If you’ve been on LinkedIn recently, you’ve likely seen posts about someone being fired or a coveted job opportunity being cancelled, often by a once-hot, high-profile startup. So far this year, 349 startups have laid off more than 53,000 jobs, according to tracker Layoffs.fyi.
Startups eyeing the prospect of falling venture capital valuations are scrambling to preserve the cash they have. Just yesterday, OpenSea, an early leader in the once-active non-fungible token (NFT) market, laid off 20% of its workforce. Earlier this month, virtual office startup Gather laid off a third of its 90 employees. Goofy’s identity verification unicorn Socure laid off 13% of its workforce last month.
It’s not just startups. Coinbase, the largest U.S. cryptocurrency exchange, has laid off 1,100 employees and eliminated some jobs. Elon Musk’s Tesla is cutting 3.5% of its workforce. Meta plans to reduce its hiring of engineers by at least 30 percent this year.
While most of the job cuts come from tech companies, the mortgage industry has also been cutting spending as rising interest rates drive down mortgage volumes. This week, loanDepot disclosed plans to cut thousands of jobs. Real estate firms RedFin and Compass each cut about 450 jobs, and PIMCO-backed First Guaranty Mortgage Corporation laid off more than 75% of its workforce in June, before filing for Chapter 11 bankruptcy a week later.
Despite such dramatic layoffs, the unemployment rate remained low at 3.6% in June as the economy added 372,000 jobs. Additionally, interviews with people who have recently lost their jobs or job offers, as well as with hiring managers, suggest that most of those laid off, at least so far, are accepting new job offers.
Yet fear is palpable, with more consumers now more pessimistic than optimistic about the short-term labor market, according to the Conference Board. The layoffs may be just beginning: Oracle recently considered laying off thousands of employees as early as August.
“In the tech industry, it’s a sense of déjà vu again,” said economist Anthony Carnevale, who has worked on employment and education policy for four years and is now director of the Center for Education and Workforce at Georgetown University. “This is pretty much exactly what happened in the late 1970s and early 1980s, when technology hadn’t penetrated American industry fast enough, and [former Fed Chair] Paul Walker hit the brakes. We get high interest rates, high unemployment, which basically causes investment in technology to stop, and secondly, it kills the industry. “
Carnevale added that given the current low unemployment rate, it remains a question whether the slowdown will ultimately “create a lot of dislocation in tech or any other industry.” his answer? “Yes and no,” he said. “Yes, yes, specific tech-based industries may be impacted, and interest rates are the culprit here. But what we’re seeing in the churn is that people who are looking for jobs are finding jobs. And we’re not at the typical The recession … to the point where people can’t find work.” He noted that wages are generally increasing — although those increases are often offset by inflation.
“What does that mean going forward? It could mean a slowdown in the expansion of startups and specific tech companies, or even an entire industry if it’s strong enough, but so far it doesn’t mean people can’t find jobs ,” Carnevale said. “And it doesn’t reflect the likelihood of college graduates, at least so far, we haven’t really seen that.”
In fact, a recent survey of nearly 200 employers by the American Association of Colleges and Employers found that nearly 90 percent of respondents will be hiring recent graduates for full-time and internship/co-op positions — up from 83 percent last spring.
But while early career hiring remains strong, it can’t erase the memory of what happened after the Great Recession, namely mass job losses and an unusually slow recovery. Some of the new graduates in the slump experience what economists call “permanent scars” — meaning their poor economic conditions at the end of college have led to long-term declines in their job prospects.
Again, this is a dire prospect, but not yet a reality.
Aidan Deery, associate director at global talent partner X4 Technology, reports that among tech companies, “basically, everyone is hiring” and “the demand for experienced professionals is at an all-time high.” He added that those fired from crypto companies like Coinbase are often “very employable” and “highly sought after in the financial and tech world.”
