Layoffs mount as U.S. economy downshifts
Companies from ride-sharing platforms to mighty Amazon are either shedding jobs or putting their hiring plans on hold as the U.S. economy slows.
Lyft said Thursday in a regulatory filing it is cutting 13% of its workforce, or almost 700 employees, as it moves to pare costs. The money-losing ride-hailing service has seen its sales shrink over the past year, while its shares have tumbled 67% in 2022.
Stripe, a provider of payments services, also announced layoffs on Thursday, saying it was cutting 14% of its workforce, or roughly 1,000 employees. In an email to employees posted on Stripe's website, CEO Patrick Collison said the company is preparing for "leaner times" amid worsening economic conditions.
"We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets and sparser startup funding," he wrote.
Stripe said it will offer a minimum of 14 weeks of severance pay for all the employees who were laid off, and more for those with longer tenure.
Twitter is another large technology company moving to slash costs. Bloomberg News reported that Elon Musk, who closed a deal to buy the social media service last week for $44 billion, plans to fire 3,700 employees, or roughly half of its workforce.
The Tesla CEO has wasted little time cleaning house, moving to dismiss Twitter's CEO, chief financial officer and top lawyer within hours of taking control, while other members of the company's leadership team have also left.
Also moving to rein in costs, Amazon executives are freezing hiring for its corporate workforce at least for the next several months, Beth Galetti, senior vice president of people experience and technology, said in a memo posted on Amazon's website on Thursday.
"We're facing an unusual macroeconomic environment, and want to balance our hiring and investments with being thoughtful about this economy," she said.
The National Association for Business Economics recently predicted that the U.S. would enter a recession within the next 12 months.
Despite the rising tech sector layoffs and economic challenges affecting millions of Americans, unemployment in the U.S. remains near a five-decade low at 3.5%. Employers around the country posted 10.7 million job vacancies in September, up from 10.3 million in August, the Labor Department said Tuesday. And despite the plethora of corporate layoff announcements, the number of workers filing for jobless assistance remains low, suggesting that even laid-off workers are finding new jobs fairly fast.
"There is a bit of a white-collar panic happening," said Julia Pollak, chief economist at ZipRecruiter, calling out the finance, technology and advertising sectors. "Companies are sitting on piles of cash and being very conservative, they're trying not to overhire. Probably they won't expand, open new locations just yet, and the big ribbon cutting will prob be postponed for another year."
"We still have this incredible labor market and an incredible shortage of candidates, but that gap between demand and supply is narrowing," she added.
The government is set to release its October employment report on Friday.
—The Associated Press contributed to this report.