Tens of thousands of tech workers have been laid off this year. Estimates vary depending on when you start counting — January or June — and how you categorize workers. For example, can an order picker for Amazon be considered a technician? Or a driver for Microsoft?
About 175,700 workers found jobs in the technology sector this year, according to trade group CompTIA. At the same time, Meta, the e-commerce giant and Facebook’s parent company, has announced plans to lay off more than 11,000 workers, about 13% of its workforce. Twitter, which is currently in the news after being taken over by far-right billionaire Elon Musk, has laid off around 3,700 employees; Lyft, Uber’s main competitor, laid off 700 employees from its administration; Stripe, a major online payments company, another 1,100.
Intel, the largest US chipmaker, is tied to the PC market. They announced they would cut their costs by $3 billion on forecasts of a sharp drop in PC sales.
Meta’s layoffs come with a huge drop in stock value. Valued at $1 trillion just a year ago, the company’s value, as measured by its stock market price, has fallen to a quarter of its peak. According to the Nov. 10 New York Times, “Stocks like Meta, Microsoft, Amazon and Apple have suffered staggering losses [in market value] this year.”
Large losses in stock market values shake the capitalist economy. In its ostensible aim to control inflation, which is now at its highest level since the 1980s, the Federal Reserve has raised interest rates and made it clear that the price of borrowing money, also known as interest rates, has been falling for a while stay high.
The Fed’s strategy makes speculation more expensive for capitalists and bursts speculative bubbles in relation to loss-making companies. This can lead to a recession that penalizes workers as they often lose their jobs. Losing a job hits the workers most likely living paycheck to paycheck. They often lose significant benefits on top of their health insurance. Facebook, for example, offered free meals, dry cleaning, and a car service to bring techs home when they were working late.
The number of layoffs is important. When massive layoffs occur in an industry, laid-off workers have a much harder time finding a new job.
In search of super-profits when there have been technological changes that increase productivity, capitalism has an innate tendency to produce more goods than can be sold at a profit. The first companies to adopt the changes can reap big profits as they increase sales. This forces others to adopt the new technology. (See “Capitalism at a Dead End” by Fred Goldstein for a discussion of the impact of dramatic technological leaps on the capitalist economy.)
For a technology company, the technological changes result from the skills that its employees have or are developing. One way for a technology company to ensure it had people capable of developing new technology was to hire as many skilled R&D people as possible and sales representatives to sell what it produced. This meant they hired many workers and speculated they might need them as sales increased.
Now that there’s less demand for what they’re producing, tech companies The aim is to reduce costs in order to work profitably. They do this by eliminating workers. Unemployment numbers are still low, but mass layoffs in the tech sector suggest the coming recession will be severe.