The Great Tech Layoff and Its Aftermath: Is the Storm Passing?

Mark Zuckerberg's declaration of 2023 as the "year of efficiency" signaled a tidal wave of layoffs in the tech sector, a trend that has continued into 2024. With over 305,000 U.S. workers laid off across all sectors in 2023 alone, companies have sought to trim their workforces, often focusing on generalists and "soft skill" roles. However, recent attempts by Tesla to rehire a laid-off supercharger team suggest that companies may be overcorrecting.

The great tech layoff, which began in 2022 with nearly 165,000 layoffs, saw an additional 226,000 layoffs in 2023. We are about halfway through 2024, and the most recent job numbers available (April 2024) paint a picture that this downturn in tech workers is continuing. There are signs of improvement to the overall economy, however, despite the hit taken specifically to the tech sector. Indications that the forecasted doomsday recession has been downgraded to a Tropical Storm rather than the predicted Category 5 hurricane can be seen in relatively low overall unemployment, the Fed pausing on interest rate hikes, and egg prices finally cracking (in a good way). So what’s the current state of the market, and should we board up the windows or take advantage of cheap tickets to Florida?

The first question to ask is, “Who is getting laid off?”. The numbers show that the tech sector is being hit the hardest, and while those with specialized skills and knowledge have mostly been spared, the generalists within companies have been hit the hardest. According to The Economist, “the axe has fallen mainly on business functions such as sales and recruitment.” (April 1 2023). These unspecialized, unskilled workers are referred to as “bloat” by The Economist, yet alongside their departure there has been a rise of emerging automated solutions to perform the roles of these laid-off workers. Is the insensitive insinuation to “trimming the fat” valid, or have companies preemptively fired valuable employees before technology was ready to pick up the slack? Unconscious bias, generative AIs that generate oft-times made-up data, and “AI” companies that are in reality utilizing off-shore human capital are rampant in the “solutions” emerging from the wave of tech layoffs.

For employees who have been laid off in exchange for the promise of technology that isn’t yet available, this can feel more than a futile attempt at “efficiency “: it’s harmful. Yes, some of these emerging solutions have absorbed some of the “bloat” of workers laid off, but not enough in the numbers of thousands to balance the equation. This leads to the second question, “Where have all those laid-off workers gone?”

First, there is some good news for the knowledge workers that have been laid off: they are either re-hired by companies learning the error of their ways, they are picked up by competitors (especially with the new elimination of non-compete clauses stipulated by the FTC), or they are switching industries. Other industries historically slow to innovate are now on their upward curve for digital reinvention. John Deere has been scooping up enough fired tech workers to open an office in Austin, providing opportunities for both skilled and business function workers, though some industries are remaining focused on knowledge workers only. If you have the skills, expertise, and education, you seem to be fine. But what about the rest of those impacted?

An uptick in freelancers, consultants, and people going into business for themselves is sweeping the country. Y Combinator is witnessing exponential growth in the number of applicants, and 2023 saw a record-breaking 5.5 million new business applications filed (U.S. Chamber of Commerce). Laid-off workers are helping to birth a new generation of startups utilizing the burgeoning technology of AI. However, they are facing the same problem larger corporations do: the technology just isn’t quite up to par with what is needed to ease the transition. Additionally, access to capital has been more restricted as VC firms are wary of duplicating mistakes made in the past with overhiring, overpromising, and untrustworthy founders. On the other side of the coin, access to capital for non-conforming founders has never before been more abundant, and the number of minority, women, and BIPOC-owned companies is booming. 

If you’re a business function, white male who has been laid off from the tech sector, the environment may seem bleak. Optimistically, one can hope that the new companies emerging alongside a new technology won’t be offering replacements for human capital but instead create new job categories. Unfortunately, this is a “wait and see” approach with really only one clear action to take: get the knowledge, pivot, and become a skilled worker. Perhaps consider the Gulf Coast area.