Workers in One Sector Are Seeing Lots of Layoffs

The post-pandemic economy isn't turning out the way some investors hoped
By Mike L. Ford,  Newser Staff
Posted Jun 7, 2022 5:44 PM CDT
Updated Jun 11, 2022 12:05 PM CDT
Workers in One Sector Are Seeing Lots of Layoffs

Overall, the US job market remains strong, according to the Labor Department’s latest jobs report, which shows US employers added 428,000 jobs in May amid record-high job openings. Meanwhile, per Reuters, layoffs and unemployment claims remain far below levels that might signal an economic downturn. "A low level of layoffs as well as elevated job openings are signaling that demand for labor remains strong, a trend that is likely to persist in the very near term," says economist Rubeela Farooqi, reflecting the consensus among analysts. But things aren’t so bright in every sliver of the economy, especially at tech startups that enjoyed major growth during the pandemic.

Some 17,000 workers at 71 tech startups around the world were laid off last month. According to reporter Nicolás Rivero of Quartz, that’s a 350% increase over April and the highest level since May 2020, when the global economy began leveling off after the initial shock of pandemic shutdowns. Around that same time, investors found renewed passion for all things tech, pushing stocks to all-time highs and "betting that the pandemic would accelerate the adoption of new technology in work and everyday life," writes Rivero. Throughout 2021, venture capitalists pumped unprecedented funding into tech startups with apps and services that promised to reshape how people shop, work, connect, and entertain themselves.

Some of those bets paid off, and the pandemic is not over, but "consumers have reverted to many of their pre-pandemic shopping habits faster than investors anticipated," Rivero says. As a result, tech stocks have plummeted and investment has slowed considerably. Rising interest rates have further dulled the appetite for risk, and inflation is dampening consumer spending. Turkish delivery startup Getir led the way with nearly 4,500 layoffs on May 25, followed by Swedish "buy now, pay later" fintech company Klarna. Stationary-bike maker Peloton saw the writing on the wall in February when it laid off 2,800 workers as gyms reopened. Meanwhile, big tech companies like Meta and Salesforce have not announced layoffs, but they have slowed or frozen hiring this year. (Read more layoffs stories.)

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