In the first few weeks of it’s existence, over 24,000 tech workers were laid off
How Tech Company Layoffs Have Saved a Supposedly Small Stock Market: The Fate of the Tech Sector, and the Status of Silicon Valley
“There is a herding effect in tech,” said Jeff Shulman, a professor at the University of Washington’s Foster School of Business, who follows the tech industry. These companies aren’t going to stop because the layoffs seem to be helping their stock prices.
If it appears as if an entire sector is experiencing a downward shift, Pfeffer argues, it takes the focus off of any single individual company — which provides cover for layoffs that are undertaken to make up for bad decisions that led to investments or strategies not paying off.
There are companies in one industry that have the same amount of employees and end them in the same way. Tech industry layoffs are an example of social influence, in which companies imitate what others are doing.
All of the major tech companies conducting another wave of layoffs this year are sitting atop mountains of cash and are wildly profitable, so the job-shedding is far from a matter of necessity or survival.
Whatever is fueling the workforce downsizing in tech, Wall Street has taken notice. The S&P 500 has notched multiple all-time records this month, led by the so-called Magnificent Seven technology stocks. Alphabet, Meta and Microsoft all set new records, with Microsoft’s worth now exceeding $3 trillion.
Interest rates are less than zero, but they’re far from zero. And some tech companies are reshuffling staff to prioritize new investments in generative AI. But experts say those factors do not sufficiently explain this month’s layoff frenzy.
Everybody is doing it, so they’re getting away with it. He said that they’re getting away with it since it’s the new normal. “Workers are more comfortable with it, stock investors are appreciating it, and so I think we’ll see it continue for some time.”
Now in 2024, tech company workforces have largely returned to pre-pandemic levels, inflation is half of what it was this time last year and consumer confidence is rebounding.
Last year was, by all accounts, a bloodbath for the tech industry, with more than 260,000 jobs vanishing — the worse 12 months for Silicon Valley since the dot-com crash of the early 2000s.
