The layoff announcements dropped one after another, accelerating throughout the second half of 2022. Amazon began laying off what will be 18,000 employees. Lyft, the ride-share company, said it would dismiss 700 of its workers, or 13 percent of its staff. The technology giants Meta and Twitter announced that they were cutting thousands of employees.
The new year brought even more bleeding in Silicon Valley: Last week, Google’s parent company, Alphabet, said it planned to lay off 12,000 of its workers, Microsoft said it would cut 10,000 employees and on Monday, Spotify said it would reduce its staff by 6 percent, about 600 people. Add up the losses and more than 216,000 tech employees have been laid off since the start of 2022, according to Layoffs.fyi, a site that tracks job cuts in the sector.
The layoffs have an ominous feel to anyone who is tracking news on the economy and the tumult in recent months relating to inflation, interest rates and the labor market. But the tech job cuts are not necessarily bad news for the economy overall, or even for Silicon Valley. (They account for about 4 percent of the tech sector’s total workers.) In today’s newsletter, I will explain what the cuts mean for the broader economy.
Boom and bust
To understand why tech companies are laying off workers now, turn back to the pandemic, when the industry was booming. In 2020 and 2021, sales spiked for companies like Amazon, as e-commerce took off and consumers who were suddenly spending much more time at home were buying goods at a record pace.
Demand for workers quickly escalated, and tech companies were competing against each other to hire talent. A virtual gold rush was on for engineers, according to my colleague Tripp Mickle, a reporter based in San Francisco who covers Apple and the tech industry.
As the pandemic waned, many companies faced a new problem: They had been on a hiring binge, but now they were confronting a possible recession — and heavy pressure from investors to scale back.
“Now, tech is in a position of resetting itself,” Tripp said. “But if you look at the fundamentals of most of these businesses, they remain pretty strong. It’s just that they went through a period of accelerated growth, and the ability to sustain that is difficult.”
Still, the layoffs contain at least one positive sign for the labor market: A lot of traditional industries need tech employees, so this is an opportunity for those companies to scoop up talent. The health care industry, the federal government, private companies in retail or manufacturing — all of them need engineers and other people with high-tech skills. What is Google’s loss could be Walmart’s gain.
But there are no signs that the layoffs will end anytime soon, especially as the Federal Reserve has suggested that it will keep increasing interest rates this year to try to cool the economy.
Consider the tech industry’s place in the broader economy — and whether tech layoffs will spread to other industries.
One factor that makes the tech industry stand out is its dependence on valuation, since companies often raise a lot of money to pour into risky or unproven assets. Companies that are very forward looking tend to take a hit when interest rates increase, which could partly explain the waves of layoffs, Jeanna Smialek, a Times reporter who covers the Federal Reserve and the economy, told me.
The tech sector can be a leading indicator, telling us where the economy is headed before the rest of the economy goes there.
“You don’t want to dismiss tech layoffs as meaningless,” Jeanna said. “They can sometimes be the canary in the coal mine.”
But she also warned not to read too much into them. Besides being especially market-sensitive, the tech sector is a very small slice of the overall work force in the United States — about 2 percent of all jobs in the economy. Jobless claims overall remain very low, and more than 10.5 million jobs are open across the country.
Layoffs can be even more chaotic when you find out about them while working from home.
The Justice Department sued Google, accusing it of abusing a monopoly in advertising tech and seeking to break up its online ad business.
Rupert Murdoch dropped a plan to combine his media companies, Fox and News Corp, describing a merger as “not optimal for shareholders.”
Walmart is raising its minimum pay for hourly workers to $14 an hour, from $12.
THE LATEST NEWS
Aides to former Vice President Mike Pence found classified documents at his Indiana home.
A bipartisan group of senators accused Ticketmaster of bullying competitors at a hearing prompted by a debacle around Taylor Swift concert tickets.
President Biden’s handling of classified documents blurs the case against Donald Trump. Politically, it has effectively let Trump off the hook for hoarding secret papers.
The 11 people killed over the weekend in the Monterey Park, Calif., shooting ranged from 57 to 76. Many were Chinese immigrants.
