The U.S. economy is booming. So why are tech companies laying off workers?

[mahatmakanejeeves]

The U.S. economy is booming. So why are tech companies laying off workers?

Google, Amazon, Microsoft and a raft of others fired thousands of workers in January, continuing a layoff wave that began in 2022.

By Gerrit De Vynck, Danielle Abril and Caroline O'Donovan
February 3, 2024 at 8:00 a.m. EST

SAN FRANCISCO — The first time Julian Chavez got laid off from his job as a digital ad sales rep at web.com didn’t turn him off from the tech industry. Neither did the second time when he was laid off from ZipRecruiter. By the third time, though, Chavez had had enough.... “I really loved what I did,” said Phoenix-based Chavez in a text message. “But the layoffs got me jaded.” Now he’s pursuing a graduate degree in psychology.

Chavez is one of hundreds of thousands of tech workers who’ve been laid off in the past two years in what now seems like a never-ending wave of cuts that has upended the culture of Silicon Valley and the expectations of those who work at some of America’s richest and most powerful companies.

Last year, tech companies laid off more than 260,000 workers according to layoff tracker Layoffs.fyi, cuts that executives mostly blamed on “over-hiring” during the pandemic and high interest rates making it harder to invest in new business ventures. But as those layoffs have dragged into 2024 despite stabilizing interest rates and a booming job market in other industries, the tech workforce is feeling despondent and confused.

The U.S. economy added 353,000 jobs in January, a huge boost that was around twice what economists had expected. And yet, Google, Amazon, Microsoft, Discord, Salesforce and eBay all made significant cuts in January, and the layoffs don’t seem to be abating. On Tuesday, PayPal said in a letter to workers it would cut another 2,500 employees or about 9 percent of its workforce.

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By Gerrit De Vynck
Gerrit De Vynck is a tech reporter for The Washington Post. He writes about Google, artificial intelligence and the algorithms that increasingly shape society. He previously covered tech for seven years at Bloomberg News. Twitter https://twitter.com/GerritD

By Danielle Abril
Danielle Abril covers technology and its impact on workers across industries for The Washington Post. Twitter https://twitter.com/DanielleDigest

By Caroline O'Donovan
Caroline O'Donovan covers Amazon for the tech team. Before joining The Washington Post, she covered tech and labor for BuzzFeed News. Twitter https://twitter.com/ceodonovan

[FalloutShelter]

1. AI works for free.

[lapfog_1]

3. THIS

I use AI at work to write software for me. Pretty much error free the first time. The "thinking" part of the job is in detailing the query sufficiently to solve the issue.

The lower the amount of invention needed the more AI will take over.

I was doing Dev/OPS for a large tech company... but python scripts to process report generation from logs of thousands or millions of log files (JSON or TXT or whatever) can now be completely done by Bard or ChatGPT. Fortunately I was recently promoted to Senior Architect and changed divisions away from the Dev/OPS team. I think the army of engineers in my former division could easily be on the chopping blocks.

On the other hand, my company is growing rapidly so they are still hiring.

[bucolic_frolic]

2. That is productivity in action. Fewer workers, more output.

[TwilightZone]

4. A booming economy doesn't impact all industries and areas equally.

The same goes for economic downturns.

[dutch777]

5. My kid has been in tech for almost 8 years now. He watched his first round of layoffs at Microsoft recently.

It was a bit of a head turner for him as ever since he graduated from college with his EE degree, he only saw more demand for his skillset than any chance of a layoff. As he works in Silicon Valley and has been thru Lockheed Martin, Apple and is now leaving Microsoft (of his own volition for a better position at Meta) he has friends that have gotten caught up in the recent layoffs and even coworkers on his team at Microsoft. His take is that there was so much shortage of talent for so long that many companies, Meta being the most notable, were simply hiring engineers to capture the skills market and have them "on the bench" for the next great idea/initiative. After awhile that proved a liability and they ended up here doing layoffs. Meta especially had its stock turn sharply south and layoffs are a great signal to Wall Street you understand investors want profits not just potential. Other than the shotgun approach eLoon took at Twitter in layoffs, my kid thinks most of the layoffs he has seen directly or via friends in other tech companies have been strategic. Within his own team at Microsoft he said most of those let go were either dead wood or roles that were no longer of high productive value to the mission. It's not kind as some of those folks ended up in dead end roles as a result of company decisions not due to skillset deficiencies.

[getagrip_already]

6. This is nothing new, been in tech for 45 years.....

And layoffs have been a thing for at leat the last 20.

Routine. Layoff out of one door while hiring in another.

Why?

Get rid of excess employees in areas you don't need them with skills you don't need. Hire the skills you want and put them where you need them.

Rinse. Lather. Repeat.

It also let's companies get rid of overpaid employees and replace them with new college hires. They are more productive and lower cost.

People are capital, and they both wear out and become more expensive.