Recent layoffs are a sign not just of over-investment in the sector, but of deeper, structural issues that may take many years to resolve.
It’s tempting to dismiss the mass layoffs and collapsing stock prices in the tech sector as just another blip in the tech boom-and-bust cycle. Technology firms may make up 36% of the S&P 500, but they represent only 0.3% of workers. These are mostly highly skilled people who will probably find other jobs quickly, so there is reason to hope that this is a necessary correction to an overinflated sector of the economy and that right-sizing won’t cause wider damage.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
This piece originally appeared in Bloomberg Opinion