Tech companies cut jobs, slow down hiring

During the pandemic, hiring and fabulous growth in the tech sector drew millions of investors, big and small, into industries of the present and future. But in recent months the blush on the high-tech rose has turned embarrassingly red to many investors.

Carvanna, Netflix, Facebook and Robinhood have recently announced layoffs, which suggests to many investors that tech is tricky, if not terrifying. After all, since December, the tech heavy NASDAQ exchange is now down 39%. That's almost twice as much as the wider, diversified stock market has fallen.

Former Employment Development Department director Michael Bernick has been following labor markets for four decades.

"What we do see this week is that tech layoffs are the highest since January 2021, and they include established firms across the spectrum as well as more recent smaller tech start-ups," said Bernick. Adding, "The reason for the layoffs at Netflix is different from the reasons driving layoffs at Carvanna or layoffs at Robinhood or layoffs that these other firms."

Tech analyst Larry Magid has been in tech for four decades.

"I've seen and actually suffered from a number of layoffs. I think this is the normal kind of cycling that businesses go through and since we've come off such a great bull market and such great success in tech, there are a lot of people who have never experienced that," said Magid.

"Despite what we're seeing just the past week, there will continue to be a very, very, very strong market for people in tech," said Bernick.

The very lifeblood of tech are venture capitalists. This year, investors blew away all records, shoveling $630 billion into venture capital firms. But with inflation and higher interest rates savaging the economy, even venture capitalists put less money into start-ups, but demanding better terms from them. But, they're not running for the exits.

"Tech is here to stay and it's not going away," said Magid.

Uber, Twitter and Amazon are among the most recent tech companies to slow down hiring while e-commerce giant Wayfair and Facebook parent Meta, have frozen hiring.