenomenon of companies in one industry mimicking each others' employee terminations "copycat layoffs." As he explained it: "Tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing."
Layoffs, in other words, are contagious. Pfeffer, who is an expert on organizational behavior, says that when one major tech company downsizes staff, the board of a competing company may start to question why their executives are not doing the same.
If it appears as if an entire sector is experiencing a downward shift, Pfeffer argues, it takes the focus off of any single individual company — which provides cover for layoffs that are undertaken to make up for bad decisions that led to investments or strategies not paying off.
"It's kind of a self-fulfilling prophecy in some sense," said Shulman of the University of Washington. "They panicked and did the big layoffs last year, and the market reacted favorably, and now they continue to cut to weather a storm that hasn't fully come yet."
veryGood! (611)
Related
- Tech consultant testifies that ‘bad joke’ led to deadly clash with Cash App founder Bob Lee
- Nicholas Pryor, Beverly Hills, 90210 and Risky Business Actor, Dead at 89
- Uber, Lyft drivers fight for higher pay, better protections
- NTSB report says student pilot, instructor and 2 passengers killed in Sept. 8 plane crash in Vermont
- Mega Millions winning numbers for November 12 drawing: Jackpot rises to $361 million
- Here's the one thing 'Saturday Night' director Jason Reitman implored his actors not to do
- Here's the one thing 'Saturday Night' director Jason Reitman implored his actors not to do
- California's $20 fast food minimum wage didn't lead to major job losses, study finds
- Kennesaw State football coach Brian Bohannon steps down after 10 seasons amid first year in FBS
- Jennifer Lopez says divorce from Ben Affleck was 'probably the hardest time of my life'
Ranking
- The Surreal Life’s Kim Zolciak Fuels Dating Rumors With Costar Chet Hanks After Kroy Biermann Split
- Powerball winning numbers for October 9 drawing: Jackpot up to $336 million
- Last Chance! Hailey Bieber-Approved HexClad Cookware Deals Will Sell Out Soon—Shop Before Prime Day Ends!
- Justin Timberlake cancels show in New Jersey after suffering unknown injury
- Jennifer Hudson, Kylie Minogue and Billy Porter to perform at Macy’s Thanksgiving Parade
- Arizona Democratic office hit by third shooting in weeks. There were no injuries or arrests
- New evidence emerges in Marilyn Manson case, Los Angeles DA says
- Tesla is unveiling its long-awaited robotaxi amid doubts about the technology it runs on
Recommendation
-
Georgia public universities and colleges see enrollment rise by 6%
-
Marriott agrees to pay $52 million, beef up data security to resolve probes over data breaches
-
3 out of every 5 gas stations in Tampa are out of fuel as Hurricane Milton approaches
-
Twins born conjoined celebrate 1st birthday after separation surgery
-
Black women notch historic Senate wins in an election year defined by potential firsts
-
RHONY's Brynn Whitfield Debuts Dramatic Hair Transformation That Made Her Cry
-
Sabrina Ionescu brought back her floater. It’s taken the Liberty to the WNBA Finals
-
'Love Island USA' star Hannah Smith arrested at Atlanta concert, accused of threatening cop