What Amazon, Meta and Twitter Layoffs Mean for the Economy
Amazon is expected to lay off about 10,000 workers in corporate and technology jobs, NPR reported on Nov. 14. That news came after Facebook parent Meta laid off 11,000 workers and Twitter laid off about 3,700 following Elon Musk’s takeover of the social media company.
Other tech firms either planning or announcing job cuts include Stripe, Salesforce, Microsoft, Zillow, Snap and Robinhood.
The fact that so many high-profile tech names are reducing their workforces has led to speculation over what it might mean for the economy at large. As Fortune reported earlier in November, the job cuts come after a decade of robust growth and lavish spending in the tech industry. But with signs of a global recession on the horizon, major tech layoffs could be a bellwether of the broader economy.
“Oftentimes the tech industry is the leading indicator of what’s going to happen next,” John Anderson, a managing director of executive search firm Allegis Partners, told Time. “With the macroeconomic trends right now, we could definitely see some spillover into other industries.”
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Not everyone is sounding the alarm just yet, however. Although companies like Amazon and Facebook enjoy wide brand recognition, they still operate in an industry that makes up only a small portion of overall jobs, The Week noted. The recent layoffs could be a reflection of nothing more than declining demand in a tech industry that was bound to fall back following such a long boom.
“The once-in-a-lifetime conditions that fostered their growth have now kind of evaporated,” Julia Pollack, chief economist at ZipRecruiter, told The Week. “I think the fallout for the rest of the economy will be pretty limited.”
One thing to keep in mind is that the U.S. job market remains historically strong. Payrolls rose by 261,000 jobs in October, according to the U.S. Bureau of Labor Statistics, though unemployment rose slightly to 3.7%. Even with the recent round of tech layoffs, there are still plenty of companies hiring in a labor market that remains very tight.
Bledi Taska, chief economist at labor market consulting and research firm Lightcast, told CNBC that while the tech layoffs are “unfortunate,” the U.S. labor market “is significantly larger and has been overall healthy.”
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About 159 million people are currently employed in the United States, CNBC reported. Over the past month, there were only 1.3 million layoffs — less than 1% of the total.
Meanwhile, some sectors of the economy are still in hiring mode. These include the Professional and Business Sector, where layoffs actually declined in September. Layoffs at startups have also fallen in recent months.
“Overall, this means that while it is important to follow some of the high-profile tech layoffs, they are not indicative of the overall trends in the labor market, or even in the tech sector,” Taska said.
And as The Week noted, some of the tech industry’s wounds are self-inflicted. Examples include Facebook and Google-owned YouTube, both of which have suffered a drop in profits due to the steep rise of TikTok.
As for Twitter: Many of its problems can be traced to Musk, whose unpredictable behavior since taking over the platform caused many advertisers to bail out.
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