“A lot of people who are out of work could become really innovative, and create really disruptive technology,” Aven said.
Many economists have given up hope of a so-called V-shaped recovery, believing instead that a return to normal will take more time, even if the public health crisis is brought under control.īut there are flickers of hope. The mass layoffs could continue for months to come, as more companies cut costs in order to survive what may be a prolonged downturn. “If you see a lot of your friends or colleagues losing their jobs, you’re going to be less willing to change,” said Brandy Aven, associate professor of entrepreneurship at Carnegie Mellon University’s business school. The recent startup reckoning could also discourage people who were thinking of launching their own companies. Layoffs in these sectors won’t turn back those transformations, but they could slow the rate of change, as well as the knock-on innovation sparked by those companies.
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Many of these businesses sprang from insights into how software could reimagine a traditional industry, like Uber did for taxis or Groupon did for coupon-clipping. The third-most affected group is consumer services, including review site Yelp Inc. and fitness studio operator Flywheel Sports Inc. Retail and food services have also suffered, including discount business Groupon Inc. Besides Uber and Airbnb, scooter company Bird and bookings site TripAdvisor have fired employees en masse. Travel and transportation has been the hardest hit sector in terms of job losses. Alphabet Inc.’s Google, however, has said it will slow hiring, while International Business Machines Corp. and Apple Inc., haven’t made public any plans to cut jobs. E-commerce giant Amazon is adding 175,000 workers to help handle a surge in orders, while other tech behemoths, including Facebook Inc. Not all technology companies have been equally affected by the pandemic.
At the end of the first quarter, seven of the top 10 companies ranked by market capitalization globally were technology giants. Although technology companies often employ fewer workers than their counterparts in other industries, tech makes up the biggest chunk of the stock market, meaning its performance has a disproportionate impact on individual retirement portfolios and other assets.