Your Evening Briefing: New Year Brings a Big Tech Firing Boom

Unemployment in the US may be low, but the new year has nevertheless been marked by big technology companies slashing employees by the thousands—32,000 to be exact. The 2024 round of mass terminations follows a 2023 during which the tech industry was also heavily engaged in dismissing large numbers of staff. Fear of a recession that never came, pullbacks on pandemic hiring, satisfying activist investors and reallocation of resources toward artificial intelligence have been among the justifications given. Snap became the latest to fire hundreds of workers, having just announced that 540 people, or about 10% of its employees, would lose their jobs. Earlier this month, software company Okta said it would eliminate 7% of its staff, or 400 people. The list goes on, including Big Tech employers like Amazon, Salesforce and Facebook-owner Meta. “I do feel like most of the layoffs have happened, and companies are going to start to rebound,” said Bert Bean, chief executive of staffing company Insight Global. “But it’s still very uncertain.”

The ubiquity of layoffs has convinced a generation of American managers that periodic downsizing is necessary—even beneficial—for companies. But it’s not, Sarah Green Carmichael writes in Bloomberg Opinion. Regular layoffs are a widespread yet deeply corrosive business practice. While the people who get fired suffer psychological and financial distress, there also are costs to organizations that regularly lay people off. Managers become lazier about the difficult work of hiring, coaching and giving feedback, she writes. And among layoff survivors, morale and engagement sink and turnover increases. Researchers estimate these effects linger for about three years—when another layoff will likely come along.