Tech Industry Layoffs Hit DoorDash – The Food Delivery Tech Company Lays Off 1,250 Corporate Employees

The San Francisco based food delivery company, DoorDash, announced Wednesday it would layoff about 6% of its staff. In a memo to employees, CEO, Toney Xu, said these layoffs were in response to slowing growth and growing operational costs from the COVID-19 pandemic. 

Xu said DoorDash was actually understaffed prior to the pandemic, and it began hiring more employees to meet the rapid demand that came from the pandemic. While Xu said the company has always been rigorous in its business practices, it should have taken more control over its team growth. 

Though DoorDash continues to see positive revenue growth, this growth does not compare to the pandemic fueled revenue increases. Xu acknowledged that this tech company is not immune to the external forces impacting the tech industry, and it must make changes before operational costs – due to high employment numbers – supersede revenue. 

Employees affected by these layoffs will receive 17 weeks of compensation, healthcare coverage until March 31, 2023 and an opt-in opportunity for companies to reach out to them to find employment. DoorDash set the termination date to March 1, 2023 to allow employees with work visas to stay in the United States and find another job before their visa expires. 

The Bigger Picture of the U.S. Workforce

DoorDash is not the first tech company to layoff employees. This move comes in the wake of other tech giants making similar decisions to cut down staffing. The question that looms over people’s heads is: What does all of this mean for the future?

These layoff patterns could mean a cultural shift on what tech industry jobs look like in the future. Tech jobs boasted high pay and extensive benefits which is what drew many people to the industry. However, these current layoffs might affect the culture of tech industry jobs. 

On an episode of the “Axios Today” podcast, Axios’ chief technology correspondent, Ina Fried, said these layoffs “fundamentally change[s] the culture of the people that remain.” Many of these companies have not seen major layoffs like this in the history of their existence, and it’s a difficult time for all employees involved. 

It’s important to note that tech layoffs are not indicative of the larger workforce. While these layoffs are making headlines because they are household names, the average U.S. layoff rate is fairly low at 0.9%. 

In an email interview with CNBC, Bledi Taska, chief economist at labor market consulting and research firm Lightcast said, “Overall this means that while it is important to follow some of the high profile tech layoffs, they are not indicative of the overall trends in the labor market, or even in the tech sector.” 

However, whispers of a recession increase workers’ fear of a jobless economy, and lead employers to cut back on hiring. Ziprecruiter’s Job Seeker Confidence Index decreased in October indicating job seekers are less confident in their ability to find a job quickly. 

These next couple of months will be difficult for those in tech positions, but the solution for some of these companies – DoorDash included – seems to be to slow or halt hiring practices.