President Reagan, quoting economists, said, “A recession is when your neighbor loses their job. A Depression is when you lose your job.” Based on that, we are in a Recession.
“Layoffs are sweeping across American businesses in the first few months of 2022.
Recent startups like Peloton have already laid off thousands of employees this year. Online car dealer Carvana plans to slash 12% of its workforce. Even traditionally layoff-resistant companies like Netflix are making cuts.
The reason, broadly, is twofold: Business growth is slowing, while labor costs are increasing. The combination is causing American companies across a variety of industries to slash headcount.
The only good news is that there are still 11 million unfilled jobs in the nation to absorb the layoffs.
Ben Gilbert and Avery Hartman, Business Insider, 5/26/22
- In the first few months of 2022, a wave of layoffs swept across American business.
- The cuts stem from slower business growth, paired with rising labor costs.
- The layoffs cut across industries, from mortgage lending to digital-payment processing.
Layoffs are sweeping across American businesses in the first few months of 2022.
Recent startups like Peloton have already laid off thousands of employees this year. Online car dealer Carvana plans to slash 12% of its workforce. Even traditionally layoff-resistant companies like Netflix are making cuts.
The reason, broadly, is twofold: Business growth is slowing, while labor costs are increasing. The combination is causing American companies across a variety of industries to slash headcount.
Here are some of the most notable examples so far:
Carvana: About 2,500 people
Carvana plans to cut 12% of its staff, or about 2,500 employees, the online car dealer announced in a filing with the Securities and Exchange Commission.
In an email to employees viewed by The Wall Street Journal, CEO Ernest Garcia III said that the company has overestimated growth amid a challenging time in the auto industry.
By cutting staff, Carvana aims to find “a better balance between its sales volumes and staffing levels,” the company said in the SEC filing.
Carvana was founded by Garcia in 2012 as a subsidiary of his father’s company, DriveTime Automotive. Carvana’s service allows customers buy cars online, which are delivered to customers’ doors or picked up at a Carvana vending machine.
Both father and son saw their fortunes skyrocket during the pandemic as demand for used cars hit new highs. Carvana said in its SEC filing that executives will forego their salaries for the rest of 2022 to help cover employee severance pay.
Reef: About 750 people
Ghost-kitchens company Reef Technology will cut 5% of its global workforce.
The SoftBank-backed startup is laying off about 750 employees as it works toward profitability amid a challenging economic environment, CEO Ari Ojalvo wrote in a memo to staff obtained by Insider.
The layoffs come months after Reef said it would pause operations on some of its “underperforming” locations. Current and former employees told Insider in recent weeks that Reef had closed one-third of its kitchens and focused on its partnerships with major chains like Wendy’s and Buffalo Wild Wings.
Gopuff: More than 400 people
Gopuff told staff in March that it would cut 3% of its workforce, or more than 400 workers, Insider reported.
The cuts impacted both corporate staff and workers at Gopuff’s warehouses, as the company works to enter its “next chapter — with a new global business model and corresponding investment priorities,” cofounders Rafael Ilishayev and Yakir Gola wrote in an email to employees.
Gopuff was founded in 2013 in Philadelphia with the goal of ultrafast delivery of convenience-store items.
Better: About 4,000 people
Starting in late 2021 and continuing through the first several months of 2022, mortgage startup Better.com laid off approximately 4,000 people.
The first wave started right before the holiday season in 2021, when CEO Vishal Garg laid off “hundreds” of people.
Garg told employees during a Zoom call that the company, “lost $100 million last quarter,” which he said, “was my mistake.” He then said the layoffs shouldn’t have happened right before the holiday, but, “three months ago.”
Better followed up with another 3,000 layoffs in March, and is now accepting voluntary layoffs in some departments.
Noom: 495 people
The weight-loss app maker Noom recently laid off hundreds of coaches, Insider reported last month — part of a bigger-picture pivot for the company toward more video-based coaching.
The company, through its app of the same name, pairs dieting with personal coaches to achieve weight loss for users. Interactions with those coaches were often through text, which users critiqued as “canned advice.” Some coaches told Insider they were responsible for giving advice to hundreds of users at any given time.
Going forward, Noom is focusing on offering users scheduled video calls with coaches.
Peloton: Over 2,800 people
In February, Peloton fired over 2,800 people — including 20% of its corporate workforce — because of an ongoing downturn in the company’s business.
Peloton faced a major setback after home-fitness products spiked in popularity during the height of the coronavirus pandemic in 2020.
With gyms reopening as vaccination rates increased, Peloton’s business took a huge hit: The company’s market value has dropped from $50 billion last year to around $6 billion as of early May 2022.
Thrasio: Up to 20% of staff, sources say
Thrasio, the company known for creating the Amazon aggregator market, is laying off an unknown number of people. Additionally, the company’s CEO and founder, Carlos Cashman, is stepping down from leadership.
Amazon aggregators work by identifying product leaders on Amazon, then buying the companies that make those products and consolidating them under one umbrella company.
