Many workers in tech companies are now getting laid off, which may serve as a warning sign for more widescale layoffs during the year, Washington Examiner reports.
The technology sector has seen lackluster stock performances, and many in it believe an economic recession will inevitably begin sometime in the coming months. Although the overall labor market reportedly remains strong, some economists say it will take a turn for the worse as the Federal Reserve continues to hike interest rates.
Amazon To Fire 18,000 Workers As Tech Layoffs Surge https://t.co/Vl9YIIyO1J
— zerohedge (@zerohedge) January 5, 2023
Numerous fortune 500 companies have already begun to announce layoffs of thousands of workers. Amazon, for instance, recently announced it will be cutting another 18,000 workers.
Others joining Amazon in mass layoffs include Meta, who said last year that over 1,000 jobs would be terminated in what amounted to the most cuts by the company in almost 20 years of operations.
Meanwhile, Salesforce is projected to cut a tenth of its entire workforce. CEO Marc Benioff claimed that the company brought on an excess of employees, forcing them to now make a decision.
“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” he reportedly said to workers.
As it stands, these losses have mostly remained in the tech sector. However, some economists have predicted that other industries will soon face similar issues in wake of numerous historic Federal Reserve rate hikes beginning in early 2022.
Currently, the target interest rate set by the central bank, 4.25% to 4.50%, is at the highest level seen since before the 2008 financial crisis.
Mark Hamrick, who serves as the senior economic analyst for consumer financial services company Bankrate, said that low-interest rates seen during the Covid-19 pandemic led to expansion in the technology sector. Now, many companies are being forced to size down.
“In that situation, money tends to flow very easily, and tech was a target for a lot of money, including for some firms that either weren’t profitable or showed no prospect of profitability,” he reportedly told the Washington Examiner. “The cycle is in a different phase now, and the economy is in what would appear to be in a slowing phase.”