Did some tech companies hire too fast over the past few years?
In the face of economic uncertainty, many companies (including some truly big names, such as Apple and Google) have announced hiring slowdowns or freezes. But those moves are potentially powered by more than recession fears—a number of CEOs are now claiming they “overstaffed” during the boom times, and now need to cut back on the number of folks they hire.
Business Insider recently compiled quotes from a handful of leaders—including the chief executives of Walmart, Redfin, and others—who all say they hired too many people. Meanwhile, companies in turbulent industries such as cryptocurrency are also drawing back after a collective hiring binge; for example, Coinbase recently blamed its layoffs on its fierce growth rate over the past few years.
“We were in the early innings of the bull run and adoption of crypto products was exploding,” Coinbase CEO Brian Armstrong explained in a corporate blog posting when the layoffs were announced. “We saw the opportunities but we needed to massively scale our team to be positioned to compete in a broad array of bets. It’s challenging to grow at just the right pace given the scale of our growth (~200% y/y since the beginning of 2021).”
Although many companies are adjusting their hiring rate, the unemployment rate for tech occupations dipped to 1.8 percent in June, a notable decline from 2.1 percent in May; that’s also well below the overall national unemployment rate of 3.6 percent.
“The stronger than expected job gains reaffirm the critical role of tech across every sector and every business in the economy,” Tim Herbert, chief research officer at CompTIA, wrote in a statement accompanying this most recent tranche of employment data. “It also highlights the limitations in projecting company-specific hiring practices to the broader tech workforce.”
In other words, although many companies are using this moment to slow or freeze hiring (or initiate layoffs), technologist hiring remains robust throughout the broader economy.