As recession fears loom over America’s C-suites, several leading Big Tech companies are tapping the brakes on hiring new employees.
The United States economy contracted at a 1.5% annualized rate during the first quarter of 2022, according to the Bureau of Economic Analysis, which associates recessions with two consecutive quarters of negative growth. The Nasdaq — a technology-heavy stock index — has endured losses for most of the year, at one point enduring its worst selloff since the dot-com bubble in 2001.
Microsoft is the latest firm to slow hiring throughout the company. According to a Monday report from Business Insider, Microsoft is slowing the growth of a cybersecurity venture spearheaded by former Amazon executive Charlie Bell from their projected growth of 4,000 to just adding 200 jobs. The company is also seeking to increase pay and prevent employee attrition to competing firms.
Meanwhile, cryptocurrency firm Coinbase announced that it would respond to “current market conditions and ongoing business prioritization efforts” by extending its hiring pause “for both new and backfill roles for the foreseeable future,” as well as rescinding “a number of accepted offers,” according to a blog post from Coinbase Chief People Officer LJ Brock.
“We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways,” the post said.
Ridesharing company Lyft will slow hiring and bolster stock options in response to its sliding share price. “It’s clear from our discussions with other business leaders that every company is taking a hard look at how they respond to concerns about an economic slowdown and the dramatic change in investor sentiment,” Lyft President John Zimmer wrote in an internal memo seen by The Wall Street Journal. “Given the slower than expected recovery and need to accelerate leverage in the business, we’ve made the difficult but important decision to significantly slow hiring in the US.”
Last week, Reuters revealed that Tesla CEO Elon Musk told executives he wanted to cut 10% of the firm’s 99,000 jobs due to his “super bad feeling” about the economy. He instructed company leaders to “pause all hiring worldwide.” The message came two days after Musk said in another email that “remote work is no longer” acceptable at Tesla.
“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he directed, adding that the workplace “must be a main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office in another state.”
Before the most recent news on economic activity, the United States had been recovering from COVID-19 and the lockdown-induced recession — growing at a strong 5.7% in 2021 after contracting 3.4% in 2020. The economy, however, has also been troubled by numerous phenomena — including persistent inflation, high gas prices, and the Russian invasion of Ukraine.
Consumer sentiment is collapsing amid the negative trends. According to a poll conducted by The Wall Street Journal and the University of Chicago’s National Opinion Research Center (NORC), 83% of respondents described the state of the economy “as poor or not so good.” Meanwhile, 35% said they are not “satisfied at all with their financial situation” — the highest level since the poll began in 1972.