‘Tech wreck’ sweeping Silicon Valley wipes out jobs paying $12BN amid ‘richcession’ – as Google plans to cut 12,000 roles
- Google parent Alphabet on Friday became latest tech firm to initiate layoffs
- Cuts at just the largest tech companies have wiped out jobs paying $12B
- White-collar tech workers have been hardest hit by recent layoffs
- Still, it appears many skilled workers are able to find new jobs relatively quickly
The ‘tech wreck’ sweeping Silicon Valley has wiped out tens of thousands of jobs paying a combined $12 billion annually, an analysis of the largest recent cuts shows.
Google-parent Alphabet on Friday became the latest tech giant to announce layoffs, saying it will cut 12,000 employees, or about 6 percent of its workforce.
The recent wave of steep job cuts has hit highly paid skilled workers the hardest, as companies that soared during the pandemic now slash costs to brace for an economic slowdown.
Meanwhile, in a reversal of typical trends during a downturn, blue-collar workers remain in hot demand, leading some to dub the layoffs sweeping skilled roles a ‘richcession’ or a white-collar recession.
At just seven large tech firms, the job cuts announced in recent months total nearly 70,000: Amazon, Alphabet, Meta, Microsoft, Salesforce, HP and Twitter.
At just seven large tech firms, the job cuts announced in recent months total nearly 70,000: Amazon, Alphabet, Meta, Microsoft, Salesforce, HP and Twitter
Using the median salaries reported from those companies in regulatory filings, most of which are from 2021, DailyMail.com estimates that the combined annual salaries of the cut jobs is roughly $11.95 billion
Using the median salaries reported from those companies in regulatory filings, most of which are from 2021, DailyMail.com estimates that the combined annual salaries of the cut jobs is roughly $11.95 billion.
That figure does not account for the fact that Amazon, which has a large logistics workforce and a median salary of just $29,007, has primarily targeted higher-paying corporate roles in its total announced cuts of 18,000 workers.
It also does not include the many thousands of jobs that have been cut at smaller tech companies that are not household names.
Tech-driven firms cut more than 150,000 workers last year, according to a recently released analysis from Layoffs.fyi, which tracks firings in real time through information gleaned in media and company releases.
However, for laid off tech workers, the news isn’t all bad, as data show that most of them are landing new jobs relatively quickly after losing their jobs.
Nearly 40 percent previously laid off tech workers found jobs less than a month after they began searching, ZipRecruiter found in a recent survey.
Google-parent Alphabet on Friday became the latest tech giant to announce layoffs, saying it will cut 12,000 employees , or about 6 percent of its workforce
‘Despite the widespread layoffs, hiring freezes, and cost-cutting taking place in tech, many tech workers are finding reemployment remarkably quickly,’ Julia Pollak, chief economist at ZipRecruiter, told the Wall Street Journal.
‘They’re still the most sought-after workers with the most in-demand skills,’ she argued.
However, reversing trends from the depths of the pandemic, blue collar workers are also in hot demand, and have seen their wages rise at a faster pace those of top earners.
In November, wages for the bottom quarter of earners were up 7.4 percent from a year ago, outpacing inflation, while wages for the top quarter rose just 4.8 percent.
Although top earners started off from a much higher base, the trend illustrates how the job market has shifted to favor low-income workers, who remain sought after by employers.
Amazon, which has a large logistics workforce and a median salary of just $29,007, has primarily targeted higher-paying corporate roles in its total announced cuts of 18,000 workers
In November, job openings in the US declined slightly to 10.458 million, which represented 1.74 jobs for every unemployed person in the country.
Manufacturing job openings increased by 57,000 on the month, while retail trade vacancies rose by 37,000.
Meanwhile, job openings dropped 75,000 in finance and insurance, one of the industries hardest hit by higher borrowing costs, and declined 15,000 in real estate.
The technology, finance and real estate sectors have all been hit hard by the Federal Reserve’s interest rate hikes over the past year, a move that is intended to slow inflation by cooling the economy.
Despite the layoffs in the tech sector, the overall job market in the US remains relatively tight.
Jobless claims, which generally serve as a proxy for layoffs, have been relatively low since the pandemic wiped out millions of jobs in the spring of 2020.
Last week, jobless aid applications fell by 15,000 to 190,000, from 205,000 the week before. Weekly jobless claims typically averaged about 250,000 before the pandemic.
Earlier this month, the government reported that US employers added a solid 223,000 jobs in December. The unemployment rate fell to 3.5 percent, matching a 53-year low.
In forecasts updated last month, the Fed’s policymakers predicted slower growth and higher unemployment for next year and 2024.
They projected the unemployment rate will jump to 4.6 percent by the end of 2023.
That would mark a significant increase in joblessness and typically would signal a recession, which many economists have predicted for the coming year.
Tech job cuts – including mass layoffs at Meta and Twitter – are accelerating
In recent months, a slew of tech companies have announced cost-cutting measures, with Amazon, Apple and Google-parent Alphabet all announcing hiring slowdowns or freezes.
For the tech sector, the pandemic boom has turned to a post-pandemic bust, as rising interest rates batter share prices and inflation cuts into profits.
The sector shed 9,587 jobs in October, the highest monthly total since November 2020, according to data from consulting firm Challenger, Gray & Christmas cited by Bloomberg.
Total job cuts announced by US-based employers jumped 13 percent to 33,843 in October, the highest since February 2021, a report said.
The Facebook-parent said in November it would cut 13 percent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year as it grapples with a weak advertising market and mounting costs.
Meta said it would cut 13 percent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year
Like its peers, Meta aggressively hired during the pandemic to meet a surge in social media usage by stuck-at-home consumers.
But but the pandemic boom-times have petered out as advertisers and consumers pull the plug on spending in the face of soaring costs and rapidly rising interest rates.
