Tech layoffs shock young workers. Older people? Not much

SAN FRANCISCO — When Lyft laid off 13% of its employees in November, Kelly Chang was shocked to find herself among 700 people who lost their jobs at the San Francisco company.

Chang, 26, said: “It seems like technology companies had a lot of opportunities. It was a continuous path.”

Issaquah resident Brian Pulliam, on the other hand, dismissed the news that cryptocurrency exchange Coinbase was shutting down. The 48-year-old engineer said that since he was fired from his first job at video game company Atari in 2003, he has asked himself once a year: “What would I do if I were fired?”

The contrast between Chang’s and Pulliam’s reactions to their professional failures speaks to a generational divide that has become apparent as the pandemic and the fast-expanding tech industry swing toward mass layoffs.

Microsoft said this week it plans to cut 10,000 jobs, or about 5% of its workforce. On Friday morning, Google’s parent company, Alphabet, said it planned to cut 12,000 jobs, or about 6% of its total. Their layoffs follow major layoffs at other tech companies like Meta, Amazon, and Salesforce.

Born between 1981 and 2012, Millennials and Generation Z began their tech careers during a decades-long expansion in which jobs grew as fast as iPhone sales. The companies they join are conquering the world and challenging economic rules. They weren’t just starting a new job when they went to work in outfits that offered a bus ride to the office and amenities including free meals and laundry; they lived a lifestyle. Several of them faced widespread layoffs.

And baby boomers and members of Generation X, born between 1946 and 1980, experienced the biggest contraction the industry has ever seen. In the early 2000s, the dot-com crash eliminated more than 1 million jobs, emptying Silicon Valley’s Highway 101 of commuters as many companies joined overnight.

“It was a bloodbath and it went on for years,” said Jason DeMorrow, a software engineer who was laid off twice in 18 months and was out of work for more than six months. “When it comes to the current recession, and as much as I empathize with the people affected, there’s no comparison.”

The generational divide of technology represents a broader phenomenon. The year someone was born greatly influences their outlook on work and money. Early personal experiences strongly determine a person’s appetite for financial risk, according to a 2011 study by economists Ulrike Malmendier of the University of California, Berkeley, and Stefan Nagel of the University of Chicago.

The study, which analyzed the Federal Reserve’s survey of consumer finances between 1960 and 2007, found that people who came of age during the stock market slump of the 1970s were more reluctant to invest than in the early 1980s. This trend was reversed in the 1990s.

Once you have your first accident, everything changes,” Nagel said. “You realize bad things happen and maybe you should be a little more careful.”

For Gen X, the dot-com crash happened early in their careers. According to an analysis of Bureau of Labor Statistics data by CompTIA, a technology education and research organization, the technology sector shed a quarter of its workers from 2001-05.

The industry-wide cuts were worse than the recession of the early 1990s, when total jobs in the technology sector fell by 5%, and the 2008 global financial crisis, when the workforce fell by 6%.

In 2011, the tech sector began a hiring boom that would last a decade. It added an average of more than 100,000 jobs each year, and by 2021 had regained all the jobs it lost when the dot-com bubble burst.

The job figures include software, hardware, technology services and telecommunications companies, including Apple, Meta, Nvidia and Salesforce. Tim Herbert, senior research fellow at CompTIA, said some tech companies such as Airbnb, Lyft and Uber may be excluded because of uncertainty in government labor market reports that classify some businesses as consumer services.

The biggest job growth in tech came after the pandemic began, as companies rushed to meet the increased demand. According to CompTIA, the sector will add nearly 260,000 jobs in 2022, the most it has added in a single year since 2000.

Tech’s job growth has continued despite major layoffs last year, though it’s unclear if that trend will continue this year. New job opportunities were a factor, as nearly 80% of laid-off tech workers said they found a new job within three months, according to a survey by ZipRecruiter.

“We’re seeing a correction to the pandemic’s hiring mania — not the formation of a bubble,” said Andy Challenger, senior vice president at career transition firm Challenger, Gray & Christmas.

Last fall, David Hayden, a program manager with a PhD in physics, learned from his manager that he was being let go from nLight, a semiconductor company. Worried about how she would pay for her oldest daughter’s college tuition, she immediately reached out to recruiters to set up interviews. In December, a month after his release, he started at Lattice Semiconductor.

In every interview, Hayden, 56, said he was voluntarily fired. His experience during the dot-com crash, when he refrained from laying off even talented colleagues, taught him that layoffs were not always rational.

“The shame of being fired is gone,” Hayden said. “Companies know that a lot of good people are being let go right now.”

For Pulliam, losing his job at Coinbase was an opportunity. He put his severance money into his own business, Refactor Coaching, a career coaching service for software engineers.

“It’s a gift,” Pulliam said. “I don’t think that story has been told. It is always suffering and darkness.”

But layoffs have been eye-opening for tech workers experiencing the first recession. Chang studied product design in college to join a seemingly recession-proof tech industry. Getting fired from Lyft shook that confidence.

Erin Sumner, a software recruiter at Meta, Facebook’s parent company, bragged to potential recruits about the company’s fastest-ever $1 trillion valuation. He said he would promote the company’s strengths, even as its stock price tumbled last year and its core business, digital advertising, struggled.

When rumors of layoffs began to circulate last year, he assured his colleagues that their jobs were safe, pointing out that the company had more than $40 billion in cash in the bank. But in November, he was among 11,000 workers laid off.

“It was heartbreaking,” Sumner, 32, said. He found a new job as chief recruiter for DeleteMe, a startup that aims to remove customer information from search results. But he said he gets frustrated every time he reads about more tech layoffs.

“I’m afraid it’s going to get worse before it gets better,” Sumner said. “There are no guarantees. I was fired from the safest company in the world.”

A similar reversal of fortune has challenged companies that sell software services. Shares of industry leader Salesforce have fallen nearly 50% in the past year as sales growth has slowed. The company spent $28 billion to buy Slack Technologies during the pandemic. It grew from 49,000 to 80,000 employees in two years.

At a general meeting last week to discuss the company’s decision to cut 10% of its workforce, company CEO Marc Benioff tried to empathize with his disaffected staff by putting the cuts in context.

“I went through very difficult times in this company. “Every loss evokes another loss for me,” he said. “It is clear that we are talking about reduction. I think of the dead workers. I think about the people we lost, whom we never want to lose.”

Benioff offered “thank you” when asked what advice he had for employees worried about the state of the company and future layoffs.

Austin Bedford found out that he was one of about 8,000 people who were kicked out of Salesforce when he tried to log in to his computer and didn’t have access to the Slack tool he works with as a chat designer. A native of East Palo Alto, California, he studied computer design in hopes of joining one of the lucrative companies in his backyard. The job he found in the company in 2021 fulfilled a dream. He never imagined that he would lose her so soon.

“I was shocked,” Bedford, 41, said.

Although he was disappointed to be laid off, he said he tried to see being out of a job as “a blessing in disguise” and intended to be selective about his next job.

“There’s something bright around the corner,” Bedford said. “I just need faith.”

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