The tech sector shed more
than 386,000 jobs in 2022 and the first half of
2023. And that number is climbing. Google today joined a
growing list of tech giants scaling back,
adding to the tens of thousands of workers in
the industry who find themselves unemployed. It is Amazon doing another
round of layoffs. Mark Zuckerberg's year of
efficiency back in focus this morning after
another round of sweeping layoffs and job cuts. The email that was sent
out in the morning to everyone in the company
basically saying, 'Unfortunately, your role
is impacted.' And that's how I found out. And then
they pretty much shut everything off at the end
of the day. I was on the committee
that was hiring new college grads. It was like thousands and
thousands of applications for maybe like 10 or 15
spots. But I thought if we're
still hiring new college grads, clearly the
company is fine. Why would we hire new
grads if the company were going to do layoffs? Known for its boom and
bust cycles, tech has seen its fair share of layoffs
in recent decades. More recently, the
industry has faced headwinds related to the
crypto crash and the failure of the Silicon
Valley Bank. Job postings for software
development positions, they're down closer to
60% year over year, and they are actually below
their pre-pandemic levels. So we've seen a much
starker pullback in hiring for software development,
which is a lot of tech jobs. But while layoffs have tax
retrenched workers, a booming artificial
intelligence market is giving the industry a
renewed sense of optimism. I have been in San
Francisco for almost 12 years now, and I have
never felt this kind of energy. And I was here
for the mobile boom. I worked at Uber, which I
think was the one company representing that mobile
explosion. And I can tell you it was nothing like
this. Every cafe, every restaurant, every
conversation that you overhear in the street,
half of the time it's ChatGPT, it's AI, it's
the latest company that is being funded. It's
accelerating. Generative AI startup
deals announced or finalized in the first
quarter of 2023 totaled more than $12 billion,
compared with about $4.5 billion invested in the
space in 2022. Amazon, Alphabet and
Microsoft have also made massive investments. The U.S. tech industry
accounts for 10% of the nation's GDP. It employs roughly 12
million people who work in more than half a million
companies. Those businesses are
concentrated in a handful of coastal areas,
including San Jose, Washington, D.C., San
Francisco, Boston and New York City. So how have
layoffs impacted tech workers, and what will
the AI boom mean for their future? The pandemic and ensuing
lockdowns brought the U.S. economy into a tailspin
in March 2020, forcing businesses to shut their
doors. By May, 23 million
Americans lost their jobs. The unemployment rate
surged to 14.7%, the highest since the Great
Depression. But tech companies face a
different climate. Remote work and cloud
computing meant more people were pivoting
towards online services, boosting revenue. Spurred on by rosy
predictions and lower interest rates,
Microsoft, Amazon, Salesforce, Facebook
parent Meta and Google parent Alphabet went on a
hiring spree. Meta had about 72,000
employees at the end of 2021, more than 60%
higher than 2019. Alphabet had more than
190,000 on staff at the end of 2022, 59% higher
than 2019. But after years of
unstoppable growth, Big tech's pandemic bubble
burst, forcing tech companies to trim their
rosters. I want to say upfront that
I take full responsibility for this decision. I'm the founder and CEO. I'm responsible for the
health of our company. Carl Wheatley, a recruiter
for Meta, grew up in the Bay Area and spent four
years working for the social media giant. Meta laid off more than
11,000 workers, or about 13% of its workforce in
November 2022. It announced a few months
later it was reducing its headcount by another
10,000 employees. I was talking to my family
about it. They grew up in the Bay
Area. They've been through multiple layoffs over the
past. I think for our age
group, I would say this is probably one of the, I
think, biggest downtrends for layoffs. Other companies quickly
followed suit. If you want to think about
a company that overbuilt during the pandemic, I'd
say that Amazon is the number one company that
overbuilt. Where is, where are the
cuts? Amazon announced in
January 2023 that 18,000 workers were being laid
off. Two months later, it said an additional 9,000
positions would be trimmed. That same month,
Alphabet cut 12,000 jobs or about 6% of its
workforce. I thought, 'Holy crap,
I've finally made it. I'm working at probably
one of the best companies in the world and I'm
making an amazing salary and I have longevity. Like I am good for many,
many, many, many years.' Paul Baker, a video
producer in tech, worked at Google for six years. We all got this email
early in the morning on January 20th. It just it just hit me
like a ton of bricks. I actually froze going,
'Wait, is this for real?' I opened my work laptop
and it says, no, access denied, no passwords are
working. So I had to look at my
personal laptop, which had an email from them
stating, 'Hey, you've been officially terminated. We're giving you two
months notice, but you're cut off. You're banned
from going to any Google office. You cannot
contact anyone, like, nothing.' Company leadership was in
a far different position. Alphabet CEO Sundar
Pichai's 2022 compensation, for
example, was worth $225 million, about 800 times
the pay of the median employee. The company's
stock has continued to climb since the
announcement. Other companies in the space
that made cuts to their workforce include
Microsoft, Salesforce and SAP. While tech layoffs
have been painful, the blow has been cushioned
in many cases by generous severance packages. Recently laid off, Google
employees in the U.S. received 16 weeks of pay,
plus two weeks for every year of employment. Salesforce employees
received a minimum of nearly five months of
pay. Stephen Campbell, a
software engineer, was laid off from Airtable, a
cloud-based project management service, in
December 2022. One night I stayed up
especially late and woke up to a bunch of Slack
messages saying, 'Are you safe? Are you okay?' And
