As of: February 11, 2024, 5:57 p.m
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San Francisco Bay Area - the heart of the US tech industry (symbolic image).
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Last year, tech companies in the US laid off more than 260,000 employees.
“This is the way the American capitalist system works,” they say.
SAN FRANCISCO - The first time Julian Chavez was fired from his job as a digital advertising representative at web.com, it didn't scare him away from the tech industry.
Not even the second time he was fired from ZipRecruiter.
By the third time, however, Chavez had had enough.
“I really loved what I did,” Chavez said in a text message from Phoenix.
“But the layoffs have blunted me.” He is now pursuing a college degree in psychology.
Hundreds of thousands of layoffs in the US tech industry
Chavez is one of hundreds of thousands of tech workers who have been laid off over the past two years in a seemingly never-ending wave of cuts that have undermined Silicon Valley's culture and the expectations of those who work at some of America's richest and most powerful companies , turned upside down.
Last year, tech companies laid off more than 260,000 employees, according to layoffs website Layoffs.fyi, with executives blaming "overcrowding" during the pandemic and high interest rates that make investing in new business ventures difficult.
But as these layoffs drag on into 2024 despite stable interest rates and a booming job market in other industries, tech workers are left feeling alienated.
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The U.S. economy added 353,000 new jobs in January, a huge boost that was about twice what economists expected.
Still, Google, Amazon, Microsoft, Discord, Salesforce and eBay made significant cuts in January, and the layoffs don't appear to be slowing down.
On Tuesday, PayPal said in a letter to employees that it would lay off an additional 2,500 employees, or about 9 percent of its workforce.
The ongoing cuts come at a time when companies are under pressure from investors to improve profits.
Wall Street's 2022 selloff in tech stocks forced companies to win back investors by focusing on boosting profits and laying off some of the tens of thousands of employees hired to support the pandemic tech boom -Address consumer spending.
With many tech companies laying off employees, downsizing is no longer a sign of weakness.
Now executives are looking for more places where they can get more work out of fewer people.
“This is the way the American capitalist system works.”
“We will continue to be careful about what we invest in and we will continue to invest in new areas and things that resonate with customers.
And where we can create efficiencies and do more with less, we will do that,” Amazon Chief Financial Officer Brian Olsavsky said in response to a reporter’s question during a media conference.
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"This is the way the American capitalist system works," said Mark Zandi, chief economist at Moody's Analytics.
“It is reckless when it comes to the pursuit of profitability and wealth creation.
It diverts resources from one place to another very quickly.”
Economic concerns and inflation in 2022 and 2023 also caused companies to buy less software and cloud services, said Gil Luria, a tech analyst at DA Davidson Co.
“This has impacted the entire software ecosystem, and looking ahead to 2024, the latest data seems to indicate that things have not gotten any worse, but they haven't gotten any better either,” Luria said.
“Their customers haven’t loosened their purse strings.”
Unable to return to the eye-popping revenue growth of recent years, tech executives are instead choosing to make things positive for Wall Street by continually laying off highly paid employees.
This seems to work.
In 2022, the Nasdaq Composite, a stock index dominated by tech companies, lost a full third of its value.
In 2023 it rose by 43 percent.
In January it rose another 3 percent.
The shine of the technology industry is gone
While stock prices have risen, sentiment in the San Francisco Bay Area - the heart of the US tech industry - has only fallen further.
Some of the power tech workers thought they had to change jobs and receive higher salaries and richer stock awards has evaporated.
For many tech workers, the shine is gone from an industry to which they dedicated their lives in return for a permanent job, lots of perks and the chance to win lucrative stock options.
Google and Meta have in recent years eliminated perks for their employees such as free laundry, free massages, and dining and fitness options.
“It seems like the tech industry has changed forever since the mass layoffs,” one anonymous employee wrote on the workplace gossip app Blind this week.
“The feeling of job insecurity is brand new,” said Julia Grummel, a former senior product designer at a Bay Area software company.
According to Grummel, since she was laid off in February 2023, she has received rejections from automated systems, been put off by employers after several rounds of interviews, and has received rejections without any feedback.
And she faces competition from a large number of other laid-off workers.
Some companies that have already laid off employees have expressed interest in her, but she is cautious, says Grummel.
“I’m not really interested in joining an organization that has shown that it doesn’t value the people who make the company run.”
Like Chavez, she says she's starting to look for a different kind of work, focusing less on pay and more on jobs that offer a better work-life balance and more meaning and fulfillment, she says.
Laid off employees from tech companies: “It feels very hopeless”
Even workers with years of experience or strong technical knowledge have difficulty getting rehired.
Parker Lopez, a machine learning engineer and data scientist in Seattle, was laid off from his job at a health technology startup in May 2023.
The last time he was on the job market several years ago, it only took him three months to find a job.
This time, however, he applied for more than 1,000 positions without success.
“It feels very hopeless,” he says.
Even with several years of experience in software development, data science, and manufacturing, including at Microsoft, laid-off Amazon employee Jennifer Pearl found it difficult to land an interview.
Pearl said she used to be able to find a job within days.
“I’m worried,” she said.
"I've been doing this stuff for 20 years - and right now I'm lucky if I get a call back."
Some of the recent layoffs have targeted middle managers who led the teams affected by previous waves of layoffs.
Some of them are trying to return to jobs writing code rather than directing the work of others because they assume those jobs are safer.
Workers who tried to change companies every three or four years to maximize the number of stock options they could accumulate are now staying put.
The once well-paid and desirable jobs in the technology sector are becoming less attractive
Tech workers have enjoyed a year of non-stop discussions about the boom in artificial intelligence and its potential impact on the workforce.
Many programmers use AI tools to write their code faster.
And tech executives and professionals often talk about how much more efficient workers will be in the near future.
AI-confident executives argue that companies will make more money as their employees become more productive, leading to more growth and more jobs.
But tech workers themselves aren't so sure.
And neither are economists.
"The technology sector could be able to produce a lot and innovate a lot without having to work as many people," said Zandi, the Moody's economist.
“This is a lesson from AI.”
The once well-paid and sought-after jobs in the technology sector have become less secure and less attractive for many in recent years.
As a result, workers are more willing to take a lower-paying job, make a career change or look for alternative employment opportunities.
A former user experience meta-researcher in the Bay Area, who wished to remain anonymous so as not to affect her future employment prospects, has found the job search difficult since she was laid off last April.
Originally working in academia, she moved into industry to expand her knowledge and secure job security, good benefits and higher pay.
“It was the idea of stability,” she said of her move into the tech industry.
“But now we’re here.”
To the authors
Danielle Abril
reports on technology and its impact on workers across industries for The Washington Post.
Gerrit De Vynck
is a technology reporter at The Washington Post.
He writes about Google, artificial intelligence and the algorithms that are increasingly shaping society.
He previously covered technology at Bloomberg News for seven years.
We are currently testing machine translations. This article was automatically translated from English into German.
This article was first published in English on February 3, 2024 at the “Washingtonpost.com” - as part of a cooperation, it is now also available in translation to readers of the IPPEN.MEDIA portals.