High-tech companies are announcing layoffs in droves, from Google and Amazon to Boston-based Wayfair. The titans of the last hiring boom say they are preparing for a slower economy and unwinding some of their massive growth from the pandemic years.
Wayfair, the online home goods retailer, on Friday announced it would cut 1,750 workers, including 937 who report into Massachusetts locations. That’s on top of hundreds of prior cuts last summer.
In a public letter to employees, Wayfair chief executive Niraj Shah said, “Unfortunately, along the way, we over complicated things, lost sight of some of our fundamentals and simply grew too big.” He said the company is looking to reap $750 million in savings from the job cuts.
It's a theme playing out across the technology sector. Mark Zandi, chief economist at Moody’s Analytics, said the layoffs are in part a hangover from the tech industry’s recent hiring.
“They hired lots and lots of folks and they had a hard time digesting all that,” Zandi said. In addition, with life returning more to normal in the wake of COVID, he said, demand is down for some tech products and services.
Overall, the job market remains strong, with the U.S. unemployment rate at 3.5%.
“What's happening is folks are losing these jobs at these big tech companies, but they're getting hired again pretty quickly by other companies who need tech workers,” Zandi said.
Still, the numbers of tech layoffs mean upheaval for tens of thousands of workers — from Microsoft, Twitter, Facebook parent Meta, Salesforce and many other companies. Google’s parent, Alphabet, on Friday said it would cut 12,000 jobs, or 6% of its workforce. It's not clear yet how any of the Boston area locations for these companies will be affected.
According to the website Layoffs.fyi, more than 155,000 tech workers were laid off in 2022. Another 55,300 have been announced already this year.
Economists are expecting a slower economy but many are still optimistic there won't be a full-fledged recession. The Federal Reserve's efforts to slow inflation by raising interest rates has hammered the stock market, including tech stocks. And consumer spending is taking a hit from higher costs.
As for jobs, Goldman Sachs economic research this week said there are still 4.7 million more available positions than workers. The Wall Street firm expects the jobless rate to edge up to 4% by the end of 2023.