Not long ago, one did not have to look far to find articles decrying labor shortages in technology-related industries and efforts by companies to recruit and keep workers amidst what many call “The Great Resignation.” Technology companies, fueled by relentless demand to meet supply-chain shortages and develop leading-edge technologies for the future, were seemingly on a never-ending quest to find workers.

Fast forward to June, however, and the picture is not so rosy. Both established tech companies and venture-capital funded startups are starting to lay off workers, impose hiring freezes, and rescind job offers to newly-minted college graduates.  This is bad news to a country already impacted by rapidly rising prices for energy and consumer goods, ongoing supply-chain issues, and an unstable global geo-political climate that is unlikely to get better any time soon.

Unemployment Creeps Up

According to the most recent data from the BLS (Bureau of Labor Statistics), the advance figure for seasonally adjusted, initial unemployment claims was 229,000 for the week ended June 4, up 27,000 from the previous week, which was 202,000 after an initial adjustment. According to the BLS, the four-week moving average of initial unemployment claims was 215,000, up 8,000 from the moving average the previous week.

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The BOL statistics do not break down the numbers by industry, so how much of that unemployment increase was related to technology jobs is unknown. A CompTIA analysis of April BLS data pegged tech unemployment at 1.7%, which is still very low.  Also, the CompTIA website, which follows IT-related employment, indicates that tech companies are still hiring, as tech job postings in key states such as California and Texas actually rose in May.

But while tech employment remains at historically low levels, one wonders if some of the sobering announcements from tech companies in the past month are just a temporary blip, or a harbinger of more bad news as companies start announcing second-quarter earnings in the coming weeks.

In the electronics industry, the most telling news came from Intel. A number of wire service reports stated that Intel has imposed a temporary hiring freeze in its client computing group, which in Intel’s last quarter accounted for more than 50% of sales. In its March quarter, Intel reported that this group’s revenue had declined 13% year-over-year due to lower consumer and education demand as well as inventory burnoff. During its first-quarter earnings call, Intel warned that global supply-chain issues and some soft spots in demand would affect its second-quarter revenue guidance.

Industries such as electronics and automotive are particularly vulnerable to ongoing supply-chain shortages and global geopolitical instability, as many of their suppliers are offshore in areas like China. Trade issues and COVID-related plant interruptions have continued to affect those regions, interrupting product shipments and casting a pall over near-term revenue forecasts.

Intel is not alone. In May, Meta, the company behind Facebook, reportedly enacted a hiring freeze as revenue growth slowed. Netflix reportedly also cut 150 workers last month, while Microsoft has reportedly slowed hiring in some of its software groups.

Job Offers Rescinded

The uneasiness starting to creep into larger, well-known tech companies has already permeated companies in fledgling industries, such as cryptocurrency.

A recent story in the New York Post, a New York City metropolitan area newspaper, reported that cryptocurrency company Coinbase announced a hiring freeze, which included rescinding job offers to recent hires such as college students. One was a foreign student on a visa who accepted a job offer at Coinbase’s Seattle location in March and had just signed a lease on an apartment there.

Several weeks earlier, the Post had reported that a tech worker hired by Twitter had his offer for a Mexico-based role pulled back as the social media company has been in buyout discussions with Tesla CEO Eton Musk. While those talks are temporarily on hold, several high-ranking Twitter executives have also resigned.

Not surprisingly, Musk is also in the spotlight in the current fray of job cut rumors. Musk, who had demanded that Tesla workers return to the office, recently threatened to reduce Tesla’s workforce by 10%. The outspoken CEO later apparently backtracked by issuing an internal memo stating that the company’s salaried staff will not significantly change in headcount.

Spencer Chin is a Senior Editor for Design News covering the electronics beat. He has many years of experience covering developments in components, semiconductors, subsystems, power, and other facets of electronics from both a business/supply-chain and technology perspective. He can be reached at [email protected].