What do Tech-Layoffs means to the economy, Stocks, and companies

Spotify, Amazon, Google, Microsoft, Twitter, and others lay off over 100,000 jobs from Q4 2022, and This month. Why did all these happen suddenly? What does that mean to the Economy? How does it affect start-ups? What about their families who lost their job?

Let’s cover all these here. It may be a long post BUT I think it was worth knowing.

Why did this happen suddenly?

All of these occur in the early months of 2019 when the COVID-19 pandemic struck. The rapid expansion of tech companies has encouraged consumers to purchase everything from groceries to clothing online. By providing a variety of online services, such as scheduling doctor appointments, taking classes, or attending meetings, many tech companies, including small start-ups, entered the competition with the big tech companies.

As a result, these tech companies hired more employees to attract customers like us who were just sitting in our houses. Some of the largest companies hired at their peak during those years, such as Amazon, which hired over 100,000 workers in Q3, and Google, whose headcount has increased by more than 50% in 2019-20, as well as other tech behemoths.

Now, in Q4 2022, there is no longer a pandemic, and people are free to move and buy groceries, go to the doctor for anything, and these online services are declining.

How many of you still buy groceries or use online doctor consultations? I believe the majority of responses were NO.

Now it was the turn of the tech companies to cut costs and expenses.


According to the website layoffs. fyi, a start-up that aims to track total layoffs in the tech space, more than 68,307 tech workers have lost their jobs so far this month.

Google said the reason for their layoffs was to reduce costs, Coinbase said it was to reduce costs while growing, and Microsoft said it was to reduce costs due to economic uncertainty. So the primary reason was to save money.

As previously stated, companies hired more people during the pandemic because people like you and me are sitting at home and browsing the internet, so more employees are needed to complete the work.

Will it affect the economy?

According to Barrons, the unemployment rate is 3.5%, the same as it has been for the past half-century. The monthly share of laid-off or discharged employees remains stable at 0.9%, just a tad higher than the lowest level on record.

In addition, the economy has added roughly 250,000 jobs per month on average over the last quarter, far exceeding the 100,000 needed to accommodate population growth while keeping unemployment stable.

“This is a drop in the bucket in the grand scheme of things,” Sederberg says. “It was just over-exuberance on the part of these technology firms facing a very different reality than they had in the past. That reality is changing again, and they are adjusting.”

How many of you are late in learning about layoffs, events around the world, and other news that may directly or indirectly affect you?

How does it affect Stock Market?

As the stock market operates daily and the activities that the company undertakes, these tech companies have not suffered a significant stock loss as a result of the layoffs. Google gained 1.6% last week, Spotify gained 6%, and Microsoft gained 4%. As a result, I believe there has been no significant impact on the stock market as of yet. Some other economic situations are going on with the FED and US banks, according to Market Watch, If the stock market crashes in 2023 it will be the fault of the Fed and U.S. banks. Here’s what could go wrong.

How it would affect their families?

Consider this: if an average educated engineer loses their job, it may take them or a year to find another, but if someone from a top tech company, such as Google or Microsoft, loses their job, they or believe they will take a break for 1-3 months and then apply to any company, and he will get a job faster than others.

Given the high demand for their skill set, many tech employees are receiving generous severance packages and finding new jobs quickly.

What are your thoughts on this? You may have different than me, but it’s perfectly right because each has a different perspective.

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