The Layoff Canary in the Conventional Business Coalmine
Over-hiring during the pandemic followed by mass layoffs suggests the conventional business model is unsustainable.
This article is a part of a series based on our Annual Strategic Report, The Future Is Gig. Download the report here.
Source: U.S. Bureau of Labor Statistics
The economic tremors felt with the supply chain crisis, inflation, and layoff woes are not signs of regular business as usual but rather indicators of systemic problems in the conventional business model.
Not Business as Usual
The layoff trend of 2022-23 was not simply a result of a typical hiring cycle, but rather a sign of a larger systemic problem in the conventional employee/employer paradigm. In 2021 and 2022, layoffs were historically low following the high layoffs in 2020, indicating a deviation from the typical cyclical pattern.
The newsworthiness of these layoffs stemmed from their impact on individuals who are not typically affected, such as those in the tech, director, and VP positions. This suggests that the layoffs were not just a part of the regular business cycle, but rather a reflection of a more profound issue within the employee/employer model.
As tech leader Brandon Southern suggested, the layoffs may be indicative of poor management. The significant number of layoffs, particularly in the tech sector, and their impact on high-level positions, point to an unsustainable business model rather than a typical hiring cycle.
Deep Cuts
The layoff trend of 2022-23, especially in the tech and biopharma sectors, indicates a shift away from the typical hiring cycle towards a more systemic issue. According to data from Layoffs.fyi, the total number of tech layoffs in 2023 exceeded the total for 2022, with over 224,503 layoffs reported. Similarly, biopharma layoffs rose by 57 percent in 2023 compared to 2022, with 187 industry workforce reductions.
These statistics highlight the atypical nature of the layoffs and their broader impact on the workforce, supporting the argument that they are not simply part of a regular hiring cycle but rather a symptom of a larger problem within the employee/employer paradigm.
The Great Layoff 2022-23, particularly in the tech sector, has raised concerns about the sustainability of the conventional employee/employer business model. The extensive media coverage and the unprecedented number of layoffs, including those affecting high-level positions, indicate a departure from the typical hiring cycle.
The over-hiring during the pandemic followed by mass layoffs suggests an imbalance in the employee count and potential unsustainability in the current conventional business model.
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