Amid a move to lay off about 18,000 people, Amazon sent mass emails informing workers their roles had been eliminated. At Google’s New York City location, employees stood in line to test their badges, hoping to receive a reassuring green light instead of the dreaded red flash of dismissal. The two tech giants have joined countless other industry leaders, including Microsoft, Spotify, and Intel, in trimming their workforces, with recent data showing tech layoffs at their highest levels since the 2008 recession. Although some of the world’s brightest minds flocked to tech companies for their flexibility, prestige, high compensation, and perceived stability in the wake of the COVID-19 pandemic, the so-called “Great Resignation” has quickly turned into the “Great Termination.”
Chester Spell, a professor of management in the Rutgers School of Business–Camden, believes businesses and workers will both struggle with the industry-wide trend toward cutting labor costs.
“Many companies in the tech industry hired aggressively over the past couple years or so, and the layoffs are simply reacting to over-hiring,” Spell said. “There have been many boom-and-bust cycles in tech, so it is nothing new to the industry.” Job loss in the sector is still below the fallout from the bursting of the dot-com bubble, when nearly 300,000 tech workers lost their positions between 2001 and 2002.
Spell believes the Great Termination may have been set in motion by the 3,200 layoffs Elon Musk initiated when he took over as owner of Twitter. News of these abrupt dismissals—most of which occurred via email—grabbed headlines and rose to the top of social media feeds. Spell points to the very public nature of Twitter’s reorganization as a signal to other companies that they needed to do the same in order to compete.
“Companies constantly keep an eye on what the ‘other guy’ is doing. There is a whole area of research on mimicry of competitors by business organizations,” Spell said, pointing to research that shows corporate initiatives like mandatory drug testing and employee assistance programs have become commonplace not because of hard data supporting their efficacy, but because companies wanted to mirror industry leaders. “There is a lot of uncertainty in the business world, so when companies don’t know the right course of action, they look to their competitors. But this could also be a reaction to the widely anticipated recession.”
Whether tech workers go back to school or land new employment, Spell thinks the current challenges for out-of-work tech employees will prove to be only temporary. History has shown that the industry, although volatile, is resilient, and its employees’ skills stay in demand.
“I have seen this industry up close,” Spell said. “While there may be bumpy times ahead for tech workers in the short term, many will end up at smaller companies, and work there until one of the giants acquires them again.”
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