MASS LAYOFFS AND TAINTED REPUTATIONS

How COVID-19 Led to the Rise and Fall of Large Technology Companies

Yoonseo Lee

PUBLICITY DIRECTOR

Thousands of employees nervously await one email from their employer: They either encounter a congratulating note of continued employment or a disappointing end to their career. At large technology companies, a trend of mass layo s is in full swing, potentially signaling the end of a tech boom era.

Recent reports from Layo s.fyi, an organization that tracks tech job cuts, revealed that more than 120,000 jobs in the industry have been lost globally this year. Furthermore, companies are continuing to announce future layo s. According to Times Magazine, Meta is planning to lay o 11,000 of its workers—equivalent to 13% of its sta , Twitter is planning to dismiss 3,700 employees—roughly half of its workforce, and Amazon is preparing to cut 10,000 jobs. Other large companies, such as Microsoft, Lyft, and Stripe, have announced similar plans. This year’s layo season represents more than a temporary recession: massive company downsizings not only result in mass unemployment but also foreshadow lost profits and tarnished reputations.

The COVID-19 pandemic introduced us to a new “normal,” with more consumers opting to shift their in-person activities online. In response, tech companies went on a hiring spree, handing out high salaries and benefits for more employees. They also rapidly expanded and created teams to adapt to consumers’ increased web reliance. In 2021, Google recorded a profit of $257 billion, which was the company’s largest revenue increase in over a decade and 40% greater than 2020. While these record hitting profits seemed continuous, the end of the pandemic ultimately drove many companies to

Michelle Koo

downsize. Columbia Business School associate professor Dan Wang described the situation as “coming o a period of outsized growth, spurred on by the pandemic,” with the present acting as a time of “correction” for the tech industry. As consumers recover from their pandemic lifestyles, online demand has significantly decreased. In order for companies to compensate for their less-than-stellar performances, experts have predicted cuts to companies’ labor, advertising, and marketing districts.

Recent layo s represent the irresponsible amount of employees companies hired during the pandemic and have sparked discourse regarding labor rights. Workforce reduction laws are highly dependent on individual companies and the contracts they propose during employment. Consequently, many of the tech companies who announced layo s were targeted for legal action by former employees. For example, a former Twitter employee sued the company in November 2022 for violations of the Worker Adjustment and Retraining Notification (WARN) Act, which requires companies with greater than 100 employees to give a 60 day notice before conducting mass layo s. To compensate for the abrupt announcement at Twitter, Musk—the current owner and chief executive officer—o ered three months of severance with a slight twist: fired workers would only be able to receive their pay if they agreed not to file legal action against the company.

As a result, layo s are a ecting the reputations of once highly regarded companies. Throughout the past decade, companies such as Google, Microsoft, and Amazon were considered to be in the top tier of the tech industry for those seeking employment. This ideal, however, has drastically changed

which companies tech workers prefer, as they are no longer simply looking for name recognition on their resumes. According to a survey conducted by Dice, a career site for tech workers, almost 90% of respondents said that THIS IDEAL, HOWEVER, HAS DRASTICALLY an employer’s brand is important when CHANGED WHICH COMPANIES TECH they are considering WORKERS PREFER, AS THEY ARE NO a new job, but roughly 80% said that they LONGER SIMPLY LOOKING FOR NAME wouldn’t apply for a

RECOGNITION ON THEIR RESUMES. higher-paying job at a company with a bad reputation. COVID-19 provided a key opportunity for the tech industry to experience a massive spike in performance. As we transition out of the pandemic, tech companies will continue to experience slower growth, necessitating di cult decisions like continued layo s. Furthermore, individuals on the job market are now looking for companies that can ensure long term stability and adherence to labor laws. Ultimately, the current layo season will determine the future for many tech companies as employees reevaluate their priorities, potentially changing the fabric of Silicon Valley.

LARGE TECHNOLOGY COMPANY LAYOFFS BY THE NUMBERS

Amazon

10,000 EMPLOYEES

Cisco

4,100 EMPLOYEES

Meta

11,000 EMPLOYEES

Twitter

3,700 EMPLOYEES

Uber

6,700 EMPLOYEES