The tech sector is starting the new year on just as shaky ground as it left the last: 150,000 tech workers lost their jobs in 2022, with more than half of them happening in November and December alone, according to Layoffs.fyi. And more than 18,000 tech workers have been laid off in the first half of January from major players like Amazon and Salesforce.
More big layoffs are probably on the way, says Roger Lee, the creator of Layoffs.fyi and a San Francisco-based HR tech founder. He started tracking tech layoffs in March 2020 in part to connect jobless workers with hiring managers at companies still growing through the pandemic.
Despite the recent deluge of layoffs, Lee says there’s some hope the current wave of cuts could slow. Lee says the latest wave of tech layoffs started in the spring of 2022, around the time the Federal Reserve began its aggressive series of interest rate hikes.
“There’s obvious correlation between the Fed raising interest rates and these tech companies doing layoffs,” Lee says. That’s because when interest rates rise, it gets more expensive for companies to borrow money and grow their business. Many tech leaders, including Meta’s Mark Zuckerberg and Amazon’s Andy Jassy, say new layoffs are a result of over-hiring in the last two years.
But, Lee says, “As of now, the Fed is projected to to slow down its pace of rate increases, and many believe that by the end of this year, they’ll pause the rate hikes and maybe even start bringing them down.” When that happens, potentially by the second half of 2023, “I do expect that that tech layoff swell will finally subside as well,” Lee says.
It’s important to remember that the overall job market is pretty strong, and tech workers losing their jobs are getting hired again quickly. As of November, the layoff rate was below 1% of the workforce, and there were 1.7 job openings for every available worker, according to Labor Department Data.
“There are many companies still hiring, and far more job openings than there have been layoffs, so there’s reason to be optimistic for folks who have been laid off recently,” Lee says.
How to job-search in a layoff environment
With layoffs top of mind, Lee says it’s important to research the stability of a prospective employer.
First, you’ll want to figure out what the company’s current business priority is — are they re-staffing, scaling or launching something new? What are they prioritizing and de-prioritizing?
Then, make sure your expertise aligns with the company’s priorities and their core business strategy right now.
If it’s a public company, Lee suggests looking at their earnings to get a sense of whether they’re profitable or on their way. That kind of information is harder to find for private companies, so you might ask a recruiter directly: Is the company profitable? If not, how much cash runway does it have?
You could also address the elephant in the room: How is the company prepared to handle a potential recession, and how does this role in particular play into that?
It’s also worth asking if the company has done layoffs before. If so, what was the reason, and how did they message it? How did they handle outgoing employees? How did leaders consider the impact on morale and productivity for those who stayed behind?
“Folks are more sensitive to this now,” Lee says. “Understanding the company’s past actions can give job-seekers a sense of how the company makes decisions and how to treat their employees during the process.”
Also remember that while there are some patterns in recent layoffs, not every company is focused on cutting costs in the same way. For example, Lee says, “while one company might be laying off its advertising division, because they’re focused less on advertising revenue, a different company may be actually investing very aggressively in advertising.”
Finally, Lee recommends checking to see if the company lists pay in their job ads and any other information about their pay philosophy online.
A handful of states and cities, including California, New York City, Washington and Colorado legally require employers to include pay ranges on their job listings. And Lee’s new website Comprehensive.io is a database of open tech jobs and listed pay in one place.
Lee says job-seekers can use this information to understand their market value in general and where they could land at a specific employer. In addition to salary potential, he adds, a company’s pay information “can be a signal of what they value, both in terms of compensating employees fairly, but also just their approach to the transparency with employees overall.”
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