Layoffs take Big Tech back to more modest future

Alphabet’s plan to cut 12,000 jobs adds to the sense that U.S. technology firms are preparing for a more modest future. But it’s still grander than the not-so-distant past.

The Google parent joins rivals Microsoft, Amazon.com and Meta Platforms, who are firing nearly 40,000 people between them. Tech firms based in the United States announced over 97,000 job cuts in 2022 according to consulting firm Challenger, Gray and Christmas, the most since the dot-com crash. Over 80% of these occurred in the final three months of the year. Moreover, new job postings fell sharply at the end of 2022, according to trade group CompTIA.

Even so, the pandemic bounty remains. There were 4.4 million people employed in tech in December, according to provisional figures from the U.S. Bureau of Labor Statistics. That’s an all-time high, and over 440,000 more than in February 2020, the month before Covid-19 hit America. Alphabet, Microsoft, Cisco Systems and Amazon all said they are cutting about 5% of employees. If all tech firms did the same, that would leave employment at 4.2 million, or about 5% larger than it was at the end of 2019.

That seems about right. Tech revenue and employment can be volatile, but tends to grow faster than the economy at large. In the period from 2012 to the end of 2019, for example, America’s GDP grew 2.3% annually according to the Federal Reserve, while tech jobs increased at a rate of about 3%. For bosses like Alphabet’s Sundar Pichai or Microsoft’s Satya Nadella, who’d rather not retrench too much, cutting around 5% of staff is enough to show investors they’re serious about costs, without signaling an all-out retreat. Reuters