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Analysis: What’s Behind Mass Layoffs in Warehouse, Tech Sectors

As the U.S. Federal Reserve attempts to slow the economy in the battle against inflation, major e-commerce, tech companies and other businesses have announced tens of thousands of layoffs.

Is the wave of job cuts over, or is it just the tip of a major overhaul as automation increases?

In recent months, Amazon has announced some 27,000 layoffs, The New York Times reported, while Google parent Alphabet announced 12,000 and Facebook parent Meta announced 11,000. The wave of layoffs prompted some 1,400 Google employees to ask CEO Sundar Pichai in an open letter obtained by IT Worth to take a more humane approach, suggesting things like a hiring freeze and voluntary resignations before it goes the firing route.

Additionally, other companies that have announced streamlining moves include:

  • Microsoft – 10,000
  • Disney – 7,000
  • Twitter – 4,400
  • IBM – 3,900
  • SAP – 2,800
  • PayPal – 2,000
  • Zoom – 1,300
  • Walmart, hundreds

Eric Crosby, chief financial officer of Hot Frameworks, noted automated facilities are run more economically than those requiring employees to perform manual labor or repetitive tasks.

“To prepare for increased warehouse automation, we need to invest in education and training programs that will prepare the workforce for jobs that require higher-level skills,” Crosby told The Food Institute.

“We also need to create policies that will help workers transition to new jobs.”

But automation can’t be blamed for all the cutbacks.

Challenger, Gray and Christmas estimated 17,456 retail jobs have been cut so far this year on recession fears. Overall, February saw 77,770 job cuts, down from January’s 102,943. The numbers are the highest since 2009 when the country was in the midst of the Great Recession. The difference, however, is that unemployment remains near historic lows at 3.6%.

Shanton Wilcox, U.S. manufacturing lead at PA Consulting, said the current round of layoffs at big box retailers and e-commerce sites likely does not represent a push toward further automation since the warehouse facilities were highly automated when they opened.

“So these layoffs are due to a general reduction in e-commerce business levels as consumers adjust to inflation, job losses and other competing priorities,” Wilcox said.

“Keep in mind that the goal of automation is not to replace workers, but rather empower them to do their jobs more efficiently, effectively and safely,” said Tom Stretar, vice president, technology at enVista. “Task automation often creates new job opportunities for the workforce, thus increasing staff headcount.”

Editor’s note: Additional reporting provided by Food Institute senior editor Jordan Wiklund. 

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