DURHAM – Tech layoffs are mounting across the United States—and the Triangle is getting caught up in the job rollbacks. Google announced on Friday that it would cut 12,000 jobs. Microsoft is laying off 10,000 workers. Both tech giants have a large presence in North Carolina. And just this week, Wilmington-based financial services firm nCino also announced job cuts, with about 7% of its workforce affected.
So why are the jobs disappearing after years of growth?
“The issue with the tech sector is that it overshot its expansion,” said Dr. Michael Walden, a William Neal Reynolds Distinguished Professor and Extension Economist at North Carolina State University, in an interview with WRAL TechWire on Friday.
Consider this: From 2020 to mid-2022 when tech sector layoffs first began to spike, technology employment increased by about 250%, according to Walden.
The growth came as the sector benefitted “immensely” during the pandemic, Walden noted, with more companies able to expand their hiring due to the rapid transition to remote working, remote communication, and more people using more technology.
“The tech sector responded by adding more workers to keep up with the increased demand,” said Walden.
But starting in the middle of 2022, layoffs are starting to be announced. Cisco, which employs thousands in the Triangle at a huge campus in Research Triangle Park, is cutting 5% of its workforce. Even smaller firms headquartered in the Triangle, such as Pendo and Adwerx have cut jobs in the prior year.
Still, not all jobs news is bad. WRAL TechWire tracks 50 notable companies with operations in the Triangle on whether they’re hiring—and as of the latest report all 50, including Google as well as Microsoft—had open jobs.
And the Triangle is still expected to be one of the top expanding metro economies this year, according to a new report from the Kenan Institute at the University of North Carolina at Chapel Hill.
But times have changed, and the region is anticipated to see less economic expansion in 2023 compared to 2022, the Kenan Institute projects.
Tech sector pullback
In the middle of 2022, the Federal Reserve began to increase the federal funds rate. And the Fed would go on to raise interest rates on a historic pace through the rest of the year.
Meanwhile, many companies began to pull back from remote work.
And continued inflation across the globe led to an increase in the value of the US dollar relative to other currencies, which has hurt US technology exports, said Walden.
“These are the reasons why tech is going through a pull-back,” he noted.
Google CEO Sundar Pichai said as much on Thursday, writing in an email that was sent to all employees and later published online that the company “hired for a different economic reality than the one we face today.”
The company’s latest cuts come across the entire company, across product areas, functions, levels, and regions, according to Pichai’s email, and like with other prior cutbacks from Google, are “to ensure that our people and roles aligned with our highest priorities as a company.”
Pichai isn’t the only tech CEO citing changing economic conditions, either.
Microsoft CEO Satya Nadella said in remarks at the World Economic Forum this week that the companies which saw boom times during the first two years of the COVID-19 pandemic are now seeing a return to normal levels of demand.
“Quite frankly, we in the tech industry will also have to get efficient, right?” Nadella said. “It’s not about everyone else doing more with less. We will have to do more with less. So we will have to show our own productivity gains with our own sort of technology.”
Earlier, Amazon said it would cut 18,000 jobs and Facebook parent Meta said it would shed 11,000 positions.
So far, Apple is one notable exception to the list of well-known large technology companies that have announced job cuts, workforce reductions, or layoffs. According to reporting from CNBC, Apple “did not appreciably increase its rate of hiring over the last two years, and also has not announced any layoffs.”
Tech jobs in the Triangle and in North Carolina
Statewide, tech jobs make up 3.7% of the North Carolina workforce, according to data from the Bureau of Labor Statistics from May 2021.
Those jobs make up a larger share of the employment statistics in Raleigh and Durham—5.9% and 7%, respectively, reports WRAL Data Journalist Ali Ingersoll.
And in the Triangle, technology workers are in high demand. The second annual Tech Innovation Index, compiled by the North Carolina Technology Association, NC TECH, found that the Triangle had gained ground, relative to the other 98 most populous metropolitan statistical areas, for technology worker demand.
Both Triangle metropolitan statistical areas ranked two spots higher compared to last year.