In a memo sent to employees, Thrasio leadership said the layoffs were due to the company’s “hypergrowth” in acquiring companies. “At times we have been acquiring a new company almost every week,” the memo said, “and running hard to build the infrastructure to support this growth.”
Two sources told Insider the layoffs could impact up to 20% of Thrasio’s staff.
Robinhood: More than 300 people
During the pandemic, so-called “meme stocks” from GameStop and AMC exploded.
Much of that explosion in stock value was driven by accessible trading platforms like Robinhood.
And while new users piled in during the pandemic, Robinhood hired rapidly. Between 2020 and 2021, Robinhood staff grew dramatically: from 700 people to around 3,800, according to CEO Vlad Tenev. But that growth was apparently too much and too fast, and Robinhood was forced to slash headcount by 9% — more than 300 people altogether.
“This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal,” Tenev said in April. “After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers.”
Wells Fargo: Unknown number of people in mortgage lending
As mortgage revenues fell at Wells Fargo in the first quarter of 2022, the company began laying off employees in mortgage-related positions, Insider reported in late April.
Loan processors and underwriters, among other positions, were reportedly affected by the layoffs. Wells Fargo representatives declined to say how many people were impacted by the cuts, but did confirm the layoffs in an emailed statement.
“We are carrying out displacements in a transparent and thoughtful manner and providing assistance, such as severance and career counseling. Additionally, we are committed to retaining as many employees as possible and will do everything we can to help them identify other opportunities within Wells Fargo,” a Wells Fargo spokesperson said in a statement provided to Insider
Canopy Growth: 250 people
One of the world’s largest publicly traded cannabis companies, Canopy Growth, slashed 250 jobs in Canada earlier this year as it faces increasing competition in the burgeoning cannabis market.
Layoffs are among several cost-cutting measures that Canopy Growth is taking “to ensure the size and scale of our operations reflect current market realities and will support the long-term sustainability of our company,” Canopy Growth CEO David Klein said in a statement.
Canopy’s stock has suffered as a result: It was trading around $6 a share as of early May, down from $9.30 in early January.
Food52: About 20 people
After raising $80 million from investing firm The Chernin Group last December, the content-creation team at food publication and retailer Food52 was suddenly laid off in early April.
About 20 of the company’s 200 employees were let go in the layoffs, which came as a major surprise to those affected.
“Everyone on the team and my immediate boss were gut-punched,” one of these employees told Insider. “We all had gotten raises and bonuses just a month prior.”
Two of the employees who were laid off said Food52 executives told them the company was “pivoting to commerce,” and away from the type of content that was created by the affected employees: recipes and other instructional cooking content.
Cameo: 87 people
Cameo is laying off 87 people, CEO Steven Galanis confirmed in early May.
“Today has been a brutal day at the office,” he wrote on Twitter. “I made the painful decision to let go of 87 beloved members of the Cameo Fameo.”
Through Cameo, people pay celebrities to make personalized audio and video recordings.
Galanis described the layoffs as a “course correction” in a statement to Variety. The cuts follow a staffing boom during the pandemic — from around 100 employees before 2020 to about 400 in 2022.
PayPal: 83 people
PayPal quietly laid off 83 people, according to a Securities and Exchange Commission filing spotted by The Information.
The company employs more than 30,000 people worldwide, over a third of whom are based in the United States. The cuts appear to be tied to the company downsizing its presence in the San Francisco Bay Area, according to TechCrunch.
Gorillas: ‘Nearly 300’ people
German grocery-delivery company Gorillas announced layoffs this week of “nearly 300” people around the world.
The layoffs, the company said, are part of a larger “shift to long-term profitability,” which means trimming staff as Gorillas focuses on its five “core” markets: Germany, France, the Netherlands, the UK and the US.
Impacted employees, who were mostly corporate staff, were shocked by the sudden layoffs.
“It’s not a secret that the company hasn’t been doing well, but I didn’t expect to wake up and lose my job,” a Berlin-based employee who was laid off by Gorillas told Insider. “My managers weren’t even aware or consulted. It’s not the laying off that hurts, it’s the way it’s been done.”
Outside, ClickUp, Zulily, and Latch all laid off people.
Layoffs aren’t only impacting major corporations — a variety of smaller and lesser known companies are also firing people to save money:
Online retailer Zulily laid off “fewer than 100” members of its corporate staff, Geekwire reported earlier this month. “Last week, we announced to our team members some hard choices we have made for our organization to bring our operating expenses in line with our revenue and position our business for future growth,” a spokesperson said in a statement.
Outside, the magazine conglomerate and publication, laid off 66 people as part of a larger restructuring to make the company a digital-first publishing house, Aspen Public Radio reported this week.
ClickUp, a software company that makes a productivity app, cut 7% of its staff, “to ensure ClickUp’s profitability and efficiency in the future,” the company told Protocol. It’s unclear how many people were impacted, but estimates put the company’s total staff at over 500.
Latch, a company that makes a smart lock, laid off about 130 people last week — 28% of the company’s total staff, it said. The layoffs are intended to, “better align staffing and expense levels with current sales volumes and the current macroeconomic environment.”
