Fourth quarter tech layoffs will exceed 2020 peak
The technology sector, which had accounted for a large share of demand growth over the past decade, has begun to slow materially in the wake of capital markets shifts, and layoff announcements in the first three weeks of November have surpassed 36,000, nearly doubling peak monthly levels from the outset of the pandemic in 2020.
A slowing of the venture capital environment, and more importantly a flight from technology stocks in public markets in favor of countercyclical sectors has spurred widespread cost-cutting initiatives across the industry, including some large-scale layoffs, with the three largest post-pandemic layoff announcements occurring to date in November, comprising nearly 25,000 jobs collectively.
Despite mostly negative headlines, recent layoffs largely reflect a deceleration of what had been exceptionally rapid job growth nationally: since 2019, the U.S. has added over 200,000 software developer jobs and more than 30,000 other technology jobs, reflecting more than 5.0% growth across the industry while total nonfarm employment has only marginally surpassed 2019 levels.
The cost-cutting initiatives and reduced headcounts are directly correlating with mounting sublease availabilities: Meta, who announced the largest layoff to date of 11,000 employees, or 13% of their workforce, has also in recent weeks announced over 3.0 million s.f. of sublease availabilities or lease terminations nationally.
Select companies remain in growth mode, and private technology companies with healthy balance sheets have not contributed significantly to recent layoffs or sublease additions—the largest lease of the third quarter came from the parent company of TikTok, ByteDance, subleasing 658,000 s.f. of a former Verizon campus in San Jose.
Cost-cutting measures from big tech companies represent a departure from longstanding culture of expense agnosticism and heightened spending on employee compensation and experience relative to other major white collar sectors, which may lead companies to reconsider other employee perks and cultural settings that diverge from other white collar sectors, including widespread remote work.