Tech and EdTech Companies Continue Firing Employees In 2024

IBL News | New York

With 353,000 jobs added in January, the U.S. economy is booming, but tech and edtech companies are firing tens of thousands of workers, despite stabilizing interest rates and a booming job market in other industries. Most of these employees, were hired to meet the pandemic boom in consumer tech spending.

Even workers with years of experience or deep technical expertise are having trouble getting hired again.

In January, Google, Amazon, Microsoft, Discord, Salesforce and eBay all made significant cuts. On Tuesday, PayPal said, in a letter to workers, it would cut another 2,500 employees or about 9 percent of its workforce.

In 2023, they laid off over 260,000 people, according to layoff tracker

Last year, the job reduction was mostly due to over-hiring during the pandemic and high interest rates environment — which makes it harder to invest in new business ventures, according to a report in The Washington Post.

Experts say that companies are under pressure from investors to improve their bottom lines and focus on increasing profits.

“That is the way the American capitalist system works,” said Mark Zandi, Chief Economist at Moody’s Analytics. “It’s ruthless when it gets down to striving for profitability and creating wealth. It redirects resources very rapidly from one place to another.”

It seems to be working. In 2022, the Nasdaq Composite, a stock index dominated by tech companies, lost a full third of its value. In 2023, it grew by 43 percent. It rose another 3 percent in January.

“The tech sector may be able to produce a lot and innovate a lot without as many people going forward,” Zandi, the Moody’s economist, said. “That is a lesson of AI.”