Tens of thousands of tech workers have lost their jobs since Jan. 1
STEVE INSKEEP, HOST:
Who's really affected by layoffs in the tech industry? Some people worked for Alphabet, the parent company of Google. Some worked for Spotify, which announced layoffs just yesterday. They worked for Twitter and many other companies. And in total, more than 56,000 people have seen their jobs cut this month alone. Arun Sundararajan says this change hits a variety of people.
ARUN SUNDARARAJAN: A lot of people think of it as people who work in computer science-related or engineering-related activities. However, the tech companies employ a wide variety of other people, ranging from customer service to financial analysts to tens of thousands of people who are screening content.
INSKEEP: Sundararajan is the Harold Price professor of entrepreneurship at New York University. He says these layoffs are a psychological blow for people who were fired and even those who were not.
SUNDARARAJAN: A number of large tech companies have grown at a breathtaking pace over the last five years. Google has more than doubled their workforce from 80,000 to 180,000 from 2017 to 2022. And that pales in comparison to Meta that doubled its workforce between 2018 and 2022. And they're all put to shame by Amazon that went from under 800,000 at the end of 2019 to over 1.6 million at the end of 2021. So they more than doubled in two years. There has been a tremendous feeling of security over the last five or six years. And so what has happened is that people have gone from feeling secure to having to deal with a high level of uncertainty potentially for, like, you know, the first time in their career.
INSKEEP: Oh, this is an interesting point because it's been observed in recent days that people in the tech industry who lose their jobs typically get rehired quickly. Do people have to worry if maybe that will not be true for them?
SUNDARARAJAN: Absolutely. I think that as more and more tech companies start to lay off workers, their ability to turn around and hire people immediately gets constrained. And as a consequence, the ease with which a tech worker might be able to find their next job starts to be constrained. And so in many ways, I think we are entering unprecedented territory, at least for a year.
INSKEEP: Could it be longer than a year?
SUNDARARAJAN: It's unlikely in my mind. I think things will be back to some normal, some pre-2017 normal, by 2024. What I have also been noticing is that not just tech workers but most employees in America tend to depend on their job for things more than just income. You know, increasingly over the last decade, Americans have found community from their workplace rather than other community or religious organizations. I think that's part of why there is anxiety, even at the level of people who feel like, well, at worst, it's a year. I'm sure I'll find another job, but it's more than the income that is being lost.
INSKEEP: Do you have students who are graduating this year into this market you're describing?
SUNDARARAJAN: Yes, I do.
INSKEEP: What advice would you give them?
SUNDARARAJAN: Well, students tend to be optimistic, so I would feed off their optimism to say, well, 2023 is going to be a difficult year to graduate, especially from a business school, because hiring has shifted away from finance - being finance dominant like it was 15 years ago to being more reliant on tech companies and tech consulting. But things will probably improve by 2024. Fundamentally, you have gotten a degree that has prepared you for life. Your first job is not the most important thing. So, you know, if you can afford it, take a year off. Do something that you wanted to do before college and reenter the labor market in 2024.
INSKEEP: I want to ask another question about that labor market. As tech firms lay off people, are the companies shrinking or deliberately evolving? By which I mean, are they getting rid of workers they think are redundant while perhaps also building up in other areas of the company?
SUNDARARAJAN: That's a great question, and I think it's a mix. A lot of the layoffs that we're seeing over the last few months are simply a reaction to overhiring during the pandemic. And so some of the jobs that are being lost today or some of the positions that are being eliminated today are permanent. They just reflect the fact that, for example, commerce has shifted offline and back to being in-person now. And so we don't need as many people as we needed in 2021. But in many specific cases, it's reflecting an evolution of the business model of the company. There are more and more activities that used to require humans that are increasingly being taken on by computers. It makes it easier. It makes it more palatable if they do this kind of workforce optimization at a time where layoffs are in the air, which is why some people sometimes conclude that layoffs are contagious. They're not actually contagious. It just, like, lowers the barriers and legitimizes the activity in the eyes of the executives if everybody else is doing it.
INSKEEP: Well, now, that raises one more interesting question, or at least interesting to me. People worry about artificial intelligence taking over human jobs. Is it likely that artificial intelligence will take over some of the jobs in the tech industry itself that is doing artificial intelligence?
SUNDARARAJAN: Absolutely. Some of the things that artificial intelligence is particularly good at are things that are actually dominant in the tech sector, like computer programming. It is actually much easier to create an artificial intelligence system that writes simple computer programs than it is to create one that has nuanced conversation the way that ChatGPT does. And so the tech companies that are creating this artificial intelligence are certainly going to be active consumers of it. However, historically, when a new technology has caused human beings to be not needed for certain kinds of economic activities, the new technology creates a different kind of demand for human labor. And my expectation is that, overall, that's going to be the case with artificial intelligence as well.
INSKEEP: Arun Sundararajan of NYU, thanks so much.
SUNDARARAJAN: Thank you. It's always a pleasure.
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