The wave of layoffs in tech that continued to mount this week has felt like a shocking and sharp turnabout for an industry that stood on top of the world just a year ago.
Be smart: Tech was never immune from forces in the broader economy, and Silicon Valley has always followed a boom-bust rhythm. But the most recent boom ran so long, many forgot it would have to end someday.
Driving the news: Amazon said Wednesday it will cut a total of 18,000 jobs, including some announced last year as well as new reductions to its retail and HR teams, among others.
Salesforce is laying off 10% of staff, saying it over-hired during the pandemic.
StitchFix on Thursday said it will cut 20% of salaried staff.
Across the industry last year, more than 1,000 tech companies laid off more than 150,000 people, per Layoffs.fyi.
The big picture: Tech’s reputation for driving economic growth has always been founded on its ability to deliver productivity gains.
The industry also grew by grabbing market share from a host of consumer and business segments that have moved from analog to digital.
The financial crisis of 2008-9 ushered in an easy-money era in which zero interest rates pushed seas of capital into tech.
The pandemic’s arrival brought some sectors to a standstill — but strengthened tech firms, who saw demand spike.
“It’s been a more than decade-long party,” said Margaret O’Mara, a University of Washington professor who studies the history of the technology industry. “It’s just extraordinary how long this boom has been.”
There was an assumption, O’Mara says, that pandemic-related behavior changes, such as the shift to remote work and buying groceries online, would just continue.
That led many tech companies to go on a hiring spree during the pandemic. The parent companies of both Facebook and Google, for example, grew more than 20 percent last year, while other large tech companies have doubled since before the pandemic.
Then inflation hit, the Fed raised interest rates and the economy softened dramatically — just as many people were returning to pre-pandemic methods of working and shopping. Tech, for all its vast scale and high profit margins, was never going to be immune from that kind of shift.
Online advertising has been hit particularly hard, with Google, Meta, Microsoft and others all noting a pronounced slowdown beginning mid-2022. Many tech companies started by slowing or freezing hiring, but shifted quickly to layoffs once the broader downturn was clear.
The chip sector, whose products had been in short supply, is now having to deal with a glut.

Axios