Downsizing in Corporate America Expands to 2023

A new round of layoffs is being prepared for at least four corporate giants to start the new year as recession fears swirl.

Amazon ( AMZN ) CEO Andy Jassy said Wednesday the company will cut “more than 18,000 roles,” a higher cut than originally planned. Jassy’s message came on the same day that Salesforce ( CRM ) said it would cut 10% of its workforce and Vimeo ( VMEO ) said it would cut 11% of its workforce in a second wave of layoffs.

And it’s not just tech workers who are being let go.

Goldman Sachs is reportedly ending plans to cut up to 4,000 bankers a day, according to CEO David Solomon’s year-end audio message to staff last week.

This year’s layoff announcements come as U.S. companies grapple with inflation, high interest rates and a deteriorating economic environment, making spending cuts both necessary and prudent — especially after a lot of hiring during the post-pandemic boom in 2021 .

“Amazon has struggled through uncertain and difficult economies in the past, and we will continue to do so,” Jassy said in a message to Amazon employees. “Companies that have been around for a long time go through different stages. They’re not in expansion mode for heavy people every year.”

The e-commerce giant first said in November that about 10,000 jobs would be cut.

Jassy’s comments echoed those of Salesforce CEO Marc Benioff, who said in an email to staff on Wednesday that the decision stemmed from what remains a challenging and more measured spending environment by customers.

“I’ve been thinking a lot about how we got to this moment,” Benioff wrote. “As our revenues accelerated through the pandemic, we hired too many people that led to this economic downturn we’re facing now, and I’m responsible for that.”

Amazon hired 1,544,000 people as of September 30, up from 1,468,000 in the same period in 2021, according to the company’s latest quarterly report. Salesforce had 79,824 employees as of Oct. 31, up from 69,530 a year earlier, according to its third-quarter report.

“Salesforce and Amazon layoffs add to a trend we expect to continue into 2023 as the tech sector adjusts to a softer demand environment,” Wedbush analyst said. Dan Ives said. “We expect more tech cuts to follow as the tech sector spends money to meet demand like the Rock Stars of the 1980s and now turns around.”

Late last year, Facebook’s parent company Meta Platforms ( META ) announced plans to cut 11,000 jobs, or 13% of its total workforce. Twitter cut half its workforce in November under new leadership from billionaire Tesla CEO Elon Musk. Dozens of other tech companies have taken similar steps.

A similar trend is seen in the financial industry, which has been aggressively hiring as it benefits from the post-pandemic economic and financial market boom.

Goldman Sach’s Solomon acknowledged in a Wall Street Journal interview last month at the CEO Summit that the company was hiring at a furious pace to keep up with record deal activity at the time. The company is now partially scaling back that hiring as investment banking revenues decline.

Andy Jassy on stage at the 2022 New York Times DealBook in New York City. (Photo by Thos Robinson/Getty Images for The New York Times)

While US tech workers face layoffs, data continues to show that labor conditions remain very tough. Monthly wage growth averaged 391,000 in 2022, weekly jobless claims did not fall below 200,000, and Wednesday’s latest Job Openings and Labor Turnover Survey, or JOLTS, showed a higher-than-expected 10.5 million jobs. opened and showed.

The Labor Department will release its jobs report for December at 8:30 a.m. Friday, and economists expect nonfarm payrolls to have increased by another 200,000 jobs last month, according to Bloomberg estimates.

Tech companies collectively laid off 153,678 workers last year, according to data tracker That’s up from about 80,000 layoffs in the sector at the start of the COVID pandemic in 2020, highlighting that recent cuts are likely the result of excessive hiring during the tech boom in 2021.

The latest job cuts report from employment firm Challenger, Gray & Christmas found that tech companies led all announced layoffs for 2022, with 97,171 jobs expected to be cut, a 649% increase from 2021.

The challenges in technology were even acknowledged by Federal Reserve Chairman Jerome Powell, who said during a press conference last month that the layoffs were “a story in themselves.”

Bank of America’s Michael Gapen noted that while the latest data show a “very healthy labor market” — and a clear inconsistency from anecdotal evidence — tech cuts may not show up in employment data as long as laid-off workers are out. .

Alexandra Semenova is a correspondent for Yahoo Finance. Follow him on Twitter @alexandraandnyc

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