By Jon Swartz
The Great Resignation is pivoting to a Forced Resignation.
Thousands of layoffs in the tech sector, compounded by hiring freezes and a slowdown in hiring, highlight the abrupt shift in fortunes over the past several months as a result of rampant inflation, fear of stagflation and recession, supply-chain interruptions, the war in Ukraine, an ailing stock market and other red-alert economic factors.
The latest blows came Tuesday, when Coinbase Global Inc. /zigman2/quotes/225893452/composite COIN -10.55% announced an 18% layoff of about 1,100 people and real-estate brokerage Redfin Corp. /zigman2/quotes/203726414/composite RDFN -8.44% said it would reduce head count by about 470 people, or 6% of its workforce.
Read more: Redfin to cut 470 jobs, stock sinks toward record low
“Everybody needs to batten down the hatches. We are in stormy, stormy seas with choppy weather on the horizon,” media titan Jeffrey Katzenberg, a board member and investor in cybersecurity startup Aura , told MarketWatch.
In recent weeks, a broad cross-section of companies across all sectors have announced layoffs or plans to limit hiring amid the economic crucible. In addition to Coinbase and Redfin, Peloton Interactive Inc. /zigman2/quotes/208035743/composite PTON -6.88% , PayPal Holdings Inc. /zigman2/quotes/208054269/composite PYPL -1.85% , Tesla Inc. /zigman2/quotes/203558040/composite TSLA -2.44% , Carvana Co. /zigman2/quotes/206651606/composite CVNA -10.83% and others said they intend to slash staff. At the same time, some of tech’s biggest players — Facebook parent company Meta Platforms Inc. /zigman2/quotes/205064656/composite META -1.01% , Intel Corp.’s /zigman2/quotes/203649727/composite INTC -2.43% client-computing group, Microsoft Corp. /zigman2/quotes/207732364/composite MSFT +0.71% , Uber Technologies Inc. /zigman2/quotes/211348248/composite UBER -2.48% and Lyft Inc. /zigman2/quotes/208999293/composite LYFT -5.85% — are slowing down or freezing hires.
All told, at least 15,000 tech-related jobs have been or will be eliminated, according to Layoffs.fyi , a website that tracks job cuts at startups.
Downturns in spending on PCs, tablets and advertising have only added to the tumult, and there are whispers that even cloud-computing — which led a wave of internet expansion the past decade — could be flattening. It’s all contributed to a convulsive shift from hiring binge to belt-tightening, especially among startups.
“It’s been a challenging last three years with the pandemic, and another two coming with secular [economic] headwinds,” Starz Chief Executive Jeffrey Hirsch told MarketWatch.
The effect has been most pronounced among Silicon Valley startups, say local economists. “With the uncertainty of recession, a slowdown in short-term demand and possibly more rate hikes, understandably there will be a pause for startups and, for in the short term, for the really big players,” Stephen Levy, director and senior economist of the Center for Continuing Study of the California Economy, told MarketWatch.
Diminished prospects and a balky market have already delayed the IPO dreams of startups and prompted others to scale back hiring plans. Max Cohen, co-founder and CEO of Sprinter Health, a startup in Menlo Park, Calif., initially planned to double headcount to 60 this year but has since reduced it to 48.
“The questions now are, Are you hiring and how much?” Cohen, a former employee at Google and Meta, told MarketWatch.
For larger companies, the impact is more subtle. Major expansion is still on for Google in Mountain View, Calif., and San Jose, and for Meta in Menlo Park, Calif., and nearby Moffett Park, but it remains to be seen if they will fill those facilities with people as quickly as originally planned. “It may take them longer, perhaps 12 months, before things pick up again for big tech,” Levy said.
Representatives from tech’s largest companies are mostly mum on their hiring plans, though Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -1.13% said it is aggressively adding staff. “With tens of thousands of corporate and tech roles currently available, we continue to look for talented individuals to help us build the future of retail, robotics, health care, devices, cloud computing, and more,” Amazon spokesperson Kelly Nantel told MarketWatch.
For now, Big Tech is taking a beating in market valuation. The market cap aggregate of about 300 publicly traded tech companies with operations in San Francisco and the valley is at its lowest now, $9.98 trillion, since late 2020 after peaking at nearly $15 trillion in November 2021, says Rachel Massaro, vice president of research at the Silicon Valley Institute for Regional Studies.
“There is certainly a confluence of things that are making everyday life difficult,” Massaro told MarketWatch. “That is a huge impact trickling down to companies, management, and the hiring level.” [The unemployment rate in Santa Clara and San Mateo counties, in the heart of the valley, is at a 22-year low of 1.8%, though that could change if layoffs pick up and hiring clamps down.]