Where do tech workers go after layoffs?

Companies have laid off thousands of workers in the first few months of 2023, many of whom signed non-competes or have few local prospects. Such a significant shift in the labor market means many people need jobs. Where do tech workers go after layoffs?

Although the rounds of layoffs in 2023 have affected many, the industry is relatively unchanged. There were around 6.5 million people in the tech sector as of December 2022, with a 1.8 percent unemployment rate. Even though tech firms primarily based in the United States let go over 147,000 employees during layoffs as of June 2023, the number is relatively small in comparison.

For instance, four of the biggest tech companies in the U.S. laid off over 50,000 employees at the beginning of 2023, but they still have massive workforces because of their hiring during the pandemic. The recent reductions are from a slow in steep market growth rather than an overall decrease in demand for tech talent.

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Your skills are almost guaranteed to stay necessary because of the constantly adapting industry, so the job market shift is more about restructuring. It may seem bleak to you when you see multiple rounds of layoffs in your sector, but the labor needs are still the same.

Where Do Laid-Off Tech Workers Go?

You must know the reasons behind layoffs to understand where workers can go. It’s a complex combination of many factors rather than one single thing. Although recent technological advances may contribute to job losses, they aren’t a huge factor. For example, even though AI can automate nearly half of all job duties, it still produces a need for talent -- employees need to program, monitor or use it.

From a financial aspect, many organizations began letting workers go because of steep inflation, high labor costs and the federal reserve’s increase in interest rates. Tech industry businesses rely more on external funding than others, so they look to offset the additional borrowing costs.

The other main reason lies in job creation. The pandemic created a boom for tech roles, but many firms realized they over employed as it ended. For instance, the technical services sector had nearly 10 million employees in 2021 alone. Many enterprises are scaling back for more sustainable growth.

The need for talent is relatively unchanged in the grand scheme of things. In fact, there’s still a labor shortage in the IT sector, meaning laid-off workers might even be able to snag competitive salaries. Plenty of places are paying attention to the waves of talent entering the job market, so they’ll likely be looking to attract them.

What About Non-Compete Agreements?

A non-compete agreement protects businesses when they specially train employees or reveal their trade secrets. You’re probably familiar with them, as you’ve likely signed one before. They’re prevalent in the tech industry, where employers want to keep their industry advantage hidden from competitors.

Laws about non-compete agreements vary depending on the state you’re in. Some require companies to present it before finalizing hiring, while others have no standards. Either way, the agreement can be as specific or vague as an employer wants. For example, it could keep you from becoming an internal hire at the same business or simply bar you from working in a particular role after leaving.

The good news is it can’t last forever. Usually, it only lasts a few years, protecting organizations in a rapidly adapting sector. Still, it’s typically valid even in cases of layoffs. Employees affected by the recent wave may be barred from rejoining the industry if their agreement requires it. While you could attempt to negotiate out of it, there’s no guarantee your employer will concede.

While non-competes can make finding new employment challenging, current legal protections might simplify things. The U.S. National Labor Relations Board decided to prevent specific severance terms, which benefits you. Typically, enterprises can require you to stay silent about your job’s terms and conditions to receive severance pay.

The new ruling changes things -- you can speak openly about your wages, hours and company culture. You still can’t reveal trade secrets if you signed a non-compete, but you can discuss most other things about your job. It may also encourage others in the industry to speak about their experiences, which can grant laid-off workers insight into their prospects.

What Other Prospects Do They Have?

While most tech workers will likely reabsorb into the industry, those with non-competes may have to look elsewhere. After layoffs, several will probably seek employment in similar industries or roles. Many people also have easily transferable skills, making them attractive candidates to prospective employers.

They may also look to different locations for employment. For example, 73 percent of high-tech jobs come from only five cities as of 2023. San Jose holds the majority, with Washington D.C., San Francisco, Boston and New York City following closely. People might be more willing to travel if their non-compete agreements limit their local hiring prospects.

What Does the Future Job Market Look Like?

Despite hiring being down 25 percent from May 2022 to May 2023 in every industry, the demand for tech jobs is still reasonably steady. The 2023 downsizing is mainly because of current events that impact financials, but demand for skill is mostly unchanged.

Most roles in the tech sector still present opportunities for new talent. For example, the U.S. Bureau of Labor Statistics projects nearly 35 percent job growth for information security analysts from 2021 to 2031. Although you might worry about the waves of layoffs, most people will likely find work in their original roles again.

Job Growth in the Tech Sector

Although the large layoffs aren’t reassuring, most people can find job security relatively easily. The change in the market is likely temporary -- and businesses are almost guaranteed to need your technical skills continuously. A shift toward growth won’t happen overnight, but it’s reasonably sure.

Image credit: George Rudy / Shutterstock

Devin Partida writes about AI, apps and technology at ReHack.com, where she is Editor-in-Chief.

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