(NEW YORK) — Big Tech companies laid off hundreds of employees in recent days, commanding headlines and confronting workers across the economy with a question: Am I next?
Amazon and Google each imposed cuts, with Apple shutting down a 121-person team in San Diego, Calif., telling workers they must either transfer to Texas or leave the company, Bloomberg reported.
In all, the tech sector has laid off nearly 8,000 workers so far this year, according to layoffs.fyi, a site that tracks tech-sector employment.
The job cuts stem in large part from an ongoing staff reevaluation specific to the tech industry, since sales have retreated from the blistering pace attained during the pandemic, analysts said, noting comparatively scant layoffs across the wider workforce.
However, the recent cutbacks in tech also are due to the rise of artificial intelligence and the persistence of high interest rates, some analysts said, foretelling similar risks for workers across major swathes of the economy.
“I could see some layoffs in other areas of the economy but not as widespread as we’re seeing in tech,” Joshua White, Vanderbilt University finance professor and former economist at the Securities and Exchange Commission, told ABC News.
The string of high-profile job cuts arrives at a time when employment in the wider labor force remains robust.
A stronger-than-expected jobs report demonstrated solid hiring growth in December, rebuking fears of a shrinking workforce anytime soon, according to data from the U.S. Bureau of Labor Statistics (BLS).
The layoff rate for November, the most recent month on record, stands at a near-historic low of 1%, according to BLS data.
Even the job cuts in tech are relatively small compared with tens of thousands of employees laid off at the outset of last year.
This resilience in the labor force has coincided with a prolonged period of high interest rates at the Federal Reserve, which typically slow the economy and increase the risk of job cuts.
“Layoffs and firings are unusually rare throughout the economy,” Julia Pollak, chief economist at ZipRecruiter, told ABC News. “It’s surprising to me that employment hasn’t fallen more.”
Still, the job cuts at Big Tech firms could portend layoffs in other sectors, since the wider economy remains vulnerable to disruption from artificial intelligence, as well as from losses induced by high interest rates, some analysts said.
Layoffs at Google, for instance, affected hundreds of workers focused on the company’s well-known products, such as Google Assistant, as well as Google-owned YouTube.
The cuts came in part from the company’s priority shift toward AI, according to an internal memo from CEO Sundar Pichai, confirmed to ABC News by a Google spokesperson.
Apple did not immediately respond to ABC News’ request for comment. Neither did Amazon.
“Tech companies are hiring and firing on a small scale very often because they’re still experimenting with how to commercialize and scale AI,” Daniel Keum, a professor of management at the Columbia University Business School, told ABC News.
“Surely AI will spread – it will just spread at an uneven pace across different sectors,” Keum added, noting that he expects AI adoption to ripple through the economy over about 10 years. “People should be concerned.”
Corey Stahle, an economist at job-listing website Indeed, acknowledged a shift toward AI may be responsible for some of the layoffs in tech, but he rejected the notion of imminent cuts in other sectors due to the technology.
“We’re not at that point,” Stahle told ABC News. “These technologies are unlocking human potential and making workers more productive and efficient so far.”
Employees across the economy, according to some analysts, also are at risk of layoffs due to high interest rates, which make it more costly for companies to borrow money.
The tech sector is particularly sensitive to elevated borrowing costs, Chris Kayes, a professor at George Washington University School of Business, told ABC News, pointing out that tech firms often rely on loans for an extended period of time before they turn a profit.
Even Big Tech companies, Kayes added, depend on borrowed funds to support some of their spending.
Despite indications from the Fed of rate cuts later this year, companies economy-wide will need to weather an environment of high borrowing costs for the foreseeable future, leaving their employees vulnerable to cuts.
“That will continue to be something hanging over the job market,” Kayes said.
Reluctant to overstate the risk, however, Kayes downplayed the recent job cuts in tech. “These are fairly small layoffs,” he said.
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