Under Biden, The Fed’s Attempts To Control Inflation Have Led To Massive Layoffs In The IT Industry

Under Biden, The Fed’s Attempts To Control Inflation Have Led To Massive Layoffs In The IT Industry

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Amazon has become the latest technological corporation to lay off staff, whom it had only recently fought to keep. This year, the e-commerce behemoth more than quadrupled the cash compensation threshold for its tech staff, citing “an extremely competitive labor market.”

Due to the Fed’s attempt to control inflation, the current economic situation is partly responsible for the IT industry’s woes. Inflation and unemployment have traditionally been inversely related. As a result of a tight labor market, employers often have to pay higher wages to attract employees, ultimately resulting in wage inflation. The number of people looking for work exceeds the number of jobs available during times of high unemployment, which means more labor is available than demand.

Amazon and the IT Industry, in general, are citing changing business models and a shaky economy as the cause of the layoffs. Elon Musk cut Twitter’s staff count in half after purchasing the firm earlier this month. At the same time, Meta, the parent company of Facebook and Instagram, revealed last week that it was cutting off 11,000 people, or around 13% of its workforce. Lyft, Stripe, Snap, and other technology companies have also fired employees in recent months.

The layoffs at Amazon would affect 3% of Amazon’s corporate workforce. According to those familiar with the situation, Amazon plans to let off around 10,000 workers in corporate and technical departments as soon as this week, which would be the greatest employment reduction in the company’s history.

Sources familiar with the situation say the decision comes shortly after Amazon CEO Andy Jassy initiated a cost-cutting assessment of the company, which includes scaling down companies that haven’t been lucrative, such as its devices segment.

Those who spoke on condition of anonymity said the layoffs would affect Amazon’s devices department, which includes the voice assistant Alexa, as well as its retail sector and human resources.

According to one source, the number of layoffs is still flexible, and the layoff will likely be implemented team by team rather than all at once as each firm completes its planning. However, if it remains around 10,000, it would represent around 3% of Amazon’s corporate employees and less than 1% of its worldwide labor force of more than 1.5 million, most of whom are hourly workers.

According to the Journal, Amazon has already urged staff in failing units to prepare to search for another job as the business makes cuts in the face of an uncertain economic environment. Amazon instituted a hiring freeze for corporate roles earlier this month.

According to Beth Galetti, Amazon’s senior vice president for people experience and technology, Jassy and the leadership team made the decision owing to the “uncertain” economy and the number of people Amazon has hired in recent years.

Galetti highlighted that the corporation had already paused recruiting in other departments and had chosen to halt all new corporate hiring.Galetti said that Amazon planned to keep this pause in place for the next several months while it watches the economy and the company and adjusts as needed.

Former CEO Jeff Bezos warned on Twitter last month that the probabilities in this economy suggest you batten down the hatches, implying that he agreed with Goldman Sachs CEO David Solomon. Earlier in the day, the latter warned of a “strong possibility” of a U.S. recession.

Amazon has also closed or scaled back several initiatives in recent months. Scale back initiatives include Amazon Care, a service that provided primary and urgent health care but did not attract enough customers; scout, a cooler-sized home delivery robot that employed 400 people, according to Bloomberg; and Fabric.com, a subsidiary that sold sewing supplies for three decades.

The 10,000 is another round of layoffs. From April to September, Amazon decreased its workforce by about 80,000 individuals, mostly via layoffs among hourly employees.

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