Tens of thousands of people have been laid off from large tech and media companies in the past 12 months. The reasons for this are not obvious.
This is an edition of The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here.
Last Friday, Google’s parent company, Alphabet, laid off 12,000 of its employees—about 6 percent of its total workforce. Yesterday, Spotify announced layoffs for a similar percentage of its staff.
By now, you might be used to the steady drip of news about tech companies slashing jobs. About 130,000 people have been laid off from large tech and media companies in the past 12 months, according to one estimate. The reasons for this are not obvious. America’s overall unemployment rate is 3.5 percent, which ties for the lowest mark of the 21st century. And tech has long been one of the country’s most dynamic industries. So why is it struggling during an otherwise optimistic moment for America’s economy?
Our staff writers Annie Lowrey and Derek Thompson, who both recently published articles on the tech layoffs, offer several explanations for the trend. The first and most obvious is the Federal Reserve’s effort to ease inflation by raising interest rates sharply over the past year. As Annie writes: