Bay Area tech sector faces surge in layoffs, salary cuts: ‘Workers with less than 6 years and women…’

Bay Area tech sector faces significant job cuts and salary reductions in 2023, with average salaries dropping by 12.1% as major companies downsize to cut costs.

The golden age of Bay Area tech may be losing its brilliant lustre. While the rest of the country dealt with massive job cuts in 2023, the Silicon Valley area appeared to be the worst affected. The tech sector's severe wave of job losses hasn't only left many in a rush to find new employment, it has also resulted in a significant reduction in pay for those who have kept their jobs. This comes after a period of explosive salary growth during the pandemic's early days, followed by more moderate increases in 2022. Now, a study by the advocacy group Women Impact Tech shows a 12.1% drop in average tech salaries for 2023.

What’s contributing to this state is the fact that we are living at a time when the economy is volatile and unsteady, there is a constant hypervigilance and fear about layoffs and pay cuts across sectors. The climate crisis, increased cost of living, the lack of physical and psychological safety that people are facing given the global events, is adding to our feeling of being emotionally tired which is impacting our overall sense of optimism (StockPic)

Layoff surge hits Bay Area tech, leading to salary reductions

Major tech companies like Google, Microsoft, Tesla, and others are experiencing significant shakeups as they continue to aggressively downsize to reduce costs. The average tech salary drop, as per the new report has brought, “the yearly figure down from $207,000 to $182,000,” as per Mercury News report. The golden age of Bay Area tech might not be as shiny as it once seemed. Despite Bay Area workers receiving the highest average tech salaries nationwide, they also experienced the largest year-over-year salary decrease at 15.25%, according to data from WIT.

Layoff surge is the key reason behind salary reduction

According to WIT researchers, their study strongly suggests that the surge in layoffs is the primary factor behind the nationwide drop in compensation. The study further highlights that tech employees in the US with less than six years of tenure faced an average salary cut of 15% in 2023, in contrast, those with more experience saw smaller reductions. Additionally, women, who had seen quicker increases in earnings relative to men from 2019 to 2022, faced a greater decline in earnings in the previous year.

Salaries for job switchers ‘dropped by 26%’

“We called it the ‘Great Reshuffling,’ because we kept seeing that people would land those jobs so quickly, even in the Bay Area,” speaking to SFGATE WIT president Paula Ratliff remarked. “The jobs were still being available. They just weren’t paying as lucratively as we saw people paying right after the pandemic,” she continued.

The research pointed out that in 2023, the typical earnings for individuals who switched jobs experienced a significant drop of 26 percent. On the other hand, those who decided to remain in their positions did not see any adjustment in their pay. WIT discovered that “project and product managers, as well as basic software engineers,” faced much greater reductions in their salaries compared to “data, artificial intelligence, and machine learning engineers.”