Think it’s just tech? Layoffs up in several R&D-heavy industries

Apple, Dell, Intel… the tech layoff headlines keep coming. But don’t think for a second it’s just Silicon Valley feeling the pinch. A closer look reveals a surge in job cuts across multiple R&D-heavy industries.

Tesla cut 14,000 workers in April 2024 (10% of its workforce). Other transportation companies making cuts include electric vehicle (EV) companies Fisker, Lucid Motors, Rivian, and the e-bike firm Rad Power Bikes.

But the tech sector has not seen so many sustained mega-layoffs since the Dot-Com crash.

In R&D-concentrated sectors, hardware and infrastructure cuts elevated

In the hardware sector, Dell is reportedly cutting around 12,500 employees as part of a restructuring effort. This move aligns with the company’s focus on AI through a new group, according to a report by Channel Futures. Other hardware-related cuts include Intel’s plan to cut its workforce by about 15,000 workers. Meanwhile, GoPro announced plans to let go 15% of its staff, while Sonos cut 6% of its workforce. Other companies making cuts include the infrastructure company Fastly (11% of workforce), edge computing and security firm Stackpath (fully shut down), internet governance body ICANN (33 employees, 7% of workforce), and cloud distribution platform Pax8 (5% workforce reduction).

In healthcare, Ginkgo Bioworks, a biotech firm that raised $1.6 billion in 2021 via a SPAC, cut its workforce by 35%, laying off 400 employees. Personalized healthcare provider Care/of shut down completely, shedding 143 jobs. And Cue Health, known for its at-home COVID-19 testing kits, shed 230 employees (49% of its workforce) in May and shuttered a manufacturing facility.

The pain isn’t being felt equally across the board. This chart shows which R&D-heavy sectors are feeling the most pressure from layoffs.

The pace of tech layoffs mostly plateauing but not in August

Layoffs have become a recurring theme across the tech industry, but were gradually reduced compared to 2023 totals. But August 2024 has been a hard month with Intel, Dell, Cisco, and Apple all cutting workers. According to data from the Bureau of Labor Statistics, the pace of job cuts in the Information sector, a proxy for the tech industry, has not relented as some other sources had suggested. The information sector cuts were up slightly from 0.90% in June 2023 to 1.00% in June 2024 (preliminary), a change of 0.10 percentage points.

As tech companies make targeted cuts, often focusing on specific divisions or projects, many are touting investment in AI- and automated-related projects. Some companies began rehiring in strategic areas while cutting in others. This is reflected in Bureau of Labor Statistics data which shows that R&D-intensive industries like manufacturing, IT, and transportation experienced a higher average layoff rate (1.17%) compared to non-R&D-intensive industries (0.86%) in June 2024 based on preliminary data.

Retail, consumer, and transportation sectors hit hardest

Tech-adjacent sectors like data and security fall in the middle to lower range of layoffs. Cybersecurity in particular has long faced a shortage of skilled workers, which may contribute to its relatively lower layoff figures. This trend could indicate a continued demand for specialized skills in these areas despite overall industry cutbacks.

While pundits argue whether AI is likely to be more of a net job-displacer or creator, the technology is likely to be disruptive in any case for many. The World Economic Forum predicts that AI will lead to the displacement of 85 million jobs by 2025 while creating 97 million new ones, with job losses and gains distributed unevenly across sectors. WEF points out that roles involving routine, manual tasks are most vulnerable to automation, while positions in technology, data science, and AI-driven fields are likely to see an increase in demand. While the outlook for STEM fields appears generally positive, industries heavily reliant on routine manual tasks, such as Natural Resources and Chemicals, exhibit a greater potential for automation, with 64% and 56% of tasks in these sectors, respectively, potentially being automated.

Conversely, sectors like Software & Platforms and Communications & Media demonstrate a significant portion of their workforce engaged in tasks more likely to be augmented rather than fully automated. For instance, in Software & Platforms, it identifies 28% of tasks seeing potential augmentation.

The WEF identifies a mixed outlook for the Life Sciences and High Tech industries, where 50% of tasks are categorized as non-language tasks, generally less susceptible to automation. Yet a notable portion of work (17% in Life Sciences and 16% in High Tech) remains potentially augmentable by AI, particularly in roles related to data analysis, research, and development.