Nearly 25,000 tech workers were laid off in the first weeks of 2024. Why is that?

The tech industry experienced a significant downturn in 2023, with over 260,000 job losses, marking the toughest year since the early 2000s dot-com crash. Executives attributed these mass layoffs to factors such as a pandemic-induced hiring surge, high inflation, and declining consumer demand. Entering 2024, the situation seemed to stabilize, with workforce levels, inflation rates, and consumer confidence showing signs of recovery. Despite this, the first month of the year witnessed nearly 100 tech companies, including giants like Meta, Amazon, and Google, laying off around 25,000 employees. This trend is not driven by financial necessity, as these companies remain highly profitable and cash-rich. Experts, like Jeff Shulman from the University of Washington, suggest a “herding effect” in the tech industry, where layoffs boost stock prices and have become the new norm, driven by investor satisfaction rather than operational demands. The phenomenon is described as “copycat layoffs,” with companies mimicking each other’s cost-cutting measures, contributing to a cycle of job cuts that continues despite a lack of immediate financial crises.

Source: NPR