California’s tech sector is facing its most significant job losses since the Dotcom Bubble of 2001. From March 2023 to March 2024, the state lost a staggering 53,600 tech jobs, outpacing losses in all other sectors. Major tech companies like Tesla and Google are announcing even more layoffs, and the trend shows no signs of slowing down.
This surge in job losses has far-reaching effects. California, currently leading the nation in layoffs, is grappling with an unemployment rate of 5.3%, well above the national average of 3.9%. The scale of the current layoffs mirrors the Dotcom Bubble when the NASDAQ Composite index plummeted, causing massive layoffs and an economic downturn.
Perhaps the most eye-opening detail is the number of jobs being slashed at major tech companies. Cisco Systems, for example, announced a second round of layoffs this year, cutting 7% of its workforce. Intel Corp. is also trimming its ranks by 15,000 jobs due to disappointing earnings. With many of these companies based in California, the state’s economy is being hit hard by these changes.
November 2024 brought more bad news when AlphaSense laid off 150 employees, 8% of its workforce, after acquiring Tegus. Ola Electric also cut up to 500 employees, or 10% of its workforce, in a bid to increase profitability. LinkedIn eliminated 202 employees, and Headspace reduced its workforce by 13%, shifting clinical therapists to part-time roles. These mass layoffs point to the broader struggles within the tech industry.
The current state of California’s tech sector echoes the Dotcom Bubble burst in 2000. Back then, many internet startups went under after burning through venture capital without turning a profit. Today, tech companies are grappling with similar issues, slashing jobs to cut costs and stay afloat.
In December 2024, Lightspeed Commerce announced it would lay off 200 employees as part of a broader business review. Despite the ongoing strategic review, these layoffs highlight the continuing struggles in the sector, impacting not just tech companies, but the economy as a whole.
California’s tech industry is in the midst of a crisis. The massive job losses reflect the challenges faced by companies trying to stay profitable in a tough market. The implications of this downturn will be felt far beyond Silicon Valley, as the state grapples with an uncertain economic future.
#Tech #Employment 📉 👀https://t.co/dG50QWgXFC pic.twitter.com/LCueahFmGv
— Invariant Perspective (@InvariantPersp1) December 10, 2024
"While the S&P 500 has continued to make new highs in December, every day of the month so far has seen more stocks down than up. That makes this the longest sustained period of weakness in more than five years."@WillieDelwiche @HiMountResearch pic.twitter.com/LtbsKEUb5l
— Daily Chartbook (@dailychartbook) December 11, 2024
$SPY $QQQ if the BOJ raises rates to the neutral rate, 3.7%, you’ll have a 30% drawdown in tech stocks. That is the carry trade. https://t.co/BpFNh0YK82
— John Doss CFA, CPA (@JohnDoss1) December 11, 2024
Funds borrow in Japan to buy U.S. tech stocks. If you raise the cost of borrow in Japan, funds have to reduce leverage. Yellen mattered more via yield curve control. Tech stocks like low long term rates.
— John Doss CFA, CPA (@JohnDoss1) December 11, 2024
Sources:
https://www.newsweek.com/new-mass-layoff-sends-california-job-losses-soaring-1940213
https://news.crunchbase.com/startups/tech-layoffs/
https://www.fastcompany.com/91229829/tech-mass-layoffs-tracker-november-2024-list-update