Tech layoffs shock young workers. The older people? Not so much.
Shea German-Tanner, 22, a social worker, near her home in Fort Wayne, Ind., on Jan. 12, 2023.
By TRIPP MICKLE
When Lyft laid off 13% of its workers in November, Kelly Chang was shocked to find herself among the 700 people who lost their jobs at the San Francisco company.
“It seemed like tech companies had so much opportunity,” said Chang, 26. “If you got a job, you made it. It was a sustainable path.”
Brian Pulliam, on the other hand, brushed off the news that crypto exchange Coinbase was eliminating his job. Ever since the 48-year-old engineer was laid off from his first job at the video game company Atari in 2003, he said that he has asked himself once a year, “If I were laid off, what would I do?”
The contrast between Chang’s and Pulliam’s reactions to their professional letdowns speaks to a generational divide that is becoming clearer as the tech industry, which expanded rapidly through the pandemic, swings toward mass layoffs.
Microsoft said last week it planned to cut 10,000 jobs, or roughly 5% of its workforce. And Friday morning, Google’s parent company Alphabet said it planned to cut 12,000 jobs, or about 6% of its total. Their cuts followed big layoffs at other tech companies such as Meta, Amazon and Salesforce.
Millennials and Generation Z, born between 1981 and 2012, started tech careers during a decadelong expansion when jobs multiplied as fast as iPhone sales. The companies they joined were conquering the world and defying economic rules. And when they went to work at outfits that offered bus rides to the office and amenities including free food and laundry, they weren’t just taking on a new job; they were taking on a lifestyle. Few of them had experienced widespread layoffs.
Baby boomers and members of Generation X, born between 1946 and 1980, on the other hand, lived through the biggest contraction the industry has ever seen. The dot-com crash of the early 2000s eliminated more than 1 million jobs, emptying Silicon Valley’s Highway 101 of commuters as many companies folded 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. “As concerning as the current downturn is, and as much as I empathize with the people impacted, there’s no comparison.”
Tech’s generational divide is representative of a broader phenomenon. The year someone is born has a big influence on views about 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 from 1960 to 2007, found that people who came of age in the 1970s when the stock market stagnated were reluctant to invest in the early 1980s when it roared. That trend reversed in the 1990s.
“Once you experience your first crash, things change,” Nagel said. “You realize bad stuff happens and maybe you should be a bit more cautious.”
For Gen X, the dot-com collapse hit early in their careers. From 2001-05, the tech sector shed one-quarter of its workers, according to an analysis of Bureau of Labor Statistics data by CompTIA, a technology education and research organization.
The layoffs that swept the industry were worse than the recession of the early 1990s, when total jobs in the tech sector fell by 5%, and the global financial crisis in 2008, when the workforce contracted 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 annually, and by 2021, it had recouped all the jobs it lost when the dot-com bubble burst.
The job figures account for software, hardware, tech services and telecommunications companies, including Apple, Meta, Nvidia and Salesforce. But they may exclude some tech-related companies such as Airbnb, Lyft and Uber because of ambiguity in government labor market reporting that classifies some businesses as consumer services, said Tim Herbert, chief research officer at CompTIA.
The biggest job increases in tech came after the pandemic started, as companies rushed to fulfill surging demand. In 2022, the sector added nearly 260,000 jobs, according to CompTIA, the most it had added in a single year since 2000.
Tech’s job increases continued last year even as big layoffs started, though it is unclear if that trend has stretched into this year. New job opportunities were a factor as nearly 80% of laid-off tech workers said they had found a new job within three months, according to a survey by ZipRecruiter.
“We’re seeing the hiring mania of the pandemic being corrected for — not the popping of a bubble,” said Andy Challenger, senior vice president of career transition firm Challenger, Gray & Christmas.
Last fall, David Hayden, a program manager with a doctorate in physics, learned from his manager that he would be let go from nLight, a semiconductor company. Worried about how he would pay his eldest daughter’s college tuition, he immediately reached out to recruiters to line up interviews. In December, a month after being let go, he started a position at Lattice Semiconductor.
In each interview, Hayden, 56, volunteered that he had been laid off, he said. His experience during the dot-com crash, when he avoided layoffs even as talented colleagues were let go, taught him that cuts aren’t always rational.
“The shame of being laid off is gone,” said Hayden. “Companies know that a lot of good people are being let go right now.”