US Recession: More Layoffs at Tech Giants are Approaching

As an impact of the pandemic and Russia’s invasion of Ukraine, the US economy is predicted to face a recession that may result in massive layoffs in 2023. In June, thousands of Tesla’s employees were laid off based on Tesla’s “super-bad feeling” about the economy. In August, Apple laid off roughly 100 contractors as part of a push to limit their spending. In September, Meta announced plans to freeze hiring and restructure current teams to cut down expenses and develop a streamlined internal workforce. Finally, HelloFresh laid off 600 employees, recorded as the biggest layoffs this year. 

The National Bureau of Economic Research (NBER) stated that the US is not yet officially in a recession. However, experts are concerned that recent layoffs among tech giants will impact the labor reports in the second half of 2022. According to the US Bureau of Labor Statistics, the unemployment rate rose 0.2% to 3.7% in August, and the number of unemployed people increased to six million. Labor reports are one of the most indicative factors in predicting US economic recessions. If people are not earning money, their purchasing power declines, and companies’ profits will decrease. Consequently, this dynamic also decreases investor confidence in companies. As a result companies layoff more employees to streamline business operations and adjust to lower consumer demand. 

As a result of employment trends, social media users are documenting their layoffs on TikTok, with the hashtag “layoffs,” garnering more than 30 million views. These users are encouraging young workers to distrust their future employers. Instead of viewing layoffs as a source of disgrace, the mindset of many laid off workers is that the company is responsible. Human resources departments are tasked with the legal and moral responsibilities of hiring, compensating, training, developing, monitoring, retiring, coaching or counseling, and selecting the right positions and/or laying off employees when the organization has to reduce its workforce. Therefore, it is important for the human resources department to apply a humanist approach when firing employees.

Because mass layoffs may continue into next year, companies must consider today’s employment law. Companies may face potential employment discrimination suits if termination is not supported by solid and transparent evidence demonstrating the financial reasoning behind layoffs. Lawsuit settlements or hiring legal counsel to develop defenses is extremely costly and time-consuming. When faced with a looming recession, employers should be aware of employment laws when conducting workforce reductions. They must consider notice of termination required by federal law and wage payment obligations under wage and hour laws. This will ensure employers are in compliance with applicable discrimination laws and that they can avoid incurring additional problems, beyond recession related profit losses.