SAN FRANCISCO – The first time Julian Chavez was fired from his job as a digital ad sales representative at web.com didn't deter him from the tech industry. That wasn't the case the second time, either, when he was fired by ZipRecruiter. By the third time, however, Chavez had had enough.
“I really loved what I did,” the Phoenix-based Chavez said in a text message. “But the layoffs exhausted me.” He is now aiming for a degree in psychology.
Chavez is one of hundreds of thousands of tech workers laid off over the past two years as part of a seemingly never-ending wave of cuts that has upended Silicon Valley's culture and the expectations of those who work there, including the richest and most powerful Companies of America.
Tech companies laid off more than 260,000 workers last year, according to layoff tracker Layoffs.fyi. Executives attributed these cuts largely to “over-hiring” during the pandemic and high interest rates that made it harder to invest in new business ventures. But as these layoffs stretch into 2024 despite stabilizing interest rates and a booming job market in other industries, the tech workforce is feeling discouraged and confused.
The U.S. economy added 353,000 jobs in January, a huge boost that was about 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 appear to be letting up. On Tuesday, PayPal said in a letter to workers that it would cut another 2,500 employees, or about 9 percent of its workforce.
The continued cuts come as companies face pressure from investors to improve profits. Wall Street's 2022 selloff in tech stocks prompted companies to win back investors by focusing on boosting profits and laying off some of the tens of thousands of workers hired to handle the pandemic boom in consumer spending on technology . With many tech companies laying off workers, job cuts are no longer a sign of weakness. Now leaders are looking for more places to get more work out of fewer employees.
“We will continue to be careful about what we invest in and we will continue to invest in new things and 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 earnings conference call on Thursday.
“This is how the American capitalist system works,” said Mark Zandi, chief economist at Moody's Analytics. “It is ruthless when it comes to making profits and creating wealth. It redirects resources from one place to another very quickly.”
Economic worries and inflation in 2022 and 2023 also limited the amount of software and cloud services companies bought, said Gil Luria, technology analyst at DA Davidson Co.
“This has impacted the entire software ecosystem, and looking ahead to 2024, it looks like the latest data suggests that things are no longer getting worse, but not yet better,” Luria said. “Your customers haven’t loosened their purse strings.”
Failing to match the eye-popping revenue growth of recent years, tech executives are instead opting to turn things around for Wall Street by continually shedding high-paid workers instead.
It seems to work. In 2022, the Nasdaq Composite, a stock index dominated by technology companies, lost a full third of its value. In 2023 it grew by 43 percent. In January it rose another 3 percent.
Shine emerged from the technology industry
While stocks have risen, sentiment in the San Francisco Bay Area — the heart of the U.S. tech industry — has only fallen further. Some of the power that tech workers thought they had to change jobs and achieve higher salaries and larger stock bonuses has evaporated.
For many tech workers, the luster has been lost from an industry to which they had dedicated their lives in return for steady employment, flashy perks and the chance at lucrative stock options. Google and Meta have in recent years restricted employee perks such as free laundry, free massages, and dining and fitness offerings. “Seems like technology has changed forever since the mass layoffs,” an anonymous worker posted on the workplace gossip app Blind this week.
“It's a completely new thing to feel unsafe at work,” said Julia Grummel, a former senior product designer at a Bay Area software company. Grummel says she has received rejections from automated systems since she was fired in February 2023, was rejected by employers after multiple rounds of applications, and received rejections without any feedback. And she faces competition from a large number of other laid-off workers like her.
She has drawn interest from some companies that have already cut employees, but she is wary of them, Grummel said. “I’m not really interested in joining an organization that has shown it doesn’t value the people who keep the business running.”
Like Chavez, she said she is thinking about looking for other types of work, focusing less on pay and more on jobs that could offer a better work-life balance and more meaning and fulfillment, she said.
Even workers with years of experience or deep technical expertise 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. When he was last on the job market a few years ago, it only took three months before he was found to work. But this time he unsuccessfully applied for more than 1,000 jobs.
“It feels very pointless,” he said.
Despite several years of experience in software development, data science and manufacturing, including at Microsoft, fired Amazon contractor Jennifer Pearl found it difficult to get an interview. Pearl previously said they got a job within days.
“I’m worried,” they said. “I've been doing this for 20 years… and now I'm lucky enough to get a call back. ”
Some of the more recent layoffs have targeted middle managers who led the teams hit by previous waves of cuts. Some of them are trying to return to jobs where they write code rather than directing the work of others, assuming that these roles may be safer. Workers who tried to jump from company to company every three or four years to maximize the amount of stock options they could accumulate are now staying put.
Tech workers have also been subjected to a year of nonstop discussion about the artificial intelligence boom and its potential impact on the workforce. Many programmers are using AI tools to write code faster, and executives and tech experts often talk about how much more efficient employees will be in the near future.
Shining AI leaders argue that as workers become more productive, companies will make more money, leading to more growth and more jobs.
But the technicians themselves aren't so sure. Neither of them are economists.
“The tech sector could be able to produce a lot and innovate a lot without so many people moving forward,” said Zandi, the Moody's economist. “This is a lesson from AI.”
Once shiny, high-paying and highly sought-after tech jobs have become less secure and less attractive for many in recent years. As a result, employees are more likely to accept a lower-paying job, make a career change or seek alternative employment opportunities.
For a former meta-user experience researcher in the Bay Area, who spoke on condition of anonymity to avoid affecting her future employment prospects, the job search has been 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 wages.
“It was the perception of stability,” she said of entering the tech industry. “Yet here we are.”
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