‘2023 is going to be rough’: What layoffs mean for Utah’s tech industry

Analysts predict slower growth in 2023, while job seekers are getting help from Silicon Slopes and state agencies.

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Lehi • In the shared office space that is home to the nonprofit Silicon Slopes — “the voice, hub, and heart of Utah’s startup and tech community” — there’s a quote on the wall outside the suite, from the industrialist Henry Ford.

“There is no man living who isn’t capable of doing more than he thinks he can do.”

Normally, it would be an encouraging sentiment. But early on a Monday morning, less than a week out from Christmas, the quote has a bitter sting for those who walk by it, because many of those people had just lost their jobs and were trying to find new ones.

Utah tech companies have been struggling and laying off staff after years of meteoric growth. In 2022, at least 15 Utah companies — 11 in the last three months of the year, or “Q4″ in corporate-speak — have laid off staff, according to the tech layoff tracker layoffs.fyi.

Even workers at so-called Silicon Slopes “unicorns” — privately held companies valued at more than $1 billion — aren’t safe. Route and Podium, two e-commerce companies, began December with staff reductions. Pluralsight, which sells online training courses, followed, laying off 400 people, about 20% of its workforce.

The downturn is being felt across the U.S. tech sector, not just in Utah. But the Beehive State is unique in that tech workers make up a larger percentage of the workforce than the national average, according to the University of Utah’s Kem C. Gardner Policy Institute — so a downturn in the tech sector here could hit harder than it might elsewhere.

Unemployment in Utah County, where much of Utah’s tech industry is located, sat at 2.2% in November, the same level as statewide, according to data from the Utah Department of Workforce Services. That’s well below the national rate of 3.7% in November. But it’s above the jobless rate of 1.7% that Utah County recorded in March, a 30-year low.

Gov. Spencer Cox said his office knew high interest rates would lead to a contraction in Utah’s tech sector. And in a news conference on Dec. 15 he said he expects more layoffs into the new year.

“There was so much money that was being thrown around and these valuations in tech were astronomically high for companies whose products were not making money yet, right?,” he said, “... [t]hat was always going to be a problem as soon as capital got more expensive, which is what happened when interest rates went up.”

Job seekers meet recruiters

To stave off panic, the state and Silicon Slopes officials are joining forces to try to get people back into jobs — with moves such as last week’s hiring and networking event. (Silicon Slopes is a nonprofit that provides support and networking for Utah’s startup and tech community, partnering with private groups and government agencies. While the name originally referred to the tech industry in Utah County, the nonprofit now aims to serve the industry from Logan to St. George.)

By 9 a.m. on Monday morning, a week before Christmas, the Silicon Slopes office was filled to the brim. Recruiters were set up at tables that lined the room’s perimeter, with job seekers eagerly waiting to talk to them. Anyone who stood still for too long was in someone else’s way.

About 400 job seekers shuffled in and out to meet with potential new employers — Zions Bank, MarketDial, Lucid, Overstock, Morgan Stanley, Goldman Sachs and others — or find unemployment resources with the state’s Department of Workforce Services, said Kori Ann Edwards, managing director of the Governor’s Office of Economic Opportunity, which co-sponsored the event.

One attendee, Porter Larsen, a data analyst who was laid off by his previous employer, said he’s from Utah and wants to stick around — but that depends on where he’s able to find a job.

Events like the one Silicon Slopes hosted are helpful, he said. “They’re taking care of the people that are around this community.”

Clint Betts, the CEO and co-founder of Silicon Slopes, said events like this are “just the beginning.”

“It does seem like our community comes together in the hard times in a way that I think is unique,” Betts said.

Is Utah’s tech sector in trouble?

Utah is more heavily invested in tech than most other states, said Levi Pace, Kem G. Gardner Policy Institute’s senior research economist. According to the institute’s most recent analysis in 2018, 15.2% of all Utah jobs were either at a tech company or indirectly dependent on it.

Data also show that tech company jobs are growing faster here — 6.6% growth, compared to the 3.7% national average in 2021, post-pandemic — than elsewhere, so Pace said the share of jobs in or reliant on the tech industry have likely increased since 2018.

(Christopher Cherrington | The Salt Lake Tribune)

Pace said so far it’s unclear what exactly happened to Utah’s tech job growth in 2022, since the U.S. Bureau of Labor Statistics shifted its industry definition this year. With that caveat, Pace said preliminary data seems to show “very strong job growth” in the first two quarters of the year. Given the recent layoffs, high inflation and changing demand, though, it’s possible job growth slowed at the end of the year, or will slow into 2023 — but it’s not a sure thing, he said.

A changing economy, where high interest rates raised “the cost of money” and discouraged investing, seem to be fueling the current downturn, Edwards said.

Sunny Washington, CEO of Utah Tech Leads — an advocacy organization for Utah’s tech industry — also cited high interest rates, but said people returning to a pre-coronavirus lifestyle is another factor.

During the pandemic, Washington said, many organizations embraced technology, and investors pushed money into growing companies filling the need COVID-19 created. All this investment happened as interest rates plummeted.

But as people returned to in-person school and work, she said, companies’ growth slowed and so did investments.

“They’re just clamping down, not because they’re not still doing well, it’s just that they can’t anticipate growing at the same speed that they were. And it’s unfortunate that people are a part of this,” Washington said about the layoffs, “especially this time of year.”

