US tech workers react to layoff axes with shock, and ‘more pain’ is coming

Scroggy – at her home in Martinez, California – is a technology trainer who was laid off from her remote job in October and is now doing contract work for less pay. — Bay Area News Group/TNS

SAN JOSE, California: The ax fell suddenly and out of the blue for technology worker Nitesh Donti. Less than a year ago, on the networking platform LinkedIn, he’d expressed excitement over his new job as an engineering manager at robot-vehicle company Nuro. Then last month, Nuro laid off Donti and around 300 others as it slashed 20% of its workforce.

“It was a complete shock,” said Donti, 30, of San Francisco, who’d spent five years as a software engineer at Google before moving to the Mountain View-based Nuro.

He was among the thousands of tech workers laid off since October as companies responded to slowing revenue growth, rising inflation and interest rates, and worries of a coming recession. It’s no surprise these tech employees were shocked when the bad news came: Their industry was going gangbusters until it wasn’t, with think-tank Joint Venture Silicon Valley in February reporting that “Silicon Valley’s innovation engine is red hot” and tech was leading a return in employment to pre-pandemic levels.

Now, nearly 8,000 tech and biotech workers have lost their jobs at companies including Facebook-parent Meta, Oracle, Twitter, Lyft, Roku, Seagate, PayPal and GoFundMe in layoffs big enough to trigger regulatory notification, and many more have been let go in smaller layoffs. This week, San Francisco on-demand delivery company DoorDash announced 1,250 corporate-job cuts.

“Things are not headed in a positive direction,” said Bay Area Council economist Jeff Bellisario. “These numbers are getting larger. We’re in for more pain.”

Andrea Scroggy of Martinez lost her remote job as a training director at southern California software firm SearchStax in an October “layoff horror story”, she said. She had projects underway, one of them about to launch, so when her boss pinged her for a meeting, she figured it was a regular check-in. Then a human-resources staffer was added to the meeting invitation just before the start.

“They told me I was laid off,” said Scroggy, 39. “It was pretty jarring – a five minute conversation on a Wednesday with no warning whatsoever.”

Stephen Lynch grew up in Indiana, the son of a steelworker who had to work three minimum-wage jobs after getting laid off amid mill closures. Lynch absorbed the notion that you shouldn’t pursue a job where you might get laid off, and he, like many who worked through the Bay Area tech industry’s recent boom years, felt secure in his job at financial-services software company Stripe. Yet early last month, he was let go as the company chopped 14% of its global workforce.

“No one was really expecting it,” said Lynch, 40, of San Francisco.

The scope and size of the region’s layoffs remains obscure, as data is sparse, Bellisario said.

But to Scroggy, the breadth of the carnage is apparent. “Every single company I’ve been at in the last five years did massive layoffs,” she said. “It looks like no matter where I was, I would’ve gotten laid off.”

Many newly unemployed workers face competition for jobs unlike anything they’ve experienced. “It’s just a very different market than I’ve ever been doing a job search in before,” Donti said. “My whole career has been in a bull market. Going into a more risk-averse market changes a lot of things.”

Donti took the week before Thanksgiving to spend with family and friends, then embarked on his job search. “We’re not done with the layoffs in the industry – you can’t take too much time before jumping back into the market,” he said.

Scroggy found full-time contract work but spends time every day seeking a permanent position. “It’s noticeably competitive,” she said.

A former boss pointed her toward a job at Microsoft and “an hour later I saw there were over 200 applicants”, she said. Many companies use automated platforms for applications and it feels like those applications go “into a black hole”, she said. “You don’t know if a human even looked at your resumé that you spent three hours updating to show that you’re a really good fit for that role.”

Laid-off workers are now competing for jobs against friends and co-workers who are also newly unemployed. The ongoing job cuts in the tech industry add a dose of uncertainty to employment searches, Lynch said, and raise a question not relevant in better times: “Will this job even be here when I get to the final round of interviews?”

Lynch said he finds himself feeling shame over losing his job, even though he knows there’s no reason for it amid an epidemic of layoffs, adding to the stress of job hunting and his family’s loss of income. “I’m trying to get a job as quickly as possible,” he said. “I’m working really hard to follow up with people. There is an ocean of opportunities out there and I’m trying to follow up with all of them.”

Scroggy, whose husband has a government job, is working on weekends so she can look after their young children during the week as they’ve had to jettison child care. They’ve scrapped most of their streaming services. “We cut down a lot of things,” Scroggy said.

The tech sector’s layoff epidemic, Bellisario said, is a “correction” in the face of economic headwinds after explosive growth and a two-year hiring surge. “We’re not falling off a cliff here,” Bellisario said. “What’s happening now is very different from the dot-com bust (and) the financial crisis. The numbers we’re talking about here are not large enough yet to really make big dents in other parts of the economy.”

That’s likely to change if a recession materialises, Bellisario added.

Still, to Cal State East Bay historian Nolan Higdon, the layoffs reflect the lack of job security that is becoming the norm in Silicon Valley. Companies facing slowing revenue growth and a possible recession look to cut labor costs first, he said.

“Everything comes down to the bottom line,” he says. – The Mercury News/Tribune News Service

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