Amazon and Salesforce kicked off the new year by slashing more than 25,000 industry jobs and signaling that more could follow, given worsening economic conditions in the U.S. and abroad.
The tsunami of layoffs marks the U.S. labor market’s first major hit in 2023 after the once-bustling tech sector faced significant headwinds in 2022. Multiple major companies like Meta, Microsoft, Twitter, Vimeo, and Lyft laid off thousands of employees and/or implemented long-term hiring freezes last year.
In total, the tech industry lost more than 150,000 workers in 2022, according to a report by The Wall Street Journal.
“Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles,” Amazon CEO Andy Jassy said in a memo to employees. “Several teams are impacted; however, the majority of role eliminations are in our Amazon Stores and PXT organizations.”
Amazon’s recent job cuts follow a post-pandemic period of aggressive hiring and expansion, largely due to the country’s low-interest rate environment at the time.
Today, though, interest rates are much higher (between 4.25% to 4.50%), meaning it is more expensive for companies to borrow money for things like hiring, acquisitions, or expansions.
Like Amazon, business-software provider Salesforce was also hit by this same error in judgment. Last week, the company announced that it would begin laying off 8,000 employees, or 10% of its workforce, over the coming weeks.
Salesforce Co-CEO Marc Benioff attributed the requisite layoffs to a period of over-hiring by the company, for which Benioff said he accepts full responsibility.
Salesforce has experienced substantial turnover among its top executives, and shareholder confidence in Benioff is quickly dropping, as The Dallas Express has previously reported.
Both companies have seen a sharp drop in their respective stock prices over the last year, according to historical price data for each company. Amazon stock price (NASDAQ: AMZN) has fallen from a 52-week high of $170.83 to a low of $81.43. Amazon closed trading Monday at $87.27, slightly above its 52-week low.
Salesforce (NYSE: CRM) is down almost 50% for the year. Shares of the San Francisco-based software company traded at a 52-week high of $239.28 and a yearly low of $126.24. Salesforce had a closing share price of $146.85 on Monday.