Startup Layoffs Dipped in October… But Only Slightly

Last month, despite a steady tide of headlines about hiring freezes and staff cutbacks, it seemed that startup layoffs were beginning to dip after peaking in June. At the time we wondered whether this dip was a temporary blip, or if the startup scene had managed to move past this bloodletting.

October’s data (taken from layoffs.fyi, which crowdsources its data from a number of sources) shows startup layoffs still below summer’s notably high levels. While crowdsourcing isn’t always the most scientific way of determining trends, some 11,500 startup employees were laid off last month, with 77 companies reporting cuts.

As you can see from the following chart, the number of startups reporting layoffs declined month-over-month, although the total number of layoffs ticked up during the same period:

Some notable companies cutting employees in October included Zillow, GoFundMe, Loom, Salesforce, and Udacity. Layoffs hit multiple segments, including education, finance, healthcare, real estate, and more. Fears of a potential recession have driven executives in many industries to take a second look at spending and hiring, despite a continuing need for tech professionals to do everything from securing networks to building websites.

As we move toward the end of the year, there are two things to look for. First, will the number of startups laying off workers continue to decline? And will the number of employees laid off continue to rise... or level off? If more startups lay off workers (and if the number of workers laid off continues to rise), that's a sign that executives still regard the economy as tight. But if the numbers stay somewhat level or even dip, that's obviously a positive sign for the startup ecosystem.

Not all companies are cutting back on hiring, of course. According to The Information, Google hired 26 percent more workers in the third quarter of 2022 than the second, despite reports of a “hiring freeze” and a significant drop in operating profit and slowing ad revenues. There are also reports that Google (along with Meta) is hiring employees fleeing Twitter ahead of Elon Musk’s dramatic acquisition.  

Beyond the startup economy, tech unemployment dipped to 2.1 percent in September, defying the fears of economic uncertainty. “Despite the prevailing sentiment of a slowing economy, the gains in tech employment say otherwise,” Tim Herbert, chief research officer at CompTIA, wrote in a statement accompanying the organization’s monthly breakdown of employment data, which it draws from the U.S. Bureau of Labor Statistics (BLS). But things can also change quickly; it remains to be seen whether tech unemployment stays that low through the end of the year.