BiggerPockets: The 2023 Tech Layoffs: What HR Won’t Tell You
There are many signs of a slowing economy. One of the trends that matters most to policy makers like the Federal Reserve is the unemployment rate. That’s because if consumers cut back spending, they may increase their spending in the months ahead.
But for those out of a job, it’s likely that their spending will be curtailed for months until they are able to find a new line of work.
That’s a stronger way of ensuring that the economy slows and inflation rates come down – and stay down.
So some are pointing to the rise of layoffs in the tech space as a sign that the economy is starting to cool. Big tech companies employ thousands of workers. So when they lay off even 5 or 10 percent of their staff, it has a bigger impact than at other firms.
In total, the past few weeks have seen over 200,000 announced layoffs at tech firms. These tend to pay substantially higher salaries than average.
But it’s not as bad as it sounds. These workers are getting months of severance pay, and continued health care for months as well.
With smaller tech firms looking to pick up talent from big-name companies, chances are this may not be as strong a sign of a recession as in the past. But it is a sign, and investors should wait and see how these tech companies operate with a smaller staff before investing.