After bumper years in 2020 and 2021, the tech industry is heading into a period of austerity. Major tech companies have announced layoffs, hiring freezes, and other cost-cutting measures, and those announcements have accelerated in recent weeks.
For example, Meta announced it was laying off 11,000 employees, or 13% of its headcount, earlier this month after adding more than 13,000 employees each year in 2020 and 2021. For many tech firms, the period since the pandemic has seen them take three steps forward, and one step backward.
Software engineers who were entertaining multiple top-dollar job offers a few short months ago are now wondering what comes next. Layoffs and hiring freezes will set many talented Americans back in their careers. That said, in what remains a historically tight labor market where companies are adding 60% more jobs each month across a broader set of industries than was usual before the pandemic, most laid-off workers are likely to land on their feet.
Here are some predictions based on the latest data from the ZipRecruiter marketplace and surveys:
1. Most laid-off tech employees will find new jobs relatively quickly.
Until recently, tech layoffs have barely shown up in aggregate economic data. That’s because they have affected tens of thousands of workers at a time when, nationally, layoffs and firings are lower by about 500k per month than before Covid (about 1.9M per month on average in the 6 months before the pandemic, compared to about 1.4M per month on average in the most recent 6 months). Furthermore, many laid-off tech workers receive severance pay for several months and therefore, never apply for unemployment benefits.
Nationwide, according to the U.S. Bureau of Labor Statistics, the median unemployment duration is 8.1 weeks, well below the 9-week median before the pandemic. Among people who were recently laid off and worked in tech previously, 37% found a new job within one month, and 79% found a new job within three months, according to a ZipRecruiter survey conducted in late October.*
Survey Question: How long did it take you to find your current job?
| Response | Share of respondents who last worked in the technology and were laid off or fired from their previous job |
|---|---|
| 0 to 1 month | 37% |
| 1 to 3 months | 42% |
| 3 to 6 months | 16% |
| 6 to 12 months | 5% |
2. Many laid-off tech employees will find opportunities in other industries.
Among former tech employees in an October ZipRecruiter survey of recently hired workers,* about 74% found new jobs in tech, 6% in retail or e-commerce, 5% in financial services or fintech, 2% in healthcare, and the rest in a range of different industries. Tech skills are in high demand across the economy, with government agencies, aerospace companies, health systems, and retailers frequently noting shortages of software engineers, cybersecurity professionals, data analysts, and web designers. Had tech companies continued growing at the breakneck 2020-2021 pace, they would have monopolized U.S. tech talent and made it impossible for employers in non-tech industries to hire tech talent. Now, other industries may stand a chance.
3. Some laid-off tech employees will take advantage of the near-term industry contraction to start their own businesses.
One silver lining of tech recessions is that many laid-off tech employees treat them as an opportunity to start their own businesses. It’s hard to take time off to build a new product or service when the alternative is a tech sector job paying $500k per year. It’s much easier when the alternative is a government or health insurance company job paying $150k per year. Furthermore, in a tough funding environment, companies need to bootstrap their way to success. The economics of the company need to work immediately for a company to succeed without free money. As a result, many of the hardiest U.S. tech companies were started in the shadows of recessions.
* Nationally representative survey of 2,550+ U.S. residents who are currently employed and started their jobs in the prior 6 months, conducted by ZipRecruiter, Inc., October 17–October 30, 2022.
