Tech layoffs surprise young workers. The older people? Not that much.
SAN FRANCISCO — When Lyft laid off 13% of its workers in November, Kelly Chang was shocked to find herself among the 700 people who lost their jobs at the San Francisco company.
“It seemed like tech companies had so many opportunities,” said Chang, 26. “If you got a job, you did it. It was a sustainable path.”
Brian Pulliam, on the other hand, played down the news that cryptocurrency exchange Coinbase was removing his work. Ever since the 48-year-old engineer was fired from his first job at video game company Atari in 2003, he said he has asked himself once a year: “If I got fired, what would I do?”
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The contrast between Chang and Pulliam’s reactions to their respective career disappointments speaks to a generational divide that becomes clearer as the tech industry, which expanded rapidly during the pandemic, leans toward mass layoffs.
Microsoft said this week that it planned to cut 10,000 jobs, or about 5% of its workforce. And on Friday morning, Google’s parent company Alphabet said it planned to cut 12,000 jobs, or about 6% of its total workforce. His cuts follow big layoffs at other tech companies like Meta, Amazon and Salesforce.
Millennials and Generation Z, born between 1981 and 2012, began tech careers during a boom decade as jobs multiplied as fast as iPhone sales. The companies they joined were taking the world by storm and challenging economic rules. And when they went to work on teams that offered bus rides to the office and services that included free food and laundry, they weren’t just accepting a new job; they were taking a lifestyle. Few of them had experienced widespread layoffs.
Baby boomers and members of Generation X, born between 1946 and 1980, on the other hand, experienced the largest contraction the industry has ever seen. The dot-com crash of the early 2000s eliminated more than 1 million jobs, emptying Silicon Valley’s Highway 101 of commuters as many businesses closed overnight.
“It was a bloodbath and it lasted for years,” said Jason DeMorrow, a software engineer who was fired twice in 18 months and was out of work for more than six months. “As worrisome as the current recession is, and as much as I sympathize with the people affected, there is no comparison.”
The technology generation gap is representative of a broader phenomenon. The year of a person’s birth has a great influence on opinions about work and money. Early personal experiences largely determine a person’s appetite for financial risk, according to a 2011 study by economists Ulrike Malmendier of the University of California, Berkeley and Stefan Nagel of the University of Chicago.
The study, which analyzed the Federal Reserve’s Survey of Consumer Finances from 1960 to 2007, found that people who came of age in the 1970s when the stock market stagnated were reluctant to invest in the early 1970s. the 1980s when it roared. That trend was reversed in the 1990s.
“Once you experience your first crash, things change,” Nagel said. “You realize bad things happen and maybe you should be a little more cautious.”
For Generation X, the dotcom crash occurred early in their careers. Between 2001 and 2005, the tech industry laid off a quarter of its workers, according to an analysis of Bureau of Labor Statistics data by CompTIA, a technology research and education organization.
The layoffs that swept the industry were worse than the recession of the early 1990s, when total tech jobs fell 5%, and the global financial crisis that followed in 2008, when the workforce shrank by 6%.
In 2011, the tech industry began a decade-long hiring boom. It added an average of more than 100,000 jobs a year, and by 2021, it had regained all the jobs it lost when the dot-com bubble burst.
Employment numbers represent software, hardware, technology services and telecommunications companies, including Apple, Meta, Nvidia, Salesforce and others. But they may exclude some tech-related companies like Airbnb, Lyft and Uber because of ambiguity in government labor market reporting that classifies some companies as consumer services, said Tim Herbert, director of research at CompTIA.
The biggest tech job gains came after the pandemic began, as companies scrambled to meet surging demand. In 2022, the industry added nearly 260,000 jobs, according to CompTIA, the most it had added in a single year since 2000.
Tech job gains continued last year even as the big layoffs began, though it’s unclear if that trend has carried over into this year. New job opportunities contributed to nearly 80% of laid-off tech workers saying they found a new job within three months, according to a survey by ZipRecruiter.
“We are seeing the pandemic hiring mania correct itself, not a bubble burst,” said Andy Challenger, a senior vice president at career transition firm Challenger, Gray & Christmas.
Last fall, David Hayden, a program manager with a Ph.D. in physics, learned from his manager that he was being let go from nLight, a semiconductor company. Concerned about how he would pay for his eldest daughter’s college tuition, he immediately contacted recruiters to set up interviews. In December, a month after being fired from him, he took a new position at Lattice Semiconductor.
In each interview, Hayden, 56, said he volunteered so he would have been fired. His experience during the dotcom crisis, when he avoided layoffs even as talented colleagues were laid off, taught him that cutbacks are not always rational.
“The shame of getting fired is gone,” Hayden said. “Businesses know that a lot of good people are being laid off right now.”
For Pulliam, losing his job at Coinbase was an opportunity. She invested his settlement money in his own business, Refactor Coaching, a career coaching service for software engineers.
“This is a gift,” Pulliam said. “I don’t think that story gets told. It’s always pessimism.”
But for tech workers experiencing their first economic downturn, the cuts have been eye-opening. Chang had studied product design in college with an eye to joining a tech industry that seemed recession-proof. Getting fired from Lyft shook that faith.
Erin Sumner, a software recruiter at Facebook’s parent company Meta, used to brag to potential hires that the company was the fastest ever valued at $1 trillion. She said she would promote the company’s strengths, including last year when its share price plunged and her core business, digital advertising, struggled.
When layoff rumors began circulating last year, he assured his colleagues their jobs were safe and pointed to the more than $40 billion in cash the company had in the bank. But in November, she was among the 11,000 laid off workers.
“It was heartbreaking,” said Sumner, 32. She managed to find a new job as head of recruiting for a startup called DeleteMe, whose goal is to remove customer information from search results. But she said she cringes every time she reads about more tech layoffs.
“I’m afraid it’s going to get worse before it gets better,” Sumner said. “There is no guarantee. I was fired by the safest company in the world.”
A similar reversal of fortunes has challenged companies that sell software services. Shares of Salesforce, an industry leader, fell nearly 50% last year as its sales growth slowed. The company had splurged during the pandemic, spending $28 billion to buy Slack Technologies. It went from 49,000 to 80,000 employees in two years.
During a general meeting last week to discuss the company’s decision to lay off 10% of its workers, Marc Benioff, the company’s chief executive, tried to sympathize with his personal discontent by putting the cuts in context.
“I have been through many difficult times in this company. Every loss sparks another loss for me,” she said, according to a recording of the call heard by The New York Times. “Obviously, we are talking about a layoff. I think of the employees who have died. I think of the people we have lost and never wanted to lose.”
When asked what advice he had for employees anxious about the state of the company and more layoffs, Benioff suggested “thank you.”
Austin Bedford learned he was one of 8,000 people fired from Salesforce when he tried to log into his computer and couldn’t access Slack, the tool he worked on as a conversation designer. Born in East Palo Alto, California, he studied computer design because he hoped to join one of the profitable companies in his backyard. The job he got at the company in 2021 fulfilled a dream. He never imagined that he would lose it so soon.
“I was shocked,” said Bedford, 41.
Although disappointed at being fired, he said he was trying to view being out of a job as a “blessing in disguise” and intended to be selective about what job he would take next.
“There’s something bright just around the corner,” Bedford said. “I just need to have faith.”
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