Big tech braces for recession with litany of hiring freezes, layoffs

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The tech industry is laying off workers at an alarming pace as it braces for a potential recession triggered by painfully high inflation and rapidly rising interest rates.

Despite still-solid job growth and record-high wages in many industries, big tech is battening down the hatches as it warns of an increasingly grim economic outlook.

Amazon, Apple, Meta, Lyft and Twitter are among the companies either implementing hiring freezes or letting workers go as the Federal Reserve moves to raise interest rates at the fastest pace in decades in order to combat inflation. Economists widely expect the Fed to trigger a recession with higher interest rates, which could force consumers and ultimately businesses to pull back on spending. 

Applications for U.S. unemployment benefits — a proxy for layoffs — have fallen in recent months from a summer peak and remained near a low level last week, while job growth in October remained surprisingly solid with employers adding 261,000 new positions last month.

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Still, Fed policymakers have made it clear that they anticipate unemployment to climb as a result of their interest-rate hike campaign.

Federal Reserve Chair Jerome Powell speaks during a news conference on interest rates, the economy and monetary policy actions, at the Federal Reserve Building in Washington, D.C., June 15, 2022. (Photo by Olivier Douliery/AFP via Getty Images) (Photo by Olivier Douliery/AFP via Getty Images / Getty Images)

Updated projections from the Fed's meeting showed unemployment rising to 4.4% by the end of next year, up from the current rate of 3.5%. That is significantly higher than in June when policymakers saw the jobless rate inching up to 3.7%. That could mean roughly 1 million Americans lose their jobs between now and the end of 2023. 

"We think we need to have softer labor market conditions," Chairman Jerome Powell told reporters in September. "And if we want to set ourselves up really light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn't." 

SOCIAL SECURITY RECIPIENTS TO SEE BIGGEST COLA INCREASE SINCE 1981

TickerSecurityLastChangeChange %
AMZNAMAZON.COM INC.90.98+1.68+1.88%
AAPLAPPLE INC.138.38-0.27-0.19%
METAMETA PLATFORMS INC.95.16+4.37+4.81%

Here is a closer look at the big tech companies cutting their payrolls in preparation for an economic downturn. 

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Amazon 

Amazon announced last week that it is hitting pause on corporate hiring under CEO Andy Jassy. 

"We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense," Beth Galetti, senior vice president of people experience and technology at Amazon, said in a note to employees. 

Galetti cited the "unusual macro-economic environment," noting that Amazon wants to "balance our hiring and investments with being thoughtful about the economy."

Apple 

Apple has reportedly instituted a hiring freeze for many jobs outside of research and development as it tries to reduce budgets next year.

The Apple logo adorns the facade of a retail store.  ((AP Photo/Kathy Willens, File) / AP Newsroom)

Bloomberg News reported that the company took the step last month, ahead of a quarterly earnings report where it warned that sales could falter ahead of the holiday season. 

While the company has fared better than some of its tech counterparts this year, it is still seeing a slowdown in sales of iPhones and computers as consumers slow their spending. Pervasive COVID-19 lockdowns in China have also slowed production of the new iPhone 14s.

THE FED'S WAR ON INFLATION COULD COST 1M JOBS

Meta 

Meta Platforms — the parent company of Facebook — is planning to begin large-scale layoffs this week, according to The Wall Street Journal, citing people familiar with the matter. The layoffs are expected to affect "many thousands of employees."

An announcement could come as soon as Wednesday.

A smartphone with Facebook’s logo is seen with new rebranded logo Meta in this illustration taken Oct. 28, 2021.  (Reuters/Dado Ruvic/Illustration / Reuters Photos)

Should Meta proceed with the layoffs, it would mark the first across-the-board job cuts in the company's 18-year history. 

Meta employees more than 87,000 employees as of the end of September. 

CEO Mark Zuckerberg said during the company's third-quarter earnings call on Oct. 26 that he anticipates the company will "focus our investments on a small number of high priority growth areas."

"So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year," he said. "In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today."

Twitter

Twitter announced severe layoffs last week following Elon Musk's $44 billion acquisition of the social media company. Roughly 3,700 workers were let go — or about half of the company — as a way to trim costs following Musk's purchase. 

SpaceX owner and Tesla CEO Elon Musk speaks in Los Angeles, California, U.S., June 13, 2019.  (REUTERS/Mike Blake/File Photo / Reuters Photos)

"Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4M/day," Musk tweeted on Friday.

Lyft

Lyft announced last week that it will lay off about 13% of its staff, or nearly 700 employees, amid fears of a looming recession. 

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In a memo to staffers, Lyft co-founders Logan Green and John Zimmer said the layoffs will affect every part of the company, citing broader concerns about inflation and the economic outlook. 

"We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up," they wrote. "We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives. Still, Lyft has to become leaner, which requires us to part with incredible team members."

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