As recession fears swirl, a fresh round of layoffs is in the works for at least four corporate giants to start the new year.
Amazon (AMZN) CEO Andy Jassy said late Wednesday the company would cut “just over 18,000 roles,” a higher reduction than initially planned. Jassy’s message came the same day Salesforce (CRM) said it would slash 10% of its workforce while Vimeo (VMEO) cut headcount by 11% in its second wave of reductions.
And it’s not just tech workers being let go.
Goldman Sachs is reportedly hashing out plans to part ways with up to 4,000 bankers any day now, according to a year-end audio message from CEO David Solomon to staff last week.
This year’s layoff announcements come as US companies grapple with inflation, higher interest rates, and a deteriorating economic environment that has prompted both needed and precautionary cost-cutting — especially after many over-hired during the post-pandemic boom in 2021.
“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy said in his message to Amazon staff. “Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”
The e-commerce giant first said in November that about 10,000 jobs would be axed.
Jassy’s remarks echoed ones from Salesforce CEO Marc Benioff, who said in an email to staff on Wednesday the decision resulted from an environment that remains challenging and more measured spending by customers.
“I’ve been thinking a lot about how we came to this moment,” Benioff wrote. “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
Amazon employed 1,544,000 people as of Sept. 30, up from 1,468,000 during the same period in 2021, the company’s latest quarterly filing indicated. At Salesforce, headcount totaled 79,824 as of Oct. 31, per its own third quarter report, up from 69,530 the same time the previous year.
“The Salesforce and Amazon layoffs add to the trend we expect to continue in 2023 as the tech sector adjusts to a softer demand environment,” Wedbush analyst Dan Ives said. “We expect more tech layoffs to persist as the tech sector was spending money like 1980’s Rock Stars to keep up with demand and now pivots.”
Late last year, Facebook parent Meta Platforms (META) announced plans to lay off 11,000 workers, or 13% of its overall workforce. Twitter laid off half its workforce in November under new leadership from billionaire Tesla CEO Elon Musk. Dozens of other tech companies have taken similar actions.
A similar trend is surfacing in the finance industry, which also hired aggressively as it benefited from a post-pandemic economic and financial market boom.
Goldman Sach’s Solomon admitted last month in an interview at the Wall Street Journal’s CEO Council Summit the company hired at a frenzied pace to keep up with record deal making activity at the time. The company is now partially reversing those hires as investment banking revenues have dropped.
Even as US tech workers face layoffs, data continues to show labor conditions remain ultra tight. Monthly payroll gains averaged 391,000 across 2022, weekly filings for unemployment insurance have not budgeted much above 200,000, and on Wednesday, the latest Job Openings and Labor Turnover Survey, or JOLTS, showed a higher-than-expected 10.5 million job openings.
The Labor Department will publish its jobs report for December at 8:30 am ET Friday morning, and economists expect nonfarm payrolls to rise by another 200,000 jobs last month, according to estimates from Bloomberg.
According to data tracker layoffs.fyi, tech companies have collectively laid off 153,678 workers last year. That’s more than roughly 80,000 layoffs in the sector at the onset of the COVID pandemic in 2020, underscoring that recent reductions are likely a consequence of hiring overzealously during the tech boom in 2021.
The latest job cuts report from employment firm Challenger, Gray & Christmas also showed tech companies led announced layoffs for all of 2022, with 97,171 job cuts expected, a whopping 649% surge from 2021.
The troubles in the tech space were even acknowledged by Federal Reserve Chair Jerome Powell, who said during a press conference last month these layoffs were “a story unto itself.”
And Bank of America’s Michael Gapen pointed out that while the latest data shows a “very healthy labor market” — and an apparent mismatch from anecdotal evidence — tech layoffs may not show up in the employment data for as long as laid off workers are receiving severance .
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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