Danny, 23, who signed a nondisclosure agreement that did not include his surname and former employer, left in June from an engineering job at a sales productivity company. “I knew I could get a job,” he said, estimating that 8-10 of the roughly 30 jobs he applied for after he was fired were responded to. “Three of them were actually like, ‘Yeah, just kidding, we’re not hiring for this position.'” Some of the other companies he began interviewing with stopped the process due to hiring freezes. However, Danny has already turned down a job for reasons such as pay, and says he remains picky when it comes to job hunting.
Curio Health, a startup working to improve remote patient care, is still hiring. Chief executive Wang Yuchen worries that layoffs at startups may encourage job seekers to look to more established companies for future opportunities, but insists startups will remain attractive because “you take on broader responsibilities and you can grow faster” and learn more.”
Wang has seen both sides of the layoff drama. He himself lost his job in 2001, and soon after graduating with a master’s degree in computer science from Georgia State University, in later positions, he had to fire employees himself because contracts didn’t go as well as expected. “These things will always happen, even if everything you do is 100 percent perfect,” he said. “Think of it as a fresh start – there are more opportunities ahead than you just lost.”
Still, for some of the unemployed, the fresh start presents unique challenges—one of the dysfunctional U.S. system to retain foreign tech talent. Software developer Amitesh Singh Baghel, 27, was fired in late June during STEM OPT, a visa program that allows international graduate students to gain work experience in their fields in the United States. Here’s the thing: He lost his job as a software engineer at a data security startup before he completed the visa extension — about two weeks before his employment authorization documents expired.
While working there, he had been offered other jobs but turned them down out of “good faith” because his manager had also been fired, and he provided great guidance. “I’ve had other offers but I’ve chosen to continue to ignore red flags,” such as a manager being sacked rather than replaced, he said.
“I tried to negotiate. I was like, ‘Instead of giving me severance, let me stay on the payroll so I can go through the extension process and I can still work,'” he said. “I gave them a solution…but they don’t want to do the extra work, which is understandable. I mean, it’s not their problem.”
Then there’s the experience of 22-year-old Jenna Radwan, who recently earned a BA in Entrepreneurship and Innovation from the University of San Francisco. She initially took a job at Hirect, a San Francisco-based startup that helps recruit and recruit for other tech startups. When she heard that Hirect would pay her a base salary of $80,000 plus uncapped commissions, which could potentially double her total compensation, she cut short other interviews to accept the offer, “My ears perked up, I My eyes got bigger, and I didn’t even see any other company as a serious competitor,” she said. But two weeks before her start date, Radwan was thrown a curveball. Her offer has been withdrawn “solely due to the current unforeseen circumstances and the dramatic shift in the market.”
“Due to very volatile market conditions, the business and leadership teams have decided to stop/freeze all forms of external hiring at this time, and we have entered a stage of an immediate hiring freeze and a round of layoffs,” wrote Radwan in an email from one recruiter. Content shared on LinkedIn. (A Hirect spokesperson confirmed to The Wall Street Journal that it has eliminated two jobs due to the slump in tech hiring.)
Radwan was “shocked” but quickly got into her network, contacting recruiters she had interviewed with before, and eventually landed a job as a recruiter at Insight Global. “It’s been a crazy journey, but I knew I was exactly where I was supposed to be,” Radwan said, adding that she hadn’t really thought about her professional values before that. “I just thought about money, but I realized you can have money plus other things like a good company culture, good job security, good benefits, good PTO,” she said.
What advice does she have for recent graduates about to enter the job market amid growing concerns about offers being cancelled? Do your research, ask how companies are responding to COVID in 2020 (ie are layoffs coming soon?), talk to existing employees and take time to weigh all your proposals.
If you’re looking for an indication of your current Gestalt, it might come from Radwan’s new employer. Insight Global is still hiring. But in June, it surveyed 1,000 workers and found that 23 percent were “very worried” about losing their jobs in the next recession. Or, as Insight puts it, “great obedience” is giving way to “great worry.”