There is a bloodbath among large companies as they keep announcing new layoffs by the thousands. Surprisingly, the biggest wave to hit the labor market in 2022 came from Facebook’s parent company, Meta, which announced plans to eliminate a whooping 11,000 employees from their payroll. What’s happening and should you be concerned? We take a closer look.
The Biggest Layoffs of 2022
⦁ Meta: Facebook’s parent company expanded its workforce by approximately 60% during the pandemic. The company has also been pouring billions into Zuckerberg’s metaverse vision. Unfortunately, things did not work out, and they are now moving to reduce their payroll by about 11,000 heads.
⦁ Amazon: Just a few days after Facebook disclosed their sad news, Amazon, too, confessed to planning on losing about 10,000 employees. However, the number may be insignificant, considering that it represents only about 1% of Amazon’s global staffing and 3% of its corporate employees.
⦁ Twitter: The largest layoff by percentage (50%) in 2022 was delivered by Twitter shortly after Musk won the fierce legal battle to secure the platform. The world’s richest man insisted he would make Twitter a super app, but he also had to lose 3,700 employees immediately. He pointed at Twitter’s $4m daily loss to justify his decision.
⦁ Tesla: Twitter was not the only company Musk decided to shrink, seeing as he announced plans to cut off 10% of Tesla’s workers. The electric car manufacturer’s CEO wrote a company-wide email breaking the news, saying they had become overstaffed in many areas.
⦁ Coinbase: The crypto platform announced in June that it will trim 1,100 people that make up about 18% of its workforce. The company would continue providing severance for 14 weeks and an additional two weeks for every employment year, among other minor benefits.
⦁ Robinhood: The brokerage firm reduced 23% of its workforce in August, just a few months after slashing 9% of employees, which brings the total to 31%. The crypto market has not done well in 2022, which might explain why giants in the space have to reduce their payrolls.
Other popular companies that made significant layoffs include Microsoft, Shopify, BizPay, Peloton, Lyft, Netflix, Stripe, Snap, Klarna, and Affirm.
What’s Driving the Layoffs?
To set the record straight, although the tech niche is worst hit, significant layoffs are happening across industries. For example, NBC reports that real estate analysts in the US are estimating major job cuts over the next few years, much like what was witnessed during the 2008 housing crash.
Among the most significant layoffs in real estate so far is mortgage platform Better.com, which let 3,000 employees go in March 2022, followed by 500 more by August. LoanDepot, too, laid off 2,800 workers in July and announced a further 2,000-worker layoff by the end of the year.
A similar trend can be observed in the gambling industry as the likes of MGM Resorts International had to fire workers by the thousands. Still, online casinos do not seem to be plagued by layoffs as much as their land-based counterparts. Moreover, Macau’s Employee Association is crying out on behalf of about 20,000 workers who are on unpaid holiday and receiving no assistance.
That said, experts in the tech industry site pandemic over-hiring as the major driver of the ongoing layoffs. Silicon Valley is especially the worst hit because the big companies rushed to hoard workers during and right after the pandemic, when people were over-reliant on technology. For instance, Microsoft, Alphabet, and Meta swelled by upwards of 20%.
Presently, things are bouncing back to normal and there are warnings of an impending recession, which is why companies are in such a hurry to trim the fat.
Add the rampant inflation affecting currencies globally and reduced earnings across startups, just as we are approaching a new fiscal year, and you can see why they would want to cut labor costs sharply.
For example, Meta, which we mentioned earlier was shedding 11,000 workers, has been experiencing consistent revenue decline for months. The company had a market share of less than 500 billion USD at the time of writing, having dropped all the way from $1 trillion in just a year. Employees are always the first to suffer in such cases.
Are We Staring at an Impending Recession?
The boom experienced in tech during and just after the pandemic is bursting. Admittedly, the numbers are not looking so bad yet. In the US, where the most layoffs occur, there are over 159 million employees, and the payrolls increased by 261,000 in October 2022. Although the layoffs (1.3 million) were significantly more than the newly-filled positions, they only represent a 0.9% rate, which is still on the low side.
Yet, we cannot ignore the other facts at hand. The crypto market is crashing, inflation is affecting world currencies at an alarming rate, and people are losing jobs. Experts warn we could be headed into a recession. The CEO of Coinbase, Brian Armstrong, hinted at a possible recession in his effort to justify the company’s 1,100 workers layoff.
Among the most pronounced characteristics of a recession are high unemployment rates, massive layoffs, and reduced economic activity. We are already experiencing low economic activity, billions of dollars in lost revenues, 40-year high inflation of major currencies, and worrying layoff numbers.
There’s no telling how bad it’s going to get. Still, we could be heading into a recession and the panic that’s sparking the huge wave of layoffs only works to catalyze the process.