MARY LOUISE KELLY, HOST:
Amazon is expected to be the latest tech company to announce mass layoffs, reportedly as many as 10,000. It's part of a broader reckoning in the tech industry, as NPR's Laurel Wamsley is here to tell us. Hey, Laura.
LAUREL WAMSLEY, BYLINE: Hi, Mary Louise.
KELLY: So 10,000 people - that is a lot.
WAMSLEY: Yeah, that's right. And they could start as soon as this week, according to reports in The New York Times and The Wall Street Journal. These are not the warehouse jobs - packing and shipping - that make up the bulk of Amazon's workforce. These are the white collar corporate and technology jobs. The cuts would affect about 3% of Amazon's corporate employees, and they're said to focus on the company's devices like Alexa, as well as the retail and human resources divisions. Amazon had already announced a hiring freeze on corporate jobs earlier this month, citing the broader economic environment. And it's apparently already been cutting the positions of many of its contractors in recruiting. It's just another indication that Amazon sees itself as needing fewer people in the years ahead.
KELLY: So set this against what is happening at other tech companies because Amazon is not alone, not the only one making cuts in recent weeks.
WAMSLEY: Yeah, Amazon's just the latest in what's been pretty punishing layoffs at other tech companies. Eleven thousand jobs were cut last week at Meta, Facebook's parent company - 3,700 jobs were cut, half the workforce at Twitter...
KELLY: Yeah.
WAMSLEY: ...A thousand jobs at payment processor Stripe, hundreds more at Salesforce and Microsoft. Even before Amazon, 25,000 tech workers across 72 companies have been laid off just this month, and some 120,000 tech jobs have been lost this year according to the tracker layoffs.fyi.
KELLY: So what's going on? Why all these layoffs? Why now?
WAMSLEY: Well, I talked with analyst Brian Yarbrough, an analyst at Edward Jones, and he told me that the factors causing Amazon to lay off a chunk of its workforce are the same things causing cuts elsewhere in the tech industry, namely that they over hired during COVID.
BRIAN YARBROUGH: A lot of these companies hired for growth that was occurring during the pandemic and they expected those growth rates to continue. I think these companies are realizing they probably hired too many people during COVID, and so they're going to have to downsize their workforce more in line with the kind of revenue and profits they're generating.
WAMSLEY: But as we've gone from being extremely online during the pandemic to, you know, doing stuff in the real world again, tech businesses have taken a big hit. We're just not as reliant on many of them as we were a year or two ago. And then there's the larger economy. The uncertainty there has made brands cut their digital ad spending, which is a major source of revenue for many tech companies. And companies that rely on venture capital funding are - find that cash drying up quickly as higher interest rates put an end to the era of cheap money. So that's what we're seeing now. And we should note that we're not really seeing these cuts in the economy more widely. It's really focused on the tech industry so far.
KELLY: Oh, interesting. So do we know in the tech industry if more layoffs lie ahead or is this just the beginning?
WAMSLEY: It's a little hard to tell. Brian Yarbrough told me that there are factors in tech and beyond tech.
YARBROUGH: I think it all depends on what happens with the economy. If we dip into recession, then you probably see wider spread layoffs. But, you know, I think if things continue to grow from here, probably don't see additional mass layoffs.
WAMSLEY: Still, this marks a big change. For the last two decades, the U.S. tech industry has been a source of big stock profits and lots of cushy, high-paid jobs. Yarbrough says that in many ways, this reckoning is a long time coming. These companies have gone on massive hiring sprees for years, even before the pandemic. That seems to be coming to an end, at least for now.
KELLY: That is NPR's Laurel Wamsley. Thank you.
WAMSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
