Among all the troubling signs in the economy right now, one of the most powerful companies in the country announcing a five-figure layoff is really not great at all:
Amazon.com Inc.'s layoffs will affect more than 18,000 employees, the highest reduction tally revealed in the past year at a major technology company as the industry pares back amid economic uncertainty.
The layoffs are concentrated in the company's corporate ranks and represent roughly 5% of that element of its workforce, and 1.2% of its overall tally of 1.5 million employees as of September.
About 1% of its total workforce is not good; nearly 5% of its "corporate ranks" seems even more troubling. This isn't just the elimination of seasonal roles.
On Wednesday, after the Journal broke the news about the size of Amazon's layoffs, Chief Executive Andy Jassy addressed the cuts in a blog post. "Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so," said Mr. Jassy. He added that the majority of the cuts are on the retail and recruiting areas of Amazon. The blog post said the company would alert affected employees later this month.
The company's stock is down 49% in the last year as well.
But there is a silver lining. Remember stories like this one, from late 2021?
The company's mad hiring blitz over the past few years was due in large part to the massive influx of Americans that flocked to online shopping during the pandemic. Online commerce was artificially inflated and companies overshot their hiring goals at the time.
Now we're dealing with the painful course correction.
The Wall Street Journal agrees:
Amazon was one of the biggest beneficiaries of the Covid-19 pandemic as customers flocked to online shopping. The rush to Amazon's various businesses, from e-commerce to groceries and cloud computing, pushed forward years of growth for the company. To keep up with demand, Amazon doubled its logistics network and added hundreds of thousands of employees.
When demand started to wane with customers moving back to shopping in stores, Amazon initiated a broad cost-cutting review to pare back on units that were unprofitable, the Journal reported. In the spring and summer, the company made targeted cuts to bring down costs, shutting physical stores and business units such as Amazon Care. Amazon later announced a companywide hiring freeze before deciding to let employees go.
