While we can’t answer your biggest one — “Am I next?” — we can try to make sense of the situation and tell you what you should expect if you find yourself cut from your tech job.
Why are there so many layoffs happening?
According to TrueUp’s tech layoff tracker at the time of this writing, there have been 171 tech layoffs in the first 19 days of 2023, impacting 57,463 people, including more than 10,000 at Microsoft and 18,000 at Amazon. Meanwhile, Layoffs.fyi counts 122 tech companies with layoffs, impacting 37,526 employees.
Per TrueUp, 2022 saw 237,874 tech layoffs, with over 60,000 of them happening in November, the month that Twitter eliminated tens of thousands of jobs following Elon Musk’s acquisition just before Halloween and Meta and Amazon let massive numbers go.
Some have called the current state of the economy a “richcession,” or a recession that impacts people with high-wage jobs.
This tech downturn may seem incongruous at a time when there is still a national tech talent shortage, with tech job listings up 25% and 375,000 tech jobs unfilled at the end of 2022, according to the Dice Tech Job Report. In fact, Microsoft itself is still hiring thousands of new employees in the midst of the layoffs. So, what gives?
In short, it was the pandemic. While a lot of industries suffered through 2020 and 2021, big tech saw massive growth as lockdowns increased demand for more hardware, software and online services. Now that things are relatively normal — or at least not 2020-level chaotic — the consumer demand for more tech has settled down. And that means that some departments at Big Tech companies became overstaffed.
Unfortunately, this week’s layoffs are unlikely to be the last. The best case scenario is probably that tech layoffs will peter out by Q3 2023, if the Federal Reserve slows or freezes interest rate increases.
You could be at risk if your company had a large hiring spike during the pandemic, if it’s quarterly numbers are down and/or if the company higher-ups have been talking about restructuring. The good news is, experienced technologists are still highly sought after, so chances are you’ll land on your feet. In the meantime:
Know your rights
The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers intending a large-scale layoff to provide 60 days’ notice to affected employees, and there are very few exceptions — if a natural disaster wipes out the physical company, for example, or if there is another sudden unforeseen circumstance. Otherwise, you should not be blindsided and you may be able to recover damages if you’re not paid for 60 days after an immediate layoff. (Note this does not apply to termination with cause, such as a firing for misconduct.)
What to expect in a severance package
In the US, there is no legal requirement for a company to offer a severance package, or an extension of pay and benefits beyond the legal termination date. A lot of laid off workers will instead receive unemployment compensation through the state’s Department of Labor.
Big Tech companies, as well as some smaller ones, do offer severance packages to employees when they’re let go. One reason is to keep things on a relatively positive note, but another common reason is that severance packages often require the laid-off employee to sign away their rights to sue the company in order to receive the money and benefits. This is the situation several laid-off Twitter employees encountered when they attempted a class-action lawsuit against the company.
You can decline a severance package if you are uncomfortable with the terms — and if you fully intend to sue the company, you probably should refuse to sign (though you should also consult a lawyer first). You will still be entitled to unemployment benefits, though it will almost certainly be significantly less than the severance offer.
Microsoft’s severance package for US employees, according to Tech Crunch’s reporting, is “above-market severance pay,” healthcare for six months and career transition services. Microsoft also cited 60 days’ notice prior to termination, which is the law and not part of severance.
An average severance package generally offers an extension of the employees salary for one to two weeks for every year the employee worked for the company, and a continuation of healthcare package and retirement contributions for a similar duration.
What about my 401K?
Your 401K is yours, and will continue to be yours after you leave the company. Your company will stop paying into it at termination (or at the time agreed to in the severance package), and will also stop paying any fees. You can cash it out or turn it into an IRA, or roll it into your new 401K at your next job. At most large companies, you only have to fill out a few forms to consolidate your 401K.
Will shares in the company be worth anything?
If you have shares in the company, it depends on whether those shares are vested or unvested.
If you receives RSUs (restricted stock units), they came with a schedule where they are earned over time. If you’ve worked for the company long enough for the shares to vest, they’re yours even if you leave the company. If they’re unvested, you haven’t earned them and unfortunately you won’t likely receive anything from them.
If you received stock options, it depends on whether you were given the right to exercise them, again usually after you’ve worked at the company for a certain amount of time. If you opted to purchase stock, it’s yours even if you leave. If you didn’t, or if you never hit the milestone where you could purchase them, you don’t.
What kind of tech companies are safer from layoffs in 2023?
Because what happened with the economy over the last couple of years has never happened before, it’s hard to say which companies or industries are “safe,” but tech giants are not, at least for now. Banks and other large corporations are eyeing layoffs, too.
If you’re wondering if your best bet is to start your own business, you’re not alone. About a quarter of people who’ve been laid off in the last couple of years have have started their own businesses, per one survey, joining the record-setting ranks of Americans who did the same since the pandemic hit. While it’s by no means an easy alternative to being an employee of a company, and you won’t get benefits like healthcare and lifestyle perks, your tech expertise may make you a valuable contractor or consultant, especially if you have a lot of connections in the industry.
Knowledge is power!
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