Hardly a day goes by that there aren’t announcements of mass layoffs at marquee tech firms: 8,000 at Salesforce, 10,000 at Microsoft, 12,000 at Google — the largest in company history — and 18,000 at Amazon. IBM and music streaming service Spotify joined the job-chopping wave last week, bringing the total to more than 200,000 pink slips in tech in recent months. This is a warning for the economy. It’s yet another signal that the consumer spending boom is fading.
The second worry is the impact of tech redundancies on consumer spending. For the most part, tech workers are highly paid, and their layoffs are coming with generous severance packages. There isn’t much sympathy for these workers, who are likely to find other work eventually. But for better or worse, the U.S. economy is heavily dependent on the spending of the top 20 percent. These are the workers with six-figure salaries who have money to drop in top restaurants and on expensive seats at sporting or theater events, sleek homes that they pay to have decorated and cleaned, and lavish vacations. Their spending — or lack thereof — is critical to the boom and bust of the service sector and businesses that rely on discretionary purchases, such as home furnishings and appliances.