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Business Manager: Julian Cassady
(This Article is Not Financial Advice)
Starting back in November of 2022, America’s biggest tech companies like Microsoft, Meta, and Amazon began the process of laying off a significant number of employees.
This could be a bad thing for not only the individuals affected by the layoffs but also for the whole economy. In this article, I intend to explain why these layoffs shouldn’t be as alarming as they seem.
It’s important to know that while the economy has been stagnant for the past year, these layoffs shouldn’t be considered an indication that the economy is in a total collapse like some headlines are saying.
My first argument for why the big tech layoffs shouldn’t be frightening is, most importantly, the availability of jobs after termination.
Many tech companies overhired during the COVID-19 stimulus boom over the last few years as consumer demand rose with increased purchasing power. Now that the stimulus period has ended, consumers are spending back to near pre-COVID levels.
Some of these companies overcompensated and are now “trimming the fat.”
Most of the terminated employees are middle-management or those with high-skill that are in desperate need elsewhere. So, smaller tech companies are lining up with lucrative offers for those former big tech employees.
Additionally, the percentage of employees laid off compared to the total number of employees for the tech giants is very small.
For example, Amazon has been making headlines for laying off around 18,000 employees since November last year, which sounds reasonably worrisome. The severity becomes misleading once you consider that 18,000 is only 1.2% of Amazon’s 1.45 million-person workforce.
When the data is presented this way, it’s easy to tell that this round of layoffs pales in comparison to the layoffs during the 2008 recession and the Dotcom bubble.
Along with the companies mentioned at the beginning of the article, other well-known tech companies like Twitter, Tesla, Salesforce, Uber, and Doordash have also laid off a number of employees.
Apple is the sole exception to this layoff trend.
So far, Apple has been operating similarly to COVID stimulus levels, despite iPhone sales going down dramatically over the past year.
Wall St. analysts and retail investors are predicting that Apple will announce layoffs during its earnings call on Thursday, February 2nd, after the stock market closes at 4 PM.
My sentiment is that Apple will indeed announce a first round of layoffs, which will drop the stock price between 3-5%. This will have a significant effect on the overall market, causing many other stocks to also go down.
However, despite my prediction, I stand firm in my belief that these layoffs are not indicative of a significant ongoing recession.
There is always a possibility Apple reveals that it is laying off 10% of its staff, but this is very unlikely to happen.
I know we are in a stagnant period in our economy, where no major growth is happening, and companies have to fight over what’s currently available, whether it be staff, customers, or resources.
I also know that the stock market will be in a slow decline over the next few years due to macroeconomic fears like inflation and world politics.