At The Hill Adonis Hoffman remarks on the layoffs in technology companies:
Today’s business headlines herald a harsh reality for Big Tech: tumult at Twitter; meltdown at Meta; atrophy at Alphabet; adjustments at Amazon. Layoffs, sliding stock and shrinking valuations are hallmarks of the moment.
Big Tech malaise is unfolding before our very eyes.
While the tech downturn was not unexpected, it is not altogether unwelcome.
Some might even consider it relief.
No one — not even investors — seems to be shedding tears for the tech sector.
After a decades-long bull run, now comes the decline, the disruption, the denouement. After all, irrational exuberance can only last so long.
I don’t know how pervasive the layoffs will be or whether they’re permanent. I’d like to draw attention to two issues.
First, the highly concentrated nature of employment in the technology sector will have substantial local effects. That will be particularly true in Seattle (Washington) and the San Francisco area (California). That will be particularly true in California due to the higher median wages in the tech sector and the state’s reliance on its graduated personal income tax.
Second and possibly more important is the sector’s reliance on H-1b via holders and the peculiar way those visas are issued. The companies laying off employees are more likely to employ H-1b holders than smaller companies are. Once laid off those employees have 60 days to find new employment and not just any employment will do. They’ve got to find jobs with companies that can sponsor them.
Once upon a time almost everyone assumed the home mortgage market couldn’t crash. Then it did. I suspect some of this is really just temporary due to current economic conditions but probably some overdue weeding. It seems pretty normal to me.
Steve
Today’s annoucement of layoffs from Amazon is quite troubling. Layoffs so close yet before the holidays tells me how negative Amazon management sees their business and how urgent they take immediate “corrective” action.
And I have to stress, given how many employees Amazon has, how many industries it is in, the pain isn’t going to limited to the technology industry.
As to technology industry in general. People are not accounting this has much broader implications. For example, big tech has been the driver of capex in this country for the past decade. Amazon alone spent $80 billion in capex last year; Microsoft and Google with $30 billion each; those datacenter’s are not cheap. A material cut in capex at these companies will be a significant reduction in business investment in this country; which this blog has complained is insufficient as it is.
How much of the Amazon layoffs is tech people vs warehouse, delivery, sales, etc people? I haven’t seen a breakdown.
Steve
It reminds me a great deal of what happened in 2007-2008. Back then a considerable number of companies seized the opportunity to reduce payrolls that had become bloated.
CuriousOnlooker: good point about business investment.
The Amazon layoffs reportedly will be in tech and management, primarily in the devices division (Alexa). Not blue collar at all.
That means not many warehouse workers and I doubt they are letting off people in sales.
The 10,000 today were “corporate” (i.e. software engineers, business people).
The biggest thing is the timing. Ever heard of a retailer laying off 2 weeks before Black Friday?
What are the chances a layoff of only 3% of the company but ahead of the holidays is the only cut…. As a reference, Amazon has 1+ million US employees, and from the latest earnings report, excluding AWS, the company isn’t profitable.
That’s been true for a long time and I’ve been pointing it out for just about that long. More than 20 years ago I pointed out that Amazon was backing a business model out of a stock offering. It turned out that AWS became the tail wagging the dog.