The authorities have not yet named the seven people killed in Monday’s shooting in Half Moon Bay, Calif.
A gunman killed three people at a convenience store in Washington State yesterday. He killed himself after a manhunt, the police said.
“We shouldn’t be asking average civilians to be heroes”: Bystanders have put their bodies on the line to end mass shootings.
Mass shootings across the U.S. have killed at least 69 people in January.
War in Ukraine
The U.S. and Germany are both planning to send battle tanks to Ukraine after weeks of political wrangling.
Ukraine fired several top officials in a corruption scandal, a big upheaval in Volodymyr Zelensky’s government.
Other Big Stories
A tornado tore through communities near Houston yesterday. The threat of severe weather is moving east today.
A shortage of natural gas has hit China this winter. Local governments are struggling to afford it after enormous zero-Covid spending.
Sixty-seven journalists were killed around the world in 2022, the most in five years.
Ben Jealous, a civil rights activist and author, will become the first person of color to lead the Sierra Club, a prominent U.S. environmental group.
The F.D.A. proposed limits for the amount of lead in baby foods after studies showed that many processed products contained dangerous levels.
The price of U.S. stamps has gone up again. A first-class Forever stamp is now 63 cents, instead of 60.
Alec Baldwin’s case is a reminder that if you are involved in a serious incident, it’s best not to talk to the police without an attorney present, Farhad Manjoo writes.
It’s in the best interest of the U.S. to help China develop new treatments to blunt Covid’s spread, Michael Callahan argues.
Spirit Mountain: A sacred site near Las Vegas may finally become a national monument.
Top 1 percent of restaurants: There are fruit beetles on the menu. Will that type of eating last?
R.I.P.: A beloved celebrity bear in Italy has died.
Tips: You should actually follow these food expiration dates.
Advice from Wirecutter: A good ice scraper is worth it.
Lives Lived: Witty and contrarian, Victor Navasky was the longtime editor and later publisher of The Nation magazine and wrote an acclaimed book about the Hollywood blacklisting era. He died at 90.
SPORTS NEWS FROM THE ATHLETIC
Hall of Fame: Scott Rolen, a veteran of 17 big league seasons, will be inducted into the Baseball Hall of Fame this year.
Hoyas snap streak: Georgetown beat DePaul last night, the Hoyas’ first win in Big East play in their last 29 games.
All-Star game: Bronny James, LeBron James’s son, will play in the McDonald’s All-American Game, an event that has hosted some of basketball’s biggest stars.
ARTS AND IDEAS
This year’s Oscar nominations
“Everything Everywhere All at Once,” the dimension-bending adventure from the directing duo known as the Daniels, was nominated for 11 Academy Awards. It’s up for best picture, best director and acting awards for its four stars, Michelle Yeoh, Ke Huy Quan, Stephanie Hsu and Jamie Lee Curtis. Among the other nominees:
Two big-budget action movies, “Avatar: The Way of Water” and “Top Gun: Maverick,” received best picture nominations, alongside more traditional awards-show fare like “Tár” and Steven Spielberg’s “The Fabelmans.”
“The Banshees of Inisherin,” a dark comedy, and the German war film “All Quiet on the Western Front” earned nine nominations each.
Among the snubs: Jordan Peele’s “Nope” and the action hit “The Woman King” were overlooked, and no women were nominated for best director.
PLAY, WATCH, EAT
What to Cook
The hosts talked about Pence and his classified documents.
Now Time to Play
The pangram from yesterday’s Spelling Bee was windmilled. Here is today’s puzzle.
Here’s today’s Mini Crossword, and a clue: I, for one (five letters).
And here’s today’s Wordle.
Thanks for spending part of your morning with The Times. See you tomorrow.
P.S. Anna Kodé, a Times Real Estate reporter, traveled to Nashville, Denver and Seattle to write about America’s startlingly similar-looking residential buildings.
Here’s today’s front page.
“The Daily” is about nonprofit hospitals.
Matthew Cullen, Lauren Jackson, Claire Moses, Ian Prasad Philbrick, Tom Wright-Piersanti and Ashley Wu contributed to The Morning. You can reach the team at email@example.com.