Friday’s jobs report came in strong: the US economy added 261,000 new jobs in October, blowing away analyst expectations of 200,000, even as unemployment ticked up to 3.7%.
But don’t let the jobs boom lull you into a false sense of employment security. Job cuts and pauses on hiring are beginning to flow across the tech sector, which boasts some of the most valuable companies in the world. That’s bad news for the economy as a whole.
Tech companies are announcing an alarming number of layoffs and hiring freezes.
News about layoffs at Meta made headlines today.
- Amazon announced on Thursday that it is pressing pause on corporate hiring. “We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense,” wrote Beth Galetti, senior vice president of people experience and technology at Amazon in a note to employees.
Late last month, Amazon forecast its revenue for the holiday quarter would be lighter than analysts had expected, causing its stock to fall sharply. Shares of Amazon are down more than 47% this year.
- Apple has reportedly instituted a hiring freeze of its own in all areas except research and development. In a statement, Apple said that it will continue to hire and is confident in its future, “but given the current economic environment we’re taking a very deliberate approach in some parts of the business.”
Like other tech companies, Apple is worried about slower growth during the holiday season, higher interest rates and waning consumer spending. Covid lockdowns in China are also hurting production of the iPhone 14. Apple stock is down about 25% so far this year.
- Lyft said last Thursday that it will lay off 13% of its employees, or nearly 700 people, as it rethinks staffing amid rising inflation and fears of a looming recession. “We know today will be hard,” Lyft founders Logan Green and John Zimmer wrote in an employee memo obtained by CNN. “We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up.”
In a filing announcing the layoffs, Lyft said it would likely incur $27 to $32 million in restructuring charges. “We are not immune to the realities of inflation and a slowing economy,” Lyft’s founders wrote in the memo to staffers. Shares of the car-share company are down nearly 70% so far this year.
- Online payments giant Stripe will lay off about 14% of its staff, CEO Patrick Collison wrote in a memo to staff Thursday. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” Collison wrote in the note. Just last year, Stripe became the most valuable US startup, with a valuation of $95 billion.
Chime, a private fintech firm, also announced it will lay off 12% of its 1,300-person workforce.
- Twitter on Friday announced extreme layoffs, noting that offices would be locked and badge access suspended as new CEO Elon Musk cuts about half of its 7,500-person workforce.
THE BOTTOM LINE
Headline jobs numbers and third-quarter corporate earnings still reflect a strong economy overall. But other companies won’t be immune to the softening demand from consumers and businesses that tech companies have noted.