Mass tech layoff wave in U.S. slowly ebbing
After mass layoffs in the tech sector in the summer months of June, July and August, the wave of established companies like Twitter, Tiktok and Netflix as well as crypto companies like Coinbase letting go parts of their workforce is now seemingly coming to an end. With inflation rates slowly receding to April 2022 levels in part due to aggressive interest rate hikes by the Fed, September saw 44 companies incorporated in the U.S. laying off workers. As our chart based on data from Layoffs.fyi shows, this represents the lowest amount since May 2022.
Between April and September, 358 startups and techoriented companies incorporated in the United States laid off employees compared to just 20 in the first quarter. For example, online used car retailer Carvana reduced its workforce by 2,500 employees in May. The staff cuts of more notable companies like Netflix or PayPal were comparably minor in this timeframe. The former dismissed 450 or around four% of its employees during the second quarter of 2022, while PayPal terminated contracts for 83 of its workers.
The most notable cases of companies reducing their workforce in September were publishing company Medium, crowdfunding platform Patreon, which laid off almost 20% of its employees and shuttered its Dublin and Berlin offices, and Twilio. The latter let go of around 11% or about 800 people to prepare the company supplying AirBnB, Lyft, and Netflix with corporate communications solutions for a more profitable 2023. CEO Jeff Lawson called this move “wise and necessary” in a message to staff.
July saw social media giants TikTok and Twitter laying off several employees. Chinese tech firm Bytedance owns the former, but it stores the data of its non-Chinese users in the U.S. and can be considered a fringe case in terms of being incorporated in the United States. In the case of Twitter, increasing pressure due to the potential takeover by Tesla CEO Elon Musk was one of the suspected reasons for these layoffs. One of Musk’s most ambitious rivals, the Amazonbacked electric vehicle manufacturer Rivian, also cut 840 of its staff in July due to the world having “dramatically changed”.
Another industry plagued by fraud, increased hacker attacks and a drastic loss in value for many cryptocurrencies over the past months is the fintech sector. For example, between April and August, industry darlings like neobroker Robinhood, NFT marketplace OpenSea, and cryptocurrency exchange Coinbase all had to let go between 20% and one third of their workforce due to effects at least in part attributable to the so-called “crypto winter”. (Statista)