November 15, 2022
😭 Morning, dear readers. The bottom continues to fall out in tech from layoffs at Amazon to the collapse of FTX.
Today's newsletter is 1,093 words, 4.5 minutes.
1 big thing: Tech layoffs are soaring this month
November is shaping up to be a brutal month for tech layoffs — and we’re only halfway through, Emily writes.
- The latest: Amazon is gearing up to lay off about 10,000 employees, the largest reduction to its headcount in the company's history (though a teeny fraction of its 1 million employees), the New York Times reports.
Why it matters: Unemployment overall is low, but you wouldn't feel that way if you worked in tech — or the mortgage industry. These are the sectors feeling the most pain from the Fed's rate hikes.
- Many of these companies were buoyed by low rates, skyrocketing equity values, and an overly optimistic view of the future — one in which we conduct meetings, legless, in the metaverse, while furiously pedaling with our actual legs on our Pelotons.
- Plus: A hyped-up "war for talent" led some companies to hire too fast and spend too much. Some of that hiring was "sloppy," one recruiter told Axios.
- It was only a few months ago that Amazon raised its maximum base pay level for these corporate employees to $350,000 a year, from $160,000, amid a fever-pitch drive to hire throughout the sector.
Details: The Amazon layoffs will be focused on those in corporate roles, including people working on Amazon devices, its retail division and human resources, according to Karen Weise's reporting in NYT.
- Growth has slowed in Amazon's core retail and cloud-computing businesses. Last week, the WSJ reported that the company was launching a "cost-cutting review," and that its device division was hemorrhaging money.
The big picture: The tech industry layoffs will likely mean huge changes culturally in a sector known for well-paying roles with lush perks at companies pitching endless growth.
- Meta's layoffs make up nearly half of the 23,000 firings thus far tallied in November.
- The chart above doesn't include the potential Amazon cuts. If those happen, November will see more than 32,000 tech workers let go, easily surpassing the prior peak in Lee's data — 27,000 in April 2020, a time of historically high unemployment.
- More than 120,000 tech workers have been laid off so far in 2022, eclipsing the total from all of 2020.
- Other companies cutting staff this month: Twitter (3,700 laid off, per Lee's tracker), Salesforce (1,000), Stripe (1,000), Lyft (700), Redfin (850), Opendoor (550) and Zendesk (350).
Zoom out: While other industries aren't seeing cuts like these, there are signs of rising anxiety among those who are still employed.
- Job seeker confidence is down significantly from earlier in the year, according to an index published by ZipRecruiter.
What to watch: Crypto has already seen big cuts this year, but more are surely on the way in the wake of the FTX debacle.
2. Catch up quick
3. Bonus bummer on Wall Street
Year-end bonuses are expected to be much lower this year than in the bonanza of 2021, according to projections released this morning, Emily writes.
The big picture: It's been a hard year. M&A slowed, IPOs dried up and revenue declined.
- Investment bankers are expected to do the worst, with bonuses plunging as much as 45%. No surprise given the drop-off in deal-making.
- "Economic headwinds showed no signs of abating," Alan Johnson, managing director of Johnson Associates, which released the estimates, said in a statement.
💭 Emily's thought bubble: At least they're not getting paid in crypto.
4. China steps in to prop up housing sector
Signs of a government shift to support China's wobbly housing market sent Asian markets higher, Matt writes.
Driving the news: Country Garden Holdings Co., one of the largest residential developers in China, surged roughly 46% in Hong Kong trading yesterday — and today announced an equity offering to raise $500 million.
Why it matters: China's residential property sector contributes an estimated 25%-30% to GDP. Its recent struggles have weighed down growth in the world's second-largest economy.
Details: Over the weekend, the Wall Street Journal reported that China's central bank and top banking regulator circulated a memo to financial institutions unwinding previous restrictions on lending to the heavily indebted housing sector.
- The reversal of previous policies that had been intended to discipline the bloated housing sector was signed off on by Chinese leader Xi Jinping, the WSJ wrote.
- The move was widely interpreted as an indication that the Chinese government is turning its attention to boosting the flagging economy, and is willing to use traditional tools such as boosting debt and investment.
The bottom line: The news moved global markets, with housing stocks in Hong Kong and on the mainland surging.
- Major producers of commodities also surged — like iron ore miner BHP Group of Australia, and other suppliers of the key ingredient for steel.
What we're watching: Whether the shift in government posture on supporting the housing market means that a softening of the zero-COVID policy could come next.
- Harsh lockdowns in Chinese cities to control outbreaks — such as one currently in place in the key industrial hub of Guangzhou — have been a major drag on the economy.
5. Job listings are the new Zillow
Browsing job listings is now a lot like browsing real estate listings — you check them out even if you're not in the market for something new, Emily writes.
Why it matters: Job posts are hot now thanks to New York City's new salary transparency law, which requires employers to post salary ranges on job listings.
- The numbers make postings a lot more interesting, both job seekers and listing lookie-loos told Axios.
"I click on every posting in NY to see what the range is purely out of curiosity," Renee Ernst, a Microsoft employee who lives on the West Coast, told Axios on LinkedIn.
- "I've definitely been looking to see what other companies are paying for equivalent work so I can better understand my value," an accounts director in Brooklyn wrote in a Slack group about pay.
By the numbers: This is a new law, so there's not great data yet on its impact. But Axios' admittedly unscientific poll on Twitter turned up some interesting results.
- We asked if people were looking at job listings more often now because of these numbers. Nearly half of the 446 respondents said yes. Another 30% didn't know about the new law. Only 20% said they weren't looking more.
🗓 Join two of our favorite Axios colleagues — Courtenay Brown and Niala Boodhoo — tomorrow at 8am ET to talk about economic equity in the U.S.
- Guests include Council of Economic Advisers member Jared Bernstein and National Bankers Association president Nicole A. Elam. Register to attend in person or virtually.
Today's newsletter was edited by Kate Marino and copy edited by Mickey Meece.