Amazon has followed suit with Twitter, Meta, and Salesforce in a recent cutting of jobs company-wide, due to a dip in the U.S. economy.
The company is estimated to lay off 10,000 white-collar workers, mostly in its human resources, retail, and devices divisions. That makes up for 3% of Amazon’s workforce making it the largest cut of jobs in the company’s history. A corporate hiring freeze was also put in place earlier this month.
This decision comes as Amazon CEO Andy Jassy began a cost-cutting review of the company, including cutting back on businesses that are non-profitable, including the devices unit. This unit works with Amazon Alexa devices, and it has been loosing $500 billion a year, according to The Wall Street Journal.
Overall, the company has been reporting less than stellar earnings, as the shares of Amazon have been down 40% year-to-date.
“We’re facing an unusual macro-economic environment, and want to balance our hiring and investments with being thoughtful about this economy,” says Beth Galetti, Amazon’s senior vice president of people and experience and technology. The leadership team also decided on the cuts based on the amount of people hired by Amazon in recent years.
Amazon is only one of the many companies that has been laying off employees, including Meta and Twitter. For instance, Elon Musk laid off at least 50% of Twitter’s 7,500 employees shortly after his guy-out of the company. Meta released 11,000 people, and the fintech giant Stripe let 14% of their workers go.
“Early on in the pandemic, we shifted our lives from the real world to the digital world,” said technology analyst Carmi Levy. “We were using apps to order things to our homes and businesses that we used to go out and get. “So these companies grew by leaps and bounds because they had to meet that crush of pandemic-fueled demand. Now that we are on the far side of the pandemic … that is, reversing.” The retail division of Amazon has slowed when compared to its peak performance during the pandemic, following this pattern that Levy explained.
However Levy explains that something good may come out of these lay-offs. “We often see tech industry employees being laid off and taking their severance packages and their savings and flowing that into a new business venture or a start-up.”
In general, the U.S. economy has been walking a tightrope. The stock market has been at a low for the entire year, but ironically, the unemployment rate has also been at a low 3.7%. Prices have been high due to inflation, and the Federal Reserve is trying to calm this by increasing interest rates and slowing national spending. Unfortunately, economists believe that the country is heading towards a recession, which may leave laid off employees in the lurch for longer.