Tech Layoffs Persist Despite Positive BLS Jobs Report

If one relies on data provided by the U.S. Bureau of Labor Statistics, the employment situation in the U.S. would appear to be at least stable, with the January unemployment rate stuck at 3.7%  for the third month in a row and total nonfarm payroll employment increasing by 353,000 last month. But for anyone following tech companies, there’s plenty of evidence that tech employment is anything but stable.

According to the site layoffs.fyi, more than 25,000 were laid off in January 2024. This is well below the 80,000 to 90,000 in the same month a year ago (see graph), but still somewhat higher than in recent months. January appears to be a prime month for employers to reduce staff to help meet their budgets and headcount goals for the new year.

Layoffs at tech companies are well down from a year ago but have not subsided. (layoffs.fyi)

What the numbers do indicate is that business remains iffy in many tech sectors and companies are likely continuing to experience the lingering effects of the COVID-19 pandemic, when many companies admittedly overhired to meet robust demand for products and services at the time.

Telecom Demand Stagnant

In this current round of job cuts, network infrastructure provider Cisco is one of the largest companies cutting staff, having cut 5% of its workforce, or 4250 employees. In announcing the cuts, Cisco CEO Chuck Robbins told analysts last month that demand remained sluggish for telecom and cable service providers and the company was being cautious with near-term forecasts.

Google, which announced workforce reductions last year, continued to pare its workforce last month, slashing several hundred employees in its Google hardware and central engineering teams, as well as those working on Google Assistant.

If Google CEO Sundar Pichai’s words are any indication, the company may not be done with layoffs yet. In an article on Verge, Pichai was quoted as saying, “We have ambitious goals and will be investing in our big priorities this year,” he told all Google employees in an internal memo. “The reality is that to create the capacity for this investment, we have to make tough choices.”

Computing giant Microsoft also cut headcount, announcing it would cut 1,900 employees in its Activision Blizzard and Xbox divisions. This amounts to 8.6% of its 22,000 employees in its gaming business.

Amazon laid off an unknown number of employees at its Prime Video and MGM Studios, and cut 500 in its Twitch business.

Slow Electric Vehicle Sales

Meanwhile, the lower-than-expected demand for electric vehicles is also now having ripple effects on employment. EV maker Rivian announced this week it would lay off 10% of its workforce, or over 1,000 workers. Rivian, which currently manufactures EVs skewed toward the high end of the price scale, said it would not increase the number of EVs built this year as demand continues to be slack.

Is AI Responsible?

The boom in artificial intelligence has been accompanied by increasing concerns that incorporating AI in company operations may be at least partially responsible for some of the layoffs. While many companies say AI is playing a larger role in their operations, none will openly admit that AI is responsible. There are no numbers to either verify or refute that AI use is contributing to layoffs. Even career experts say the role of AI in layoffs and company restructuring is hard to establish.

Many companies incorporating AI in their processes or tools say the science, while replacing some mundane tasks, will help make existing employees more productive by speeding design and calculations.