Mass Layoffs Are Still Happening — Does This Mean a Recession Is Around the Corner?
Mass layoffs are happening, especially in the tech industry. Are the mass layoffs due to an impending recession or some other beast? Here's what we know.
Oct. 20 2022, Published 1:02 p.m. ET
Mass layoffs are happening, especially in the tech industry but also in health, retail, and other economically important sectors. At many companies, workers worry (perhaps rightfully) that they might be next.
As for where these layoffs are stemming from, it’s a combination of recession fears and other factors that make previous growth goals more of a pipe dream than a reality.
Mass layoffs have been happening at companies including Microsoft, Foot Locker, and Intel.
On Oct. 19, Microsoft announced that it will lay off 1,000 people from its workforce. At this point, only gaming divisions have confirmed an impact from the layoffs, including Xbox team members. However, the Microsoft layoffs may expand beyond these confines.
Meanwhile, Foot Locker laid off 210 employees and closed its Wisconsin-based distribution center.
Despite the CHIPS Act propelling its product, Intel has initiated layoffs for upwards of a fifth of certain divisions (including sales and marketing).
More layoffs are happening at companies like Sanford Health, TikTok, and even San Francisco trucking startup AtoB, which is laying off 30 percent of its workforce just after raising $155 million in a funding round.
Do layoffs usually happen during a recession?
Layoffs tend to be a marker of a looming or ongoing recession, but it’s important to note that every recession is different. According to the Bureau of Labor Statistics, unemployment decreased 3.5 percent in September while employment increased by 263,000 jobs.
This shows how unusual the current economy is. It’s a post-pandemic whirlwind in which we’re recovering from a mixture of shutdown struggles and massive amounts of stimulus spending.
A recession is possible even without layoffs, and mass layoffs are possible even without a recession. Still, the two often overlap, but other factors can come into play.
Mass layoffs tend to happen for certain reasons.
“The trauma and disruptions that come from a job layoff have been well researched — everything from depressed lifetime earnings to reduced physical and mental well-being,” the Wisconsin School of Business wrote. As for why these layoffs happen, that’s a different story.
According to a recent survey by PwC, “50 [percent] of all [companies] are reducing their overall headcount, 46 [percent] are dropping or reducing signing bonuses, and 44 [percent] are rescinding offers.”
The top reasons for a layoff, according to Indeed, include:
- Company relocation
- Business closure
- Cost-cutting measures
- Mergers and acquisitions
- Slimmed operations and increased outsourcing
- Loss of funds or humbled growth projections
- Seasonality
- Tech advancements
- Change in position requirements
- Offshoring
Many of these reasons correspond with actions a company might take in response to an economic downturn or recession. Tech companies have been especially impacted by layoffs in 2022, which may be due to the massive growth the sector experienced in the years leading up to this.
Valuations and growth projections are condensing, and leaders are responding and reallocating the workforce.
The upside to the layoff conundrum? While layoffs are a negative thing (and, as mentioned, can be dangerous for people’s livelihood), hiring is still prominent, and finding a new job may be easier than you realize — at least for now.