Yelp Furloughs, Layoffs Show COVID-19 Impact on Tech Sectors

Yelp plans on laying off 1,000 employees, and furloughing 1,100 more, in response to COVID-19. In a public letter to employees, CEO Jeremy Stoppelman said that, although the company had ambitious plans for 2020, it faces a hard impact due to the virus’s effect on brick-and-mortar businesses. 

“The impact we’ve seen on consumer behavior is staggering: interest in restaurants, our most popular category, has dropped 64% since March 10, and the nightlife category is down 81%,” Stoppelman wrote. “Gyms and similar businesses are down 73%, and salons and other beauty businesses are down 83%.”

Stoppelman also claims that Yelp already “reduced server costs, deprioritized dozens of projects, and redone our budget based on ensuring company survival” before initiating layoffs and furloughs. Yelp’s executives are taking huge pay cuts.

“While this pandemic has dealt us an unprecedented and unexpected setback, I couldn’t be more proud of how our teams across the company came together over the past few weeks,” the letter concluded. “The coming months will require us to stay nimble and adapt, like many local businesses have been doing.”

The Yelp layoffs illustrate a particularly vexing aspect of the COVID-19 crisis: While companies that deal with cloud-based products and services are seeing spikes in activity (even if, like Facebook, they’re facing declining revenues as some clients cut back spending and ad budgets), those tech firms that interface in some way with physical businesses and consumer interactions are feeling more of a crunch. In turn, this might result in layoffs and furloughs of employees, including vital software engineers.

Before this crisis began, Yelp was known for paying its software engineers quite a bit. According to levels.fyi, which crowdsources its data, even junior engineers could pull down six-figure salaries (we’ve excluded Yelp’s top tiers from this chart since levels.fyi didn’t have enough data for those segments): 

While it’s far too soon to tell how the pandemic will ultimately impact the economy and jobs, especially in the context of tech, our recent analysis of data from Burning Glass (which collects and analyzes millions of job postings from across the country) shows that, between February and March, postings for technology jobs actually increased in many cities across the country.

Meanwhile, an analysis of the Dice database shows that the top tech positions at the moment include application developers, systems engineers and analysts, sysadmins, and full-stack developers. Companies are clearly looking for technologists who can not only build and maintain apps, but also keep the tech stack running during this crucial time. While the COVID-19 situation is stressful, and some companies are clearly facing a crunch, always keep in mind that there’s still nationwide demand for technologists.

For more COVID-19 content, check out the COVID-19 Jobs Resource Center.