In the United States on Thursday, as Amazon publicly announced a hiring freeze and several other technology companies such as Lyft and Stripe announced layoffs, the US technology industry seemed to be in a new employment “cold winter”.
Amazon said its executives decided this week to suspend hiring because the economy was “in a state of flux.” Last month, the e-commerce giant stopped hiring corporate and tech workers in its retail operations.
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“We expect to maintain this freeze for the next few months and will continue to focus on our new situation seen in the economy and business.”
Meanwhile, ride-hailing company Lyft said it would cut 13% of its workforce or about 650 of its 5,000 employees. Payment processing platform Stripe announced it would lay off 14% of its workforce, affecting about 1,100 people.
Tech giants including Meta and Amazon have slowed hiring for months, while smaller tech companies such as Robinhood and Coinbase have announced layoffs. Rarely, however, have so many layoffs and hiring freezes been revealed on the same day.
Tech companies have led the U.S. economy over the past decade, helping to boost the stock market during the worst days of the Covid-19 pandemic. But in recent weeks, many large companies have reported financial results that show they are feeling the effects of a strained global economy, soaring inflation, and rising interest rates.
Social media companies, in particular, have been grappling with dwindling digital ad support over the past few months. Meta, the parent company of Facebook and Instagram, said last week that its headcount would be “roughly flat” by the end of next year. The company plans to downsize some of its teams and hire only in high-priority areas.
Snapchat’s parent company, Snap, laid off 20% of its workforce in August, citing mounting pressure from challenging macroeconomic conditions.
Last week, Microsoft told investors that the number of new hires “should be minimal” this quarter. At the same time, Google and YouTube parent Alphabet also said that the number of new employees hired this quarter will be less than half of the third quarter.
Amazon warned investors that revenue growth could slow to the slowest pace in 20 years this quarter, even as the key holiday shopping season looms. After doubling its workforce in 2020 and 2021, Amazon has been shrinking since the start of the year. The company employed 1.5 million people at the end of the third quarter.
Tech companies are making more layoffs. Elon Musk has ordered layoffs at the company, which employs about 7,500 people, following last week’s $44 billion acquisition of Twitter. Twitter employees have started distributing the Layoff Guide, which contains tips on how to deal with layoffs.
On Thursday, Lyft said the company had decided to cut jobs in response to “a possible recession next year.” All teams will be affected, founders Logan Green and John Zimmer said in an email to employees.
“It is important to take these proactive actions to ensure that we can accelerate execution, focus on the best opportunities to drive profitable growth, and deliver strong business results,” Green and Zimmer wrote.
Lyft cut 2% of its workforce this summer, largely because of the closure of its car rental business and a hiring freeze. But the company’s founder said Lyft still needs to “get leaner.” It “is not immune to the reality of inflation and a slowing economy” which has led to higher costs of carpool insurance.
Lyft also said it plans to sell its first-party vehicle services business and expects employees on the team to keep their jobs. Stripe co-founder and CEO Patrick Collison said the company hired too many people and spent too quickly on operations during the outbreak, only to face inflation, high-interest rates, energy this year rising costs, and reduced start-up capital.
“We are overly optimistic about the short-term growth of the internet economy and underestimate the likelihood and impact of a broader slowdown,” Chrissen said in an email to employees.
Chrisson added that the layoffs will not be evenly distributed across teams. Teams such as recruiting, for example, will see more layoffs as the company cuts hiring activity next year. In July, Stripe cut its internal valuation by 28% to $74 billion.