After plunging billions into CEO Mark Zuckerberg’s Metaverse vision with little to show for it, Meta has been faced with rising costs and shrinking profits.
Meta, once worth more than $1 trillion, is now valued at $256 billion after losing more than 70 percent of its value this year alone.
‘Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,’ Zuckerberg said in a message to employees, according to Reuters.
‘I got this wrong, and I take responsibility for that.’
Zuckerberg delivered the grim news about job cuts on a call with hundreds of Meta executives
On a short call, a red-eyed Zuckerberg addressed employees but took no questions.
He stuck to a script that closely followed the wording in the morning’s blogpost and called the increased investments in e-commerce a ‘big mistake in planning.’
Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering following Elon Musk’s $44 billion takeover.
The cutbacks affected roughly 3,700 employees, who learned their fate by email last week.
However, Bloomberg reported Twitter was reaching out to dozens of employees who lost their jobs, asking them to return.
Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering
Musk previously said there was no other choice but to impose mass layoffs as the company loses hundreds of millions of dollars every year and needs a financial overhaul
In January, cloud-based software company Salesforce announced it will layoff 10 percent of its employees or about 8,000 workers.
CEO Marc Benioff cited a rough period for the tech sector as well as over-hiring during COVID-19 leading to the decision.
Several weeks ago, it quietly laid off hundreds of employees.
‘Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition,’ a Salesforce spokesperson told CNBC in a statement several weeks ago.
Salesforce had 73,541 employees at the beginning of last year – it is the largest employer in the San Francisco area.
The company said in an August filing that headcount rose 36 percent in the past year ‘to meet the higher demand for services from our customers.’
Amazon said it would layoff 18,000 corporate and technology jobs what will be the largest job cuts in the company’s history.
The move comes as the company reportedly lost $1trillion over the year after its stock plummeted from a high during the pandemic.
If the company goes through with its proposal to cut 10,000 jobs, it would lose about 3 percent of Amazon’s corporate employees
The move comes after the company put a hiring freeze in place, affecting major teams including Prime Video, Alexa and Amazon Fresh.
‘We’re facing an unusual macroeconomic environment, and want to balance our hiring and investments with being thoughtful about this economy,’ Beth Galetti, senior vice president of people experience and technology at Amazon, wrote in a memo, which was seen by the Wall Street Journal.
Intel Corp’s CEO Pat Gelsinger told Reuters ‘people actions’ would be part of a cost-reduction plan.
The chipmaker said recently it would reduce costs by $3 billion in 2023, then ramping that up to $10 billion by 2025.
The adjustments would start in the fourth quarter, Gelsinger said, but did not specify how many employees would be affected.
Some Intel divisions, including the sales and marketing group, could be cut by up to 20 percent, Bloomberg News reported last month, citing people with knowledge of the situation.
Chipmaker Intel is reportedly planning major layoffs, likely numbering in the thousands, in the face of a slowdown in the personal computer market
The company had 113,700 employees as of July, when it slashed its annual sales forecast by $11 billion after missing estimates for second-quarter results.
Intel, based in Santa Clara, California declined to comment on the job cuts when reached by DailyMail.com in October.
Intel has been battered by shifting market trends, including the decline of traditional personal computers as smartphones and tablets rise in popularity.
Last quarter, global PC shipments, including desktops and laptops, declined another 15 percent from a year ago, according to IDC.
Microsoft in January initiated layoffs of 10,000 employees, citing slowing customer demand and a negative economic environment.
‘We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one,’ CEO Satya Nadella said in a company memo.
The layoffs affected nearly 5 percent of Microsoft’s global workforce.
Microsoft previously laid off under 1,000 employees across several divisions last year, according to Axios.
In a statement, Microsoft executives said: ‘Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly.
Microsoft laid off under 1,000 employees across several divisions last month, according to Axios
‘We will continue to invest in our business and hire in key growth areas in the year ahead.’
Microsoft executives previously announced in July that it was laying off less than 1 percent of its workforce and significantly slow hiring, as its revenue fell short of investor expectations.
The company recorded only $51.9 billion in revenue during the second quarter of the year, but was expected to rake in $52.4 billion.
It had previously recorded blockbuster growth during the COVID pandemic, when consumers and businesses turned to its products as they shifted to a work-from-home model.
Ride-hailing firm Lyft said it would lay off 13 percent of its workforce, or about 683 employees, after it already cut 60 jobs earlier this year and froze hiring in September.
Lyft said in a regulatory filing it would likely incur $27 to $32 million in restructuring charges related to the layoffs.
‘We are not immune to the realities of inflation and a slowing economy,’ Lyft’s founders wrote in the memo to staffers.
Ride-hailing firm Lyft said it would lay off 13 percent of its workforce, or about 683 employees, after it already cut 60 jobs earlier this year
The company’s share price has fallen 76 percent since the beginning of the year and currently stands at around $10, compared to nearly $45 in January.
Announcing the job cuts in a memo seen by the Wall Street Journal, Lyft founders John Zimmer and Logan Green told staff: ‘There are several challenges playing out across the economy.
‘We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up.
‘We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives.
‘Still, Lyft has to become leaner, which requires us to part with incredible team members.’
Lyft has about 4,000 employees, not including its drivers.
Apple CEO Tim Cook told CBS Mornings on Monday he plans to freeze hiring
Though Apple has not yet announced any major layoffs, CEO Tim Cook told CBS Mornings that it is slowing some hiring as well.
‘What we’re doing as a consequence of being in this period, is we’re being very deliberate in our hiring,’ he said. ‘That means we’re continuing to hire, but not everywhere in the company are we hiring.’
At the same time, though, Cook said ‘we don’t believe you can save your way to prosperity.”
‘We think you invest your way to it,’ he said.