The hidden upside of tech layoffs

In a state of shock, Smith drove home to break the bad news to his wife. They had gotten married in 2020, and bought a house together the following year. At 28, his life had seemed so good, so secure — until suddenly it wasn't. "What am I going to do now?" he wondered. "Am I going to be able to find something that's going to be good for my career?"

The next morning, he started applying to every job he could find. Given the uncertainty of his future, the search was far from pleasant. But he didn't have to look for long. By August, he had landed a role as a technical project manager at New Classrooms, an education nonprofit. After only a few weeks of unemployment, his career was back on track.

"I got lucky," he says. "I hope that others who find themselves in a similar position are also that fortunate."

So far, it appears that they are. Even as the tech sector has been hammered by mass layoffs this year — more than 140,000 workers since March, by one count — the vast majority who have been let go haven't remained on the sidelines for long. According to an analysis of laid-off workers conducted by Revelio Labs, a workforce-data provider, 72% have found new jobs within three months. Even more surprising, a little over half of them have landed roles that actually pay more than what they were earning in the jobs they lost.

The findings underscore just how strong the job market remains, even in the face of a cratering tech sector. All too often, losing your job can pose a major career setback — especially when tens of thousands of others in your profession are being laid off all around you. But this time, it appears, getting a pink slip might even, in many cases, provide a career boost. In the midst of a wave of wholesale layoffs, many tech workers are somehow bouncing back stronger than ever.

"The key takeaway is 'do not despair,'" says Reyhan Ayas, a senior economist at Revelio Labs. "The job market is still hot. Although some parts of the tech industry are struggling, other companies are actively hiring."

Because tech workers are typically college-educated, with specialized skills in high demand across many industries, their chances of finding new jobs are pretty good in any economy. But right now, those odds are unusually good. Ayas and her colleagues analyzed the fate of laid-off tech workers by looking at data from Parachute and Layoffs.fyi, both of which compile information provided by out-of-work employees. The economists estimate that 75% of tech workers who were laid off in October will end up finding a job within three months. That's up from 71% for those who were laid off in January of this year and 67% for those who lost their jobs in July 2021, back when Silicon Valley was still in the midst of a hiring binge.

Revelio Labs also found that laid-off tech workers are doing much, much better in the current downturn than they were during the initial months of the pandemic. Back then, less than half were able to find new gigs within three months. That's because in 2020, it wasn't just tech that was downsizing — it was everyone. Over the span of two months, the economy lost more than 20 million jobs.

Compare that with today. Even though tech companies are doing terribly right now, a lot of businesses in other industries are fine. And those other employers need a lot of coders, data scientists, and product managers — specialists the tech industry was previously hoarding. Economy-wide, the unemployment rate last month was near a 50-year low of 3.7%, which shortened the job search for everyone who was out of work. In November, the average unemployed person had been jobless for 21 weeks — down from 32 weeks in June 2021.

Economists care a lot about that number, because long spells of unemployment can inflict lasting damage on people's careers and lives. The longer you're out of a job, the more outdated your skills become and the more likely it is that you'll be passed over by job recruiters and employers. That's what happened after the Great Recession, when mass layoffs followed by a sluggish recovery made it hard for many Americans to reenter the workforce. And many of those who did find a job were forced to take a pay cut, putting them on a lower earnings trajectory for years.

Today, not only are laid-off tech workers finding jobs quickly, Revelio Labs found, but 52% are actually earning more than they were before. It goes to show the kind of salaries that new hires are able to command in the current job market. To attract job candidates, as I recently reported, employers are still being forced to offer salaries that are 7% higher than those they pay their existing staff. That salary premium for new hires, it turns out, applies not only to employees who leave their jobs voluntarily but also to those who have been laid off.

That's not to say that laid-off tech workers will continue to face great job prospects forever. November was a bloodbath for the tech industry, with giants like Meta and Amazon making especially deep cuts. If the layoffs continue, the economy will eventually become oversaturated with tech workers — at which point their job searches will take longer, and more will be forced to accept lower salaries. But the data suggests that we're not there yet — at least for now.

At the moment, the job prospects of laid-off workers vary widely based on their occupation. Software engineers have had especially good luck, Revelio Labs found, with 79% of those who lost their jobs since March landing new gigs within three months. Human-resource specialists, on the other hand, have had a harder time, with only 58% of them finding a new employer quickly.

One way workers are navigating that variation is by being open to new opportunities. Revelio Labs found that nearly half of all laid-off workers who found new jobs took positions that were significantly different from the ones they had before. And 12% of them have relocated as well.

"A lot of people are adapting to these changes pretty quickly," Ayas says. "That's good news."

Smith, the former Netflix employee, is one of those who have adapted. Previously in a hybrid position, he's now fully remote. He's gone from working for a tech behemoth to a much smaller nonprofit. And his day-to-day responsibilities have changed quite a bit as well. He enjoyed the data analysis he was doing at Netflix, but he's found his new job in project management to be more fulfilling — and more challenging. "It's definitely more aligned with what I would rather spend my time doing," he says. "But I also think I have a lot to learn."

Aki Ito is a senior correspondent at Business Insider.