Amazon, one of the largest tech employers in the world, has revealed that it is now hiring at the slowest pace since 2019 and has cut over 100,000 employees globally in the June quarter, likely due to the dramatic economic slowdown since 2021. It is the largest workforce cut in a single quarter in the history of the company. The layoffs are part of an increasing trend of protecting the bottom line within the tech industry. The cuts likely played a large role in Amazon’s recent revenue beat and their rosy profit projections for the third quarter, though it still lost a net $2 billion in the second quarter.
The more employees lose their jobs, the more healthy the company appears to be when shareholders examine quarterly earnings; it is inevitable that layoffs will continue. There have been over 30,000 job cuts by tech companies in the US in the past few months alone, and unemployment claims have climbed to 8-month highs.
The covid pandemic lockdowns and subsequent stimulus checks created an enormous artificial boost for tech companies like Amazon in 2020 and 2021, but the $6 trillion stimulus has since circulated out of the pockets of most Americans and globally the lockdowns did incredible harm to existing economic stability. Demand for peripheral goods is in steep decline as inflation in necessities continues to rise. In 2022, the stagflation crisis is leading to imminent demand destruction.
This news comes as multiple companies are announcing layoffs and hiring freezes. Google parent Alphabet Inc. is instituting a hiring freeze. Apple is slowing its hiring this year. Coinbase is cutting 18% of it’s staff. Microsoft has announced a hiring slowdown. Netflix has cut at least 500 employees recently, not including contractor cuts. Peloton is firing over 2800 workers so far this year. Online brokerage Robinhood terminated 9% of its workforce in April. Twitter cut 30% of its talent acquisition team this past month but declined to give a specific number of layoffs. The list goes on and on.
The steep reversal from only a year ago highlights the swift nature of the economic downturn and also shows how dependent the tech industry is on consumers having large amounts of expendable income. When the financial environment gets tight, Big Tech corporations are among the first to feel the crunch because most of them offer very little in terms of necessities.
Reporting from Zero Hedge.