A spate of layoffs has hit Utah’s tech community, putting hundreds of workers out of work just before the holidays.
Tech layoff tracker layoffs.fyi reports that at least 15 Utah companies — 11 in the last three months of the year, or “Q4” in corporate lingo — have laid off hundreds of employees.
Companies on the list include some so-called unicorns, private companies valued at more than $1 billion, such as Pluralsight, Route and Podium.
Since 2018, Utah’s tech sector has grown faster than the national average. So while high interest rates also fuel cutbacks at tech companies outside of Utah, a downturn in the tech sector could have a bigger impact here than elsewhere.
Here’s what you need to know about why these Silicon Slope companies are shedding staff and what it means for Utah’s economy:
1. Why are companies shedding staff?
It’s the economy – and some other things.
Sunny Washington, CEO of advocacy group Utah Tech Leads, blamed inflation and people’s return to pre-coronavirus lifestyles for the decline.
She said high interest rates have reduced investors’ incentive to spend money on these companies, while at the same time reducing demand for some of their products.
“[Companies are] just cracking down, not because they’re not still doing well, but because they can’t expect to grow at the same rate as they were. And it’s unfortunate that people are a part of it,” Washington said of the layoffs, “especially at this time of year.”
Gov. Spencer Cox said at a news conference in December that he knew this type of market decline was likely if interest rates went up.
“They make these rounds of funding and they make a living,” Cox said, “and that was always a problem once capital got more expensive, which happened when interest rates went up.”
Others, like The Atlantic’s Derek Thompson, believe the downturn predicts a shift in the technology sector.
He wrote in November that “we’re in a pause between technological eras” and “leaving behind the browser era, the social media era and the smartphone app economy era” and moving on to something else, maybe artificial intelligence and augmented reality.
If true, Washington said a change would likely create more jobs in Utah — not replace or reduce them.
2. What is the impact?
This economic downturn means some companies are shedding staff to balance their budgets while still anticipating rapid growth. If interest rates remain high, companies are likely to grow more slowly going forward, Washington said.
“It’s still a great time to start a business, but maybe it’s not the best time to start raising money for a business,” she said. “It might be a good time to bootstrap and really get to a product market before you really expand.”
Washington said companies may need to hire smaller teams, cut salaries and focus on creating a company or product that fits the market rather than focus on growth.
“I don’t think this is the end of this market for a long time. I think technology will continue to be strong in Utah. What’s happening is that people are a little bit more risk averse. I think they’re a bit more conservative numerically,” she said, “and that’s reflected in the hiring practices and firings that they make.”
[Read more: ‘2023 is going to be rough’: What layoffs mean for Utah’s tech industry]
Levi Pace, senior research economist at the Kem G. Gardner Policy Institute, said Utah’s economy “appears to be well-positioned as we head toward slower growth” given the state’s low unemployment rates and fewer networking, cybersecurity, and Systems engineers are as there is need.
Cox said at the press conference that he believes the layoffs will continue into 2023.
3. What is the state doing about it?
State agencies are working with the nonprofit Silicon Slopes and other companies to develop a “cross-pollination” approach to help Utahns who have lost their tech jobs find other available jobs.
Officials said the life sciences, and particularly the aerospace and defense industries, were booming and trying to hire as many staff as possible.
“Some of these companies … they could have hired every engineer that graduated from every university in Utah, every single one of them every single year, and still don’t have enough,” Cox said, “so there will be places for those.” Tech staff land.”
The governor’s Office of Economic Opportunity hosted a networking and hiring event on Dec. 19 to match some job seekers with employers, and the Department of Workforce Services is hosting a virtual job fair on Jan. 12.
https://www.sltrib.com/news/2022/12/28/3-things-know-about-utah-tech/ Three things you should know about Utah’s tech layoffs