Technology companies are driving unemployment to levels unseen since the beginning of the pandemic.
In recent weeks, companies like Meta and Twitter announced that thousands of employees would be laid off for a multitude of reasons — and those not firing are freezing or slowing down their hiring efforts.
“For the big companies, it’s reasonable to assume that the rising tide that has been floating their boats for the past 15 years is just now a lot choppier,” said Jo-Ellen Pozner, an assistant professor of management at Santa Clara University’s Leavey School of Business.
“They clearly need to trim and to rationalize projects that they just haven’t had to do for a decade and a half because the environment was so munificent.”
The dream seems to be over for the technology industry, which up until now has ridden a steady coast of high stock market valuations and revenue streams. However, the graying economy serves as a bad omen for both investors and leaders.
According to data from Layoffs.fyi, over 104,000 startup employees lost their jobs this year, exceeding the 81,000 job losses seen in 2020.
However, the reasons for layoffs today differ from those of early 2020.
At the helm of the pandemic, companies quickly slashed jobs to navigate uncharted waters. But luckily for the technology industry, the mass transition to remote work meant the need for more technology.
Now set the scene for 2022. Many companies are ushering employees back into the office, vaccinations are readily available and the severity of illness has fallen. So why are tech companies struggling even more today?
For companies like Meta, the lack of focus and commitment to the metaverse has led it to lose over 71% of its valuation this year. For others, political upheaval and global affairs left them with disappointing profits and exceedingly high losses.
Additionally, interest rates are currently sitting at unprecedented levels, meaning companies are tightening their belts more than ever before as inflation dashes any hope for solid earnings.