“Raleigh and Durham saw increases to their index values for tech supply in addition to the bump in rankings. This was driven by an increase in resident workers per capita,” said Ted Abernathy, managing partner of Economic Leadership, the organization that compiled the report for NC TECH. And more tech workers are now living in the area than a year ago, said Abernathy, in a recent interview with WRAL TechWire.
“Durham bumped up in the rankings across most of the metrics in this group,” said Abernathy. “This is a testament to the highly educated workforce present in both metros.”
Companies are still seeking tech workers
That includes many workers who now live in the area and work for Google, which announced it would bring an engineering hub to Durham in March 2021, with the intent to hire at least 1,000 workers.
And while the company declined to comment further on whether any local workers had been impacted by Google’s decision to lay off workers, the company is still hiring with 98 open roles in the area as of Friday afternoon.
That’s up from 101 job openings posted at the beginning of the week, as tracked in the latest WRAL TechWire Jobs Report.
Microsoft, which operates an office in Morrisville and one in Charlotte, continues to seek additional workers in the Triangle, as well, with 29 openings posted. Microsoft declined to answer questions from WRAL TechWire about where the layoffs and office closures would occur. But the company sent notice to State of Washington officials Wednesday that it was cutting 878 workers at its offices in Redmond and the nearby cities of Bellevue and Issaquah.
And Apple remains hiring for corporate roles in the Triangle, as well, with 20 job openings as of Friday afternoon. Apple continues to move forward with its plans to construct an east coast hub in the Research Triangle, WRAL TechWire previously reported.
Impact of tech layoffs
“It’s hard to know for sure all the reasons behind the layoffs, and what 2023 may bring,” said Andrea Fleming, director, talent and workforce development at NC TECH, in an interview with WRAL TechWire on Friday. “Some have indicated economic conditions, others resetting from growth and changes due to Covid.”
But one thing is clear, said Fleming. While technology remains a large component of the overall statewide economy, it is still just one component.
“The state is in an enviable position for having a broad base of industry,” said Fleming, adding that the state saw a record year with regards to economic development.
“Layoffs in tech are not ideal by any measure, but the overall state economy is in a good position,” said Fleming. “Trends in tech job openings are still trending upwards over the past several years. There have been some major fluctuations month to month, but year over year since 2019, postings are trending up.”
Demand for tech workers remains high
So while layoffs—especially in large numbers, from well-known companies—are leading headlines, the tech sector remains fairly strong, with tech workers still in demand, said Brooks Raiford, president and CEO of NC TECH, in an interview with WRAL TechWire on Friday.
Raiford noted that while there are layoffs occurring in the tech sector, unemployment in the sector remains much lower than the national unemployment rate, which hit a 50-year low last month at 3.5%. Which means that tech workers are finding new jobs after being laid off, said Raiford, citing that about 80% of tech sector workers who are laid off are securing new jobs within three months or less.
“The large layoffs by big companies catch the public’s attention, but most tech workers do not work at tech companies, they work at all sorts of employers, large and small, where demand seems to remain high,” Raiford said.
North Carolina will still experience economic slowdown
Still, North Carolina may be affected by an economic pullback, a downturn, or a coming recession.
“There is reason to worry both statewide and in the Triangle,” said Walden. “But the worry will be temporary.”
That’s because the state and regional economy is poised to move past the current economic climate and any one that comes later in the year. The Triangle, for instance, is still expected to have the fourth-fastest GDP growth rate of any of the 50 most populous extended metropolitan areas in the United States, a new report from the Kenan Institute of Private Enterprise found.
And there are other signs that the state has a robust labor market. Consider that during 2022, North Carolina had the fewest mass layoff and plant closure events in the prior 25 years of data from the North Carolina Department of Commerce. The data tracks the number of reported events statewide that would trigger a required legal notice under the federal the Worker Adjustment and Retraining Notification (WARN) Act, which is meant to provide employees advance notice of qualified plant closings and mass layoffs.
“I still believe the outlook for technology is bright in both North Carolina and the Triangle,” said Walden, noting that the state has lower costs than other major metropolitan regions, a pipeline of talent suited toward technical roles, and “growing urban areas that are attractive to young tech workers, who are increasingly important to the industry.”
~WRAL Data Journalist Ali Ingersoll contributed to this report