It’s not a normal fluctuation of the economic cycle but a restructuring of the industry with no turning back.

Author | Hualin Wuwang

Editor | Jingyu

The US employment data for February 2026 has been released, and one number has left economists silent for a moment—the rate of job loss in the tech industry is surpassing levels seen during the 2008 financial crisis and the 2020 pandemic.

These two moments, over the past twenty years, have represented the most severe shocks to the US economy.

And now, the tech industry is crushing both of them with layoffs.

The question is, 2008 was a bank collapse, 2020 was pandemic lockdowns—so what collapsed in 2026?

01 The bubble burst, but not a valuation bubble

Let’s go back to 2020–2022. The explosion of digital demand driven by the pandemic, combined with the Federal Reserve’s near-zero interest rates and cheap capital, made tech companies suddenly discover a gold mine and expand wildly. Some leading companies doubled or even tripled their employee numbers within two or three years.

The logic at that time was simple—growth was the only KPI, burning money was the only way, and headcount was the only execution tool.

Then interest rates rose. The foundation of the growth logic loosened, valuations started to decline, investors became cautious, and layoffs quietly began at the end of 2022. But back then, most people still thought this was just an “adjustment,” and everything would return once the market improved.

But it didn’t.

In 2025, the global tech industry cut approximately 245,000 jobs. US companies contributed nearly 70% of that, over 170,000 jobs.

By 2026, the momentum not only didn’t slow down but accelerated—over 30,000 layoffs in just the first six weeks, with more than 80% coming from US companies.

After Amazon recorded a record $71.69 billion in revenue in 2025, it announced layoffs of 16,000 corporate positions in 2026, accounting for more than half of all announced tech layoffs.

Block CEO Jack Dorsey wrote in a letter to shareholders, “Smaller teams using the tools we’re building can do more and better.” Autodesk and Salesforce each cut about 1,000 jobs earlier this year.

Note this detail—most of these companies are still profitable, some even hitting revenue records.

This isn’t a life-or-death layoff; it’s a proactive choice.

02 AI as the scapegoat?

Every large-scale layoff needs a narrative to explain it.

This round, AI has become the most convenient scapegoat.

“Layoffs due to AI automation”—this phrase sounds both technically sophisticated and era-appropriate, and seems irrefutable. But the data tells a different story.

According to RationalFX, out of approximately 245,000 global tech layoffs, only about 69,800 (roughly 28.5%) can be directly attributed to AI and automation adoption.

In other words, over 70% of layoffs have other reasons behind them.

IBM CEO Arvind Krishna directly pointed out when discussing this issue: “From 2020 to 2023, some companies increased their staff by 30% to 100%, which is just the adjustment needed for the company.” He didn’t blame AI but pointed to a more straightforward truth—overhiring followed by an economic hangover.

Of course, AI isn’t entirely innocent. Its role is more subtle than “direct replacement”—AI makes companies realize that many roles are unnecessary. It’s not about firing someone directly; it’s about management redoing the math and discovering the numbers don’t add up.

This logic is more brutal and harder to refute. It’s hard to tell a company, “My job can’t be done by AI,” when it actually is.

Some analysts describe this round of layoffs as a “structural reset,” rather than “short-term cost correction.” The difference is that the latter implies the market will recover and jobs will return; the former means those roles will never exist again.

This is the most important factor in understanding this tech winter.

Previous large layoffs were essentially temporary demand contractions. Companies waited for economic recovery, and once it warmed up, the same roles would reopen. But this time, many eliminated positions are being permanently redesigned—focused on AI-first workflows, with companies rebuilding their organizational structures.

General Assembly CEO Daniele Grassi issued a sober warning: as companies cut headcount, they increase AI investments, creating a skills gap that will ultimately slow down the pace of transformation.

In other words, layoffs are creating new risks.

Market data shows a strange polarization—demand for AI-related roles is surging, while traditional generalist tech roles are shrinking. “Technology is both growing and contracting,” and both are happening simultaneously, just affecting different people.

If you have an AI engineering background, understand prompt engineering, and can optimize large model inference costs, 2026 might be the best job market in recent years for you.

If you’re a general product operator, middle-platform engineer, or traditional salesperson, you might face a rapidly shrinking market.

This isn’t an industry-wide decline but a rapid redefinition of “valuable people.”

03 How cold will this winter get?

Oxford Economics Chief Economist Adam Slater warns that if the tech sector continues to decline, US GDP growth in 2026 could fall to 0.8%, edging close to recession.

Excluding tech investments, US growth in the first half of 2025 was almost stagnant.

The US economy’s dependence on technology has become so deep that a single pull can affect the whole system.

But there’s another voice. Salesforce industry observers note that, compared to 2024, the absolute number of layoffs in 2025 actually decreased by about 20%. The narrative of “2025 as a disaster year” doesn’t fully hold up based on the data.

This wave of layoffs seems more like an indefinite transitional period rather than a downward slide with a clear bottom.

Companies are using layoffs to “free up space,” space for AI tools, leaner teams, and higher efficiency. This logic will hold until some boundary is reached—perhaps regulation, technical bottlenecks, or consumer reactions.

Jack Dorsey’s phrase “smaller teams doing more” somewhat reflects the current collective belief in the industry. The question is, when everyone is shrinking, who will support the next “bigger”?

What the tech industry is experiencing is not just a typical downturn but a fundamental questioning of “what role humans play in the system.”

Unfortunately, layoffs alone cannot answer this question.