Stop Worrying About All Those Tech Layoffs…

I needed to drop a fast be aware concerning the countless spate of layoff bulletins — and why it’s best to (largely) ignore them.

Let’s begin with some numbers:

Microsoft        22,000            (10%)

Amazon          18,000            (1%)

Google            12,000            (6.4%)

Salesforce       7,000              (10%)

Tesla               10,000             (10%)

Twitter           3,700              (50%)

Apple              0                      (0%)

Take into account a number of issues as you take into account these large tech layoffs:

First, as Sam Ro reminds us, Tech employment represents about 3% of the workforce. The massive scary tech layoffs are a small portion of the general workforce. It’s a traditional case of context-free knowledge; my favourite phrase for that is “Denominator Blindness.”

Second, what seems to be like large layoffs are the truth is a tiny share of simply the current hiring (to say nothing of the whole workforce) of those identical companies. Amazon, now has 1.5 million staff, greater than half of whom had been employed in 2020-2022. Google simply fired 12,000 folks; they employed 57,000 over the previous two years. Microsoft laid off 10% of its 221,000 workforce bringing headcount again to mid-2021 ranges. Tesla, Netflix, Salesforce, and others appear to be undoing a modest share of the current 9excess) hiring over the previous two years.

Final, the Labor market stays very sturdy. Unemployment is low, job openings are nonetheless excessive, and what seems to be salaries are nonetheless rising.

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I’ve a really vivid recollection of huge firings throughout the 2007-09 monetary disaster. Because the chart above exhibits, Unemployment spiked to 10%, layoffs had been ubiquitous. It was very ugly interval, particularly so near the dotcom debacle a number of years earlier. Even that implosion despatched unemployment 6.3%, almost double present ranges.

Put away your GFC-based PTSD. The current period of rate of interest normalization just isn’t remotely similar to these eras.

Not less than, not but . . .

See Additionally:
Mind the anecdata ? (Sam Ro, Jan 22, 2023)

The American Rescue Plan was the best economic policy in forty years (Claudia Sahm, Dec 7, 2021)

Beforehand:
The Plural of Anecdote IS Data (February 4, 2019)

Fearing the Dramatic, Complacent for the Mundane (April 29, 2019)

Denominator Blindness, Shark Attack edition (February 5, 2019)

Shark Attacks Illustrate an Investing Problem (February 4, 2019)

Don’t Suffer From Denominator Blindness (October 14, 2015)