Tens of thousands of tech workers have lost their jobs since January 1

NPR
Tuesday, January 24, 2023

Copyright 2023 NPR. To see more, visit https://www.npr.org.

NPR’s Steve Inskeep speaks with Arun Sundararajan, Harold Price Professor of Entrepreneurship at New York University, about the effects of mass layoffs on tech workers.

Transcription

STEVE INSKEEP, HOST:

Who is really affected by layoffs in the tech industry? Some people worked for Alphabet, Google’s parent company. Some worked for Spotify, which announced layoffs yesterday. They worked for Twitter and many other companies. And in total, more than 56,000 people have seen their jobs cut this month alone. Arun Sundararajan says this shift hits a variety of people.

ARUN SUNDARARAJAN: Many people think of it as people working in computer science or engineering related activities. However, tech companies employ a wide variety of other people, from customer service to financial analysts and the tens of thousands of people who review content.

INSKEEP: Sundararajan is the Harold Price Professor of Entrepreneurship at New York University. He says these layoffs are a psychological blow to people who were fired and even to people who weren’t.

SUNDARARAJAN: Several large technology companies have grown at a breakneck pace over the last five years. Google more than doubled its workforce from 80,000 to 180,000 from 2017 to 2022. And that pales in comparison to Meta, which doubled its workforce between 2018 and 2022. And they’re all embarrassed by Amazon, who went from less from 800,000 at the end of 2019 to over 1.6 million at the end of 2021. So they more than doubled in two years. There has been a tremendous sense of security over the last five or six years. And what’s happened is people have gone from feeling secure to having to deal with potentially a high level of uncertainty, like, you know, for the first time in their careers.

INSKEEP: Oh, that’s an interesting point because it’s been noticed over the past few days that people in the tech industry who lose their jobs are often quickly rehired. Do people need to worry that maybe this isn’t true for them?

SUNDARARAJAN: Absolutely. I think as more and more tech companies start laying off employees, your ability to shift and hire people is immediately constrained. And as a result, the ease with which a tech worker can find their next job starts to be limited. And so, in many ways, I think we’re getting into unprecedented territory, at least for a year.

INSKEEP: Could it be more than a year?

SUNDARARAJAN: It’s unlikely in my mind. I think things will get back to normal, some pre-2017 normal, by 2024. What I’ve also noticed is that not just tech workers, but most employees in America tend to depend on their job for more than just things. income. You know, more and more in the last decade, Americans have found community in their workplace rather than other religious communities or organizations. I think that’s why anxiety exists, even at the level of people who feel, well, worst case scenario, it’s a year. I’m sure I’ll find another job, but it’s more than the income being lost.

INSKEEP: Do you have students graduating this year in this market you’re describing?

SUNDARARAJAN: Yes, I do.

INSKEEP: What advice would you give them?

SUNDARARAJAN: Well, students tend to be optimists, so I would feed into their optimism to say, well, 2023 is going to be a tough year to graduate from, especially in a business school, because hiring has changed finance — being finance dominant as it were. 15 years ago, to be more dependent on technology companies and technology consulting. But things are likely to get better by 2024. Crucially, you earned a degree that prepared you for life. Your first job is not the most important thing. So, you know, if you can afford it, take a year off. Do something you wanted to do before college and return to the workforce in 2024.

INSKEEP: I want to ask another question about this job market. As tech companies lay off people, are companies deliberately shrinking or evolving? By which I mean, are they getting rid of workers they think are redundant while building other areas of the company at the same time?

SUNDARARAJAN: That’s a great question, and I think it’s a mixed bag. Many of the layoffs we’ve seen in recent months are simply a reaction to overhiring during the pandemic. And so some of the jobs that are being lost today or some of the positions that are being eliminated today are permanent. They just reflect the fact that, for example, commerce has moved offline and back to face-to-face now. And so we don’t need as many people as we needed in 2021. But in many specific cases, it’s reflecting an evolution of the company’s business model. There are more and more activities that required human beings that are increasingly being performed by computers. It makes it easy. It becomes more palatable if they do this kind of workforce optimization at a time when layoffs are in the air, which is why some people sometimes conclude that layoffs are contagious. They are not really contagious. It just lowers the bar and legitimizes the activity in the executives’ eyes if everyone else is doing it.

INSKEEP: Well, now that raises one more interesting question, or at least interesting to me. People worry about artificial intelligence taking over human jobs. Is artificial intelligence likely to take over some of the jobs in the very tech industry that is doing artificial intelligence?

SUNDARARAJAN: Absolutely. Some of the things artificial intelligence is particularly good at are things that are really mainstream in the tech sector, like computer programming. It’s actually much easier to create an artificial intelligence system that writes simple computer programs than it is to create one that has nuanced conversations the way ChatGPT does. And so the tech companies that are creating this artificial intelligence will certainly be active consumers of it. However, historically, when a new technology has made human beings unnecessary for certain types of economic activities, the new technology creates a different type of demand for human labor. And my expectation is that, in general, this will also be the case with artificial intelligence.

INSKEEP: Arun Sundararajan from NYU, thank you very much.

SUNDARARAJAN: Thank you. It’s always a pleasure. Transcript provided by NPR, Copyright NPR.

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Tens of thousands of tech workers have lost their jobs since January 1

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