If the Job Market Is Strong, Why Are So Many Companies Laying Off?

Over the last few months, I’ve had numerous conversations with peers and colleagues in digital advertising and tech—many with a decade or more of experience—who have either been laid off or offered voluntary exit packages. And yet, many of these companies are still turning massive profits. For example, despite reporting a record $23.7 billion in profit for Q4 2023, Google laid off thousands of employees across its advertising, hardware, and engineering teams. Similarly, Amazon, which saw net sales increase by 12% to $170 billion in the same quarter, has continued its rounds of layoffs, affecting thousands in AWS, Prime Video, and other divisions.

And they aren’t alone. In 2023, the tech sector saw over 260,000 layoffs, with another 42,000 job cuts already announced in the first two months of 2024, according to Layoffs.fyi. The biggest names in business—Google, Amazon, Meta, Microsoft, and Disney—have collectively cut tens of thousands of jobs in the last year.

Yet, the U.S. job market is supposedly thriving. The unemployment rate remains historically low at 3.7%, job growth continues, and wages are rising. But if the job market is so strong, why are so many highly skilled professionals being let go? What’s really happening beneath the sSure, jobs are being added—but what kind of jobs? While white-collar and tech workers are being let go, most new positions are in hospitality, healthcare, and service industries. This creates a misleading picture of job growth. Yes, people are finding work, but not necessarily in the careers they trained for or at the salaries they once had. A stable job market on paper doesn’t always translate to security and opportunity for everyone.

Cost-Cutting Over Growth

I’ve spoken to people who were let go from companies that were still profitable. Why? Because in uncertain economic times, businesses prioritize efficiency over expansion. Instead of hiring for the future, they’re trimming teams to protect margins. Many of these layoffs aren’t happening out of financial necessity but rather as a precautionary move to maintain investor confidence.

The AI & Automation Factor

We knew it was coming—AI isn’t just changing jobs, it’s eliminating them. From automated customer service to AI-generated content, companies are replacing roles with technology at an accelerating pace. We might be witnessing the first major wave of AI-driven layoffs, where companies are realizing that if software can do the job for less, they have little incentive to keep human workers in those positions.

Pandemic Over-Hiring

Remember 2020-2022? Companies couldn’t hire fast enough, expecting nonstop digital growth. Tech giants, e-commerce firms, and digital service providers expanded their workforces aggressively, believing the boom would last forever. Now, with demand stabilizing, they’re realizing they expanded too quickly. Unfortunately, that means real people—hardworking employees—are paying the price for poor planning as companies roll back their workforce to pre-pandemic levels.

Stock Market Pressures

This one stings. The reality is that layoffs often boost stock prices. Investors love “lean” companies, and cutting jobs sends the message that leadership is focused on profitability. But are these layoffs truly about efficiency, or are they just a quick way to please shareholders? The unfortunate truth is that in the short term, stock markets often reward workforce reductions, even if they hurt innovation and morale in the long run.

So, What’s Next?

If this trend continues, we could see a major divide—high demand for frontline workers but fewer opportunities in corporate and tech roles. Will companies realize they’re cutting too deep, or is this the new normal? The coming months will reveal whether these layoffs are just a temporary correction or a sign of a shifting workforce landscape.