Not all of it is "copycat". During the pandemic consumer spending moved online. People purchased hardware to work from home, ordered more from Amazon and other online stores as opposed to physical stores, used online services such as Zoom and Microsoft Teams more. Tech companies responded to the increased demand by increasing the pace of hiring. Were they wrong to do so? Possibly, because they should have expected that not all of the increased demand would stick around once the pandemic is over. As it happened, the demand ebbed when the pandemic was over, so they are stuck with excess manpower, which now has to be reduced. This doesn't explain all layoffs, however. Some of it is just opportunistic - now is a good time to do layoffs without looking weak.
Staff turnover in most companies is more than 15%. The same staff reduction could have been achieved by implementing a hiring freeze, moving people to strategic projects and putting underperforming staff on a performance management plan. However, as layoffs are now normal, it can be done without looking weak.
The job market is still very active. There are plenty of opportunities in more traditional sectors such as insurance and banking. I also suspect some layoffs have gone too far, especially with some early indicators that 2023 might not be as bad as forecasted. As a result, these companies will likely start hiring again in the second half of 2023, even if it is only to replace disgruntled staff that want to switch jobs after a poorly handled layoff.
Self fulfilling prophesy: if everyone is cutting demand, supply will also reduce its urgency to regrow. Which affects also inflation. This is a complex chaotic system that we have the epidemic effect of belief/gossip of layoffs and recession running on top.
It is hard to time. We make it hard to time. Most likely yeah, all these layoffs are causing the problems, and following what the FED instructs them indirectly to do.
> During the pandemic consumer spending moved online.
I keep hearing this repeated as canon but is this quantified somehow? Did we really see a spike long enough for hiring sprees? And did it last until ... when? A few months ago?
It seems intuitive but I'd really love to see numbers.
The Shopify layoff memo (https://news.shopify.com/changes-to-shopifys-team) has a pretty interesting graph of exactly this effect. Basically a huge leap in e-commerce adoption with a subsequent dip right back to where the pre-pandemic trend line was heading. It’s not hard numbers I suppose, but it was at least the reason shopify gave when explaining their layoffs.
> In 2021, as people began returning to their pre-pandemic shopping habits, Amazon’s revenue growth decelerated to 22 percent with nearly $470 billion in revenue. And in the first nine months of 2022 (Amazon reports results for the final quarter of 2022 the first week in February), year-over-year revenue growth decelerated all the way to 10 percent. To make matters worse, Amazon’s core retail business lost more than $8 billion during that time frame, compared to an $8 billion profit during the same period the previous year. Jassy decided Amazon’s layoffs and cuts had to follow.
Yes, there was pull-forward growth in e-commerce. Using this from Benedict Evans in 2021 because it has numbers and a good graph:[1]
> The traditional way to think about ecommerce penetration is to look at share of total retail sales, and then deduct things like car repair, gasoline and restaurants - to get to ‘addressable retail’. On that basis, US ecommerce was at 16% penetration at the end of 2019 and increased to 20% or so in 2020, adding 12-18 months of growth in a year.
I recently spent a couple years interviewing hundreds of global F100 executives and all of them said exactly the same stuff about both B2B and B2C demand moving online during the pandemic.
"Pandemics are known to cause widespread disruption, illness and hardship as we have experienced since 2020. An endemic means a disease is spreading in a community at the normal or expected level. A pandemic begins to shift to an endemic once the disease becomes more stable and manageable."
COVID has mostly moved from pandemic to endemic (like the flu).
