US Tech Sector Continues Laying Off Large Number of Employees

A 3D printed Facebook's new rebrand logo Meta is seen in front of the displayed Google logo in this illustration taken on Nov. 2, 2021. Dado Ruvic/Illustration/Reuters

American tech firms have announced thousands of layoffs this year so far, with reasons for these terminations ranging from over-hiring during the pandemic, worries about a potential recession, and efforts to cut costs.

Salesforce set the tone for the tech industry’s layoffs this year in January when it announced that 8,000 employees would be terminated. PayPal announced 2,000 layoffs, Microsoft 10,000, IBM 3,900, Amazon 18,000 jobs, and Alphabet 12,000 employees. Other major companies like Meta, Yahoo, Dell, and GoDaddy, among others, followed with more job cut announcements. More recently, Soundcloud has announced it is laying off eight percent of its global staff.

A report by outplacement firm Challenger, Gray & Christmas, Inc. found the tech sector to have made the most job cut announcements so far this year. Between January and April, the tech industry announced 113,944 layoffs, which is 34 percent of all job cuts announced in 2023, it said.

There are multiple reasons why the tech sector accounts for the bulk of the layoffs. The COVID-19 pandemic created a situation where people had more time at home as well as cash in hand. People sat at home, buying groceries, food, and other stuff online while streaming their favorite shows.

Demand for IT solutions expanded and tech companies went on a hiring spree, with Meta almost doubling its head count. But as things got back to normal, demand for tech services dropped and IT firms found themselves with excess employees, triggering layoffs.

Companies are also worried about a potential recession. A probability model from the New York Federal Reserve found the odds of the United States falling into a recession over the next 12 months to be at 68.2 percent, the highest in 40 years.

Some tech firms are cutting jobs in a bid to cut down costs and improve profitability. When Amazon announced in March that they were eliminating 9,000 jobs, CEO Andy Jassy said, “Given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount.”

Hiring Foreign Workers

While tech companies are laying off domestic employees, they are hiring more foreign workers, according to investigative journalist Lee Fang.

In a May 16 analysis at his website, Fang cited data from the Department of Labor to reveal that “thousands of recent H1-B foreign worker visas requested by firms that just underwent massive layoffs this year.” Such companies include Meta, SalesForce, Microsoft, Zoom, Amazon, and Palantir.

Microsoft has a “long history of internal outsourcing to lower wages. Here’s Bill Gates in 2008 testifying in Congress, asking policymakers to increase the cap on H-1B visas,” Fang said in a May 16 tweet while posting the video of the testimony.

“Google sent an emotional email announcing 12k layoffs in Jan. Just one month later, Google filed for foreign visa high tech workers at lower pay,” Fang said in another tweet.

H-1B visas are usually used by the tech industry to hire foreign software workers and have been criticized for being used to undercut American citizens. They are issued for three years and can be extended for an additional three years.

This year, there were 780,884 H-1B visa applications, which is up by 61 percent compared to 2022. Every year, up to 85,000 people are selected for these visas.

‘Despicable’ Policy

On May 18, public charity America First Legal (AFL) filed Freedom of Information Act (FOIA) requests with multiple government agencies to obtain records related to Microsoft’s efforts to hire foreign workers instead of American employees.

AFL claimed that the H-1B visa program is being misused by employers “frequently” to cut costs by hiring “cheaper foreign workers,” according to a May 18 post. Employers do not have to pay payroll taxes on such workers due to special agreements that Washington has signed with the home nations of these foreign workers.

“It is despicable for a company to fire its own workers and then turn around and hire foreigners as replacements, all just to save a few dollars. The letter and the spirit of the law forbid such practices,” said James Rogers, America First Legal Senior Counsel.

“American companies that engage in this appalling behavior need to be held accountable. It’s time for them to start following the law and respecting the rights of American workers.”

The organization criticized the Biden administration for rolling back many of the “critical” H-1B reforms that were put in place under the Trump administration.

For instance, Trump eliminated the practice of allocating H-1B visas through a lottery system and instead instituted a process of giving these visas by wage level.

This was “a crucial reform that made it virtually impossible for companies to hire low-wage foreign workers to replace their American employees,” AFL stated. Biden revoked this rule entirely.