Startup Layoffs Rose in January 2024 Mirroring Big Tech

Layoffs across private tech startups rose in January, mirroring the cuts from tech giants.

This is a reversal in the trend we'd been seeing for startups since the summer, where layoffs had been declining (though slowly).

I was hopeful that startups would manage to buck the trend set by big tech here 😔

Line chart below shows layoffs (orange line) vs voluntary departures (black line), while the area chart underneath shows the share each type of employee departure took in a given month.

January 2024 was the first month since Feb 23 where layoffs were more than 50% of all employee departures across startups.

Why this matters (aside from the obvious disruptions involved in a layoff):

• Employees choosing to remain in role (in aggregate) is a signal that they remain worried about the overall job market. The tolerance for risk (jumping to a new gig) is low.

• Employees have also seen that in these layoff waves, new hires are often the first to get cut. This contributes to the overall feeling of uneasiness.

• If employees remain in seat for longer, there is less need to backfill from their current companies, reducing the number of open positions and adding some kludge to the hiring market.

Usually January is also a big hiring month, but we won't have good data on that until a couple months from now as hiring data hits our system at a lag.

Now maybe this year follows the same pattern as 2023, where Jan was a rough layoff month but each month following got a little bit better. Definitely possible!

We just aren't out of the layoff woods quite yet in startups. It may be the case that startup employment in general declines a bit in 2024 as hiring remains scrutinized. But hoping some better growth prospects make me wrong here.

#cartadata #startupjobs #jobmarket #startups #hiring #layoffs