The string of layoff announcements by Amazon and other Seattle-area tech employers has many wondering if the tech industry is headed for a major correction and even more job cuts in the months coming.
In fact, this correction may already be underway.
Last month, employers in Washington’s information sector cut 5,900 jobs, according to the Department of Employment Security’s October jobs report.
It’s one of the biggest monthly declines in the state’s history. While it’s still too early to know how bad things could get, the losses so far are already a poignant reminder that the pandemic tech boom “wasn’t necessarily long-lasting”, says Anneliese Vance -Sherman, regional economist at ESD who covers the Seattle area. .
The October report wasn’t all bad news. The tech woes don’t appear to have infected the rest of the labor market, which still managed a net gain of 5,400 jobs in October. Hotels, restaurants and other leisure and hospitality businesses led the way, with 4,400 new jobs, and even the construction sector, despite a declining housing market, increased by 700 jobs.
While the state’s unemployment rate fell from 3.7% to 3.8%, Washington did not experience an alarming increase in jobless claims. Just over 5,800 Washingtonians applied for benefits last week, according to data released Thursday. That’s a 28% increase from the weekly average in October, but not out of step with seasonal trends, and it’s still 23% less than that applied in the same week in 2019.
But these encouraging trends are unlikely to continue. October’s tech losses did not include all of the roughly 12,500 layoffs recently announced at Amazon, Meta, Convoy, Zillow, Redfin and other tech companies.
That’s partly because the October figures came from a mid-month survey, before more recent layoffs were announced. Equally important, the “information” category includes jobs at employers such as Microsoft and Meta, but excludes some technology-related jobs at other employers, such as Amazon, which is classified as a retailer, and Zillow and Redfin. , which are classified as real. real estate companies, Vance-Sherman said.
The October losses also do not include contractor positions cut during that period, said ESD economist Paul Turek.
In total, Washington looks set to lose up to 18,000 tech or tech-related jobs in just two months. That’s more than the state lost in the dot-com bust of 2001-2003, when many overvalued online startups collapsed and thousands of workers were left jobless.
These historical comparisons come with important caveats.
Today’s losses occur in a much larger technology sector. The drop of 18,000 jobs would represent less than 4% of the current tech workforce. Losses in the dot-com bust accounted for about 10.5% of the sector’s workforce.
Equally important, many pundits view the dot-com collapse as an inevitable correction after years of overzealous hiring and unrealistic business expectations.
In contrast, the pandemic hiring boom has reflected strong demand for tech products from consumers isolating at home and employers rolling out remote work.
While demand hasn’t been sustainable at these levels, the industry is still selling a lot of these services, making it difficult to predict how long tech layoffs will continue.
For example, Amazon CEO Andy Jassy said Thursday that the announced 10,000 layoffs will continue through 2023, meaning some may have to wait months to find out if their jobs are secure.
The temptation to use historical trends to “understand what the future will look like… kinda misses the mark because it’s something completely different,” Vance-Sherman said.
A major unknown: whether the Seattle area can absorb all of the laid-off workers, or whether some may have to move to other industries or other locations.
Some employment and recruiting experts believe layoffs from Amazon and other large Seattle-area tech employers will allow smaller tech employers to finally hire enough talent.
But some workers in the labor market wonder if smaller employers have the budget to hire as many soon-to-be-available workers, especially for the high-skilled, high-paying positions common in the Seattle area.
Nadir Khan, a former AWS employee, said the offers he’s received are all out of state, and they’re all less than what he was doing at Amazon.
“If you get paid a lot at a big tech company and you get laid off, it’s very likely that you’ll make less money,” Khan said.
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