I thought like, was there an earthquake in SF? Like, what's going on? Obviously I'm safe, I
feel fine. And as I woke up a little
more, I thought, oh, no, like, I know what this
is. And so I like opened up my work laptop and I
got a notification saying, like, 'your access to
this laptop will end in 30 minutes.' With help from a severance
package, Campbell co-founded two new
businesses. Revamp AI uses machine learning and
generative AI to get insights into customer
datasets. His other business hosts
in-person events to discuss the future of
generative AI. The thing about generative
AI in San Francisco right now is that there's
similar buzz to crypto, right? There's all these
meetups, which I'm fortunate to throw some
of them. There's all of this
venture investment going into it. I mean, absurd
amounts of money is getting funneled into
generative AI startups. The difference for me
between generative AI and something like crypto is
generative AI is solving problems for people
today, it's delivering value for people today. San Francisco has 11 out
of 20 of the top AI companies in the U.S. by dollars raised. Collectively, those
businesses took in $15.7 billion between 2008 and
2023. Investments in automation
and AI at big tech companies could be a
contributing factor in recent layoffs, Meta CEO
Mark Zuckerberg told employees prior to its
third round of layoffs that investments in tools
like AI would help engineers write better
code faster and automate workloads. Flo Crivello
founded Lindy in 2022. The company's AI personal
assistant helps automate tasks for workers like
drafting emails, sending calendar invites and
taking notes during meetings. Something absolutely huge
is coming, and I don't think people have quite
realized that yet, that everything is about to
change, especially the information economy and
knowledge workers. Steve Jobs said that
computers were like a bicycle for the mind. I think that AI is like a
jumbo jet for the mind. I think it is going to
radically change how people work and go about
their lives. Generative AI could add as
much as $2.6 to $4.4 trillion to the global
economy annually. I think counterintuitively
it is actually going to result in a net increase
in employment in the tech industry. It's a basic
fact of economics that when something becomes
cheaper, its complement becomes more valuable. Tech workers are a
complement to AI, AI makes tech workers a lot more
productive, and so when something becomes a lot
more productive and a lot more valuable, we want
more of it, not less. I don't know if I
necessarily would want to say that I don't regret
getting laid off sooner, but getting laid off was
such an overall positive experience to me. Really, the only downside
to it was the initial shock that was tough to
deal with. While layoffs are having a
big impact on tech companies, the sector is
accustomed to periods of growth and contraction. Tech has always been an
industry with very high churn and that actually
comes from both sides. So job seekers have
always really valued the flexibility that they
have in order to jump from tech company to startup
to major company to really grow their career. And at the same time,
tech, because it's often at the forefront, has
been a subject to big booms and busts. The bursting of the
dot-com bubble two decades earlier eliminated more
than 1 million jobs. The Great Recession
spurred additional cuts. By 2008, Silicon Valley
tech companies employed 17% fewer workers than in
2001. But there are a few key
differences this time around. Even though two
thirds of tech workers are men, more than half of
those laid off in 2022 and 2023 were women. According to a study
analyzing more than 1,100 LinkedIn profiles, the
groups most heavily impacted by layoffs
include HR and talent sourcing, software
engineers and marketing employees. Bianca Brown
started with Meta in 2019. She was laid off from her
job as a program manager in 2023. I tried to sleep the night
before, I couldn't, and then maybe it was around
the 8:00 a.m. mark I got the email. My heart kind of dropped. You know, I took a deep
breath and I was like, okay, you know, this is
your new reality, this is something you have to
navigate. The study also found 48%
of laid off employees were between 30 to 40 years
old. 89% were based in the
U.S. and the average employee
had about 12 years of work experience. And while the
number of U.S. tech jobs are projected
to slightly lag the longer-term trend, the
demand for tech workers should remain high for
the foreseeable future. The unemployment rate for
tech workers as of May 2023 was 2%, well below
the national figure of 3.7%. While tech
companies shed a modest 4,700 jobs that month,
over the course of the entire year, a
significant number of jobs were added in IT
services, cloud infrastructure, data
processing and hosting and tech manufacturing. Employment opportunities
for software developers is predicted to grow by 26%
between 2021 and 2031. It is a cooler job market
for tech workers than it was maybe a year or two
ago. But at the same time, a
lot of these skills and experiences from the tech
sector are still in high demand. Oftentimes these
tech skills and this experience from the tech
industry is very valuable in other parts of the
economy as well. Tech workers are also
finding jobs in other industries desperate for
their skill set, ranging from financial services
and manufacturing to the government. Nationwide,
tech workers earn on average $87,000 annually,
60% more than the average U.S. salary of $54,000. California tech workers
average about $117,000 a year. Despite those
trends, competition for jobs remains fierce as
unemployed workers face a restless job market. I've already applied to
probably about 165 jobs, and I've had only two
interviews and both were first interviews after
the recruiter and they ghosted me like didn't
respond to my emails, nothing. So we're also
living in a time where people just don't get
back to you. And if you go on LinkedIn,
there's so many recruiters and designers and
engineers and everyone looking for jobs, right? There's hundreds or
thousands of people applying for the same
role. I just tell everyone, put your sales
cap on, get a tool where you can find emails and
you kind of have to go out there and kind of find
your own job.