Despite the layoffs, Washington said, the industry forecast isn’t all doom and gloom. There are still opportunities for growth, she said — just more conservative growth.

“It’s still a great time to start a company, but maybe it’s not the best time to raise money for a company,” she said. “It might be a good time to bootstrap and really get to a product market fit before you start really expanding.”

That bootstrapping, Washington said, could mean hiring smaller teams, perhaps cutting salaries and focusing on creating a company or product that fits the market, instead of concentrating on growth.

She said the tech industry has weathered downturns before, but haven’t seen a “contraction in the market” like this since 2008.

Even if the tech sector is shifting, like some experts have theorized, toward automation and virtual reality, Washington said that doesn’t foretell fewer jobs in Utah. It could produce more.

Larsen, the job-seeking data analyst, backed up Washington’s point, saying a lot of the jobs he saw being laid off at his company “weren’t necessarily easily automated.”

Pace said Utah has a dearth of network, cyber security and systems engineers. The share of Utah workers in these jobs is lower than the national average — and was projected to grow faster than the national average this year.

“We’ve had a shortage of tech workers, and Utah’s unemployment rate is still very low,” Pace said, “so the economy appears to be well positioned if we’re heading for slower growth.”

Job market ‘cross pollination’

Edwards said many of the employees laid off by Silicon Slopes companies aren’t “traditional tech employees.” Many of them are working sales and marketing, or analytics.

Jenna, who asked to be identified by only her first name as she searches for jobs, is one of those. She said Monday that she was laid off as a remote recruiter for a large tech company.

It’s a peculiar situation, being a recruiter who has been laid off, Jenna said.

She admitted that losing her job left her feeling depressed.

“It’s been rough with the holidays, and inflation has not been easy to deal with,” she said.

Though she has never laid anyone off herself, Jenna said companies who lay off employees are saving more money than just the amount of someone’s salary.

“It’s their benefits and other associated costs most people don’t think of,” she said.

Jenna said Utah is her home, and she would like to stay here if possible. That’s the case for most tech workers, Washington said. Her organization’s Community Priorities Survey found 33% of Utah’s tech workers were “lifelong” Utah residents, and 50% have lived here for more than 10 years.

“So this is home, and this is where they’ve settled,” Washington said. “I think that for a lot of folks, they’ll be able to find jobs.”

Edwards shared Washington’s optimism. She said the state’s strategy is to move workers like Jenna into similar roles at other Utah companies. She called it a “cross pollination” approach, and said the Silicon Slopes event was one way to introduce former tech employees to new industries that could use their skills.

For instance, Edwards said, the life sciences, manufacturing and aerospace and defense sectors are “very much in a hiring mode” and have been looking to fill jobs.

“I was talking to one employer, and they’re like, ‘We need electricians. We need front desk workers, sales, marketing, all of these and more,’” Edwards said.

At last week’s Silicon Slopes event, Overstock recruiting manager Paul Kerr told The Tribune his company was looking to scoop up “talented corporate employees that were laid off recently from some high-caliber companies.”

Kerr said Overstock had 45 open positions, split between tech and corporate roles. The company was specifically looking for software engineers and data science workers, he said, but had jobs available in merchandise and marketing.

“We wanted to show up and see if we could help some folks out,” Kerr said.

Edwards said Department of Workforce Services is hosting a virtual job fair on Jan. 12.

Branching out

Some laid-off tech workers have taken the task of finding new jobs into their own hands.

Kelly Neilson was the head of community and events at Hightop — a “neobank” that provides traditional financial services, like a bank, but using decentralized cryptocurrency — before being laid off about two months ago.

As more companies laid off employees, Neilson said she wanted to make a website that could build communities — her specialty — and help people.

So she started a job board called Utah Layoffs on Dec. 15, alongside Trent Mano, with Convoi Ventures, and Kat Kennedy, with Kickstart Fund.

The site started as a Google spreadsheet, where those who were laid off can promote their skills, and where employers can list their job openings. The spreadsheet has grown into a volunteer-run website: 1Utah.com. The site is different from LinkedIn, Neilson said, because of it’s hyperfocused on local talent.

Neilson said everyone knows someone in Utah who has been laid off or affected by these layoffs.

“It’s like supporting your local small businesses,” she said. “You want to be able to support the local workers here as well.”

Reading the entries on the job board, Neilson said, she hasn’t noticed any trends or similarities in the job titles or areas from which people have been laid off. She did note that she “hasn’t seen any executives laid off.”

Neilson added that she has worked at startups for seven years, and that layoffs aren’t uncommon.

Some experts suggest these tech industry layoffs are a result of a shift in the industry’s actual products and services. Derek Thompson wrote in The Atlantic in November that “we are in an intermission between technological epochs,” moving past “the browser era, the social-media era, and the smartphone-app-economy era” to something else, perhaps artificial intelligence and augmented reality.

“Ten years from now, looking back on the 2022 tech recession, we may say that this moment was a paroxysm of scandals and layoffs between two discrete movements,” Thompson wrote.

Neilson said companies “aren’t sure what the market will look like.” With that uncertainty, Neilson said she’s planning to stay in Utah, with the hope of finding something more stable, maybe a role in the venture capital world.

As for the future of Silicon Slopes and the shrinking Utah tech bubble, Betts doesn’t sugarcoat his expectations.

“2023 is going to be rough from an economic standpoint. But, if we do things like this,” he said, gesturing to the overflowing office room during the recent job fair, “maybe we can make it less rough.”

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