Amazon had hoped to show that tech can boost cities

Amazon staff cuts are set off by the uncertain economy and the rapid hiring over the last few years: A note on the post by Andy Jassy

In a blog post, Amazon CEO Andy Jassy wrote that the staff reductions were set off by the uncertain economy and the company’s rapid hiring over the last several years.

Jassy tried to strike an optimistic note in the Wednesday blog post announcing the massive staff reduction, writing: “Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so.”

Last year, Amazon was the latest Big Tech company to watch growth slow down from its pandemic-era tear, just as inflation being at a 40-year high crimped sales.

The job cuts were part of a broader cost-cutting move to trim down its growing workforce amid more sluggish sales and fears of a potential recession. Many of the tech companies that went on hiring binges in the past couple of years have been trimming their workforce as well.

“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing,” Benioff wrote in a note to staff.

Facebook owner Meta, as well as Twitter, Snap and Vimeo, have all announced major staff reductions in recent months, a remarkable reversal for an industry that has experienced gangbusters growth for more than a decade.

For Amazon, the pandemic was an enormous boon to its bottom line, with online sales skyrocketing as people avoided in-store shopping and the need for cloud storage exploded with more businesses and governments moving operations online. And that, in turn, led Amazon to go on a hiring spree, adding hundreds of thousands of jobs over the past several years.

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The company intends to help cushion the blow for laid off workers despite the hiring that went too far, according to CEO Jassy.

The package that Jassy said they are providing includes a separation payment, transitional health insurance benefits, and external job placement support.

Zach Goldsztejn, an Amazon spokesperson, told CNN that the pause is not a result or indicative of role eliminations at the company. Goldsztejn said Amazon’s long-term intention and commitment regarding HQ2 remains unchanged, including the company’s plans to bring 25,000 corporate and tech jobs to the new headquarters.

We’re always evaluating space plans to make sure they fit our business needs, and since Met Park will have space to accommodate more than 17,000 employees, we’ve shifted the ground-breaking ceremony for Pen Place out of the first phase.

The first phase of the new campus, called Met Park, will be a hive of activity in June, when Amazon will welcome over 8,000 new employees to its headquarters.

Amazon had planned to build its second HQ in two phases. The first building had two million square feet of office space, followed by three more buildings and the centerpiece tower called the Helix, which is a cross between a custard swirl and the poop symbol.

In light of a shift in demand and broader economic uncertainty, a number of tech companies are rethinking their real estate footprint and investments. Facebook-parent Meta, Microsoft, Salesforce and Snap have each shuttered offices or announced plans to cut back on real estate in recent months.

In Atlanta, Microsoft paused the development of a campus, and in San Francisco, businesses are facing the effects of multiple tech office closings.

Some community members have said the tech pullback feels like “broken promises” and raised concerns about the potential fallout from these moves in their neighborhoods.

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In his statement, Schoettler said Amazon remains committed to Arlington, including “investing in affordable housing, funding computer science education in schools across the region, and supporting dozens of local nonprofits.”

HQ2’s first phase, known as Metropolitan Park, will open on schedule in June of this year, Amazon says. The company isn’t sure when they will be able to build the second phase, which was previously planned to include more than 1 million square feet of office space and 115,000 square feet of retail.

Amazon has told its employees to come back to work. Last month, Amazon CEO Andy Jassy said the company would require corporate employees to return to the office at least three days a week, a shift from from the prior policy that allowed leaders to make the call on how their teams worked. The change, which will be effectively on May 1, has ignited some pushback from employees who say they prefer to work remotely.

The company is expecting to apply for permits later in the year for the construction work in Virginia, said Goldsztejn. He said final timing for the second phase of the project is still being determined. The company had previously said it planned to complete the project by 2025.