![People walk past a Microsoft office in New York in 2016. Big tech companies like Google and Microsoft and dozens of smaller startups have collectively laid off more than 20,000 workers so far this year.](https://media.npr.org/assets/img/2024/01/27/ap23024789962896_custom-73db0f6fb5fbf6c2c78a73a7e31ac46f27391232.jpg?s=600)
Folks stroll previous a Microsoft workplace in New York in 2016. Massive tech corporations like Google and Microsoft and dozens of smaller startups have collectively laid off greater than 20,000 staff to date this 12 months.
Swayne B. Corridor/AP
Final 12 months was by all accounts a massacre for the tech business, with greater than 260,000 jobs gone — the worst 12 months for Silicon Valley because the dot-com crash of the early 2000s.
Executives justified the mass layoffs by citing a glut of jobs as a result of pandemic, excessive inflation and weak shopper demand.
Now in 2024, the tech workforce is basically again to pre-pandemic ranges, inflation is half of what it was final 12 months, and shopper confidence is rebounding.
Nonetheless, within the first 4 weeks of this 12 months, practically 100 tech corporations, together with Meta, Amazon, Microsoft, Google, TikTok and Salesforce, collectively laid off about 25,000 staff, in accordance with layoffs.fyi, which tracks the tech sector.
MPR Information is supported by members. Presents from people gasoline every part you discover right here. Make a present of any quantity immediately to grow to be a Member!
All the main tech corporations making one other wave of layoffs this 12 months are sitting on prime of mountains of money and intensely worthwhile, so job losses are removed from a matter of necessity or survival.
So what drives her?
“There’s a herd impact in expertise,” stated Jeff Shulman, a professor on the College of Washington’s Foster Faculty of Enterprise who follows the expertise business. “The layoffs appear to be serving to their inventory costs, so these corporations see no cause to close down.”
Shulman provides, “They get away with it as a result of everybody else is doing it. They usually get away with it as a result of now it is the brand new regular,” he stated. “Employees are extra comfy with it, fairness traders admire it, and so I believe we’ll see that proceed for a while.”
Rates of interest, hovering round 5.5%, are a far cry from the near-zero charges of the pandemic. And a few tech corporations are reshuffling employees to prioritize new investments in generative AI. However specialists say these elements don’t sufficiently clarify this month’s layoff frenzy.
No matter is fueling tech job cuts, Wall Avenue has taken notice. The S&P 500 hit a number of all-time highs this month, led by the so-called Magnificent Seven tech shares. Alphabet, Meta and Microsoft set new information, with Microsoft now value over $three trillion.
And as Wall Avenue reels from information of tech layoffs, extra tech corporations are shedding staff.
“You are seeing these tech corporations nearly being rewarded by Wall Avenue for his or her price self-discipline, and that might encourage these corporations and different tech corporations to chop prices and lay off employees,” stated Roger Lee, who runs the corporate. business tracker layoffs.fyi.
Stanford enterprise professor Jeffrey Pfeffer known as the phenomenon of corporations in an business imitating one another’s worker layoffs “copycat layoffs.” As he defined: “Layoffs within the tech business are principally an instance of social contagion, the place corporations imitate what others are doing.”
In different phrases, layoffs are contagious. Pfeffer, who’s an professional on organizational habits, says that when a serious expertise firm downsizes, a competitor’s board could begin to marvel why their executives aren’t doing the identical.
If a whole sector seems to be experiencing a downward shift, Pfeffer argues, it takes the highlight on any particular person firm—which gives cowl for layoffs which can be undertaken to compensate for dangerous choices that led to unfunded investments or methods. torn off.
“It is sort of a self-fulfilling prophecy in a way,” stated Shulman of the College of Washington. “They panicked and did the large layoffs final 12 months, and the market reacted favorably, and now they proceed to climate a storm that has but to totally come.”
Copyright 2024 NPR. To see extra, go to https://www.npr.org.
Correction
01-28-2024
The headline of this story has been corrected so as to add the omitted phrase “off.”