- Coinbase said in a blog post that it will rescind some job offers and freeze hiring indefinitely.
- Other tech companies are freezing hiring as well due to impact of inflation and interest rates.
- Some workers say they'll be less likely to apply to companies that retract job offers.
Signing on to work for a company doesn't necessarily mean you're safe in this economy — some are starting to rescind job offers in an effort to cut costs amid growing fears of a coming recession.
Companies have announced over the last few weeks that they're instituting hiring freezes and laying off employees, but the move to drop workers right after taking them on suggests that many businesses are making last-minute considerations about what they can and cannot afford amid rising inflation rates and slowing demand.
"A lot of companies were over-hiring, part of this is really a correction on that," says Lars Schmidt, founder of HR search firm Amplify, told Axios.
Cryptocurrency platform Coinbase recently joined the line of tech companies dropping new hires, rescinding the offers of hundreds of new employees in recent weeks. Insider reported last month that companies including Meta, Netflix, Uber, and Salesforce are either cutting down hiring or implementing layoffs. More than 15,000 tech workers were laid off globally in May, according to a TechCrunch analysis.
The hiring moves — or lack thereof — come despite the US labor market still feels a strong demand for workers. It represents a divergent trend in the market right now: the hospitality and service sectors can't hire people fast enough, but there's a slowing need for tech workers. That's as hospitality and service sector workers — historically in the lowest wage bracket — bargain for higher wages, with the most power they've seen in decades. Tech workers, in contrast, are some of the highest earners in the country, and now those salaries are getting harder to hold onto. Some in the finance and tech industries warn that rescinding offers will make workers wary of joining companies in the future.
So tech leadership is hoping the trend doesn't last.
"I've never rescinded an offer before, and I hope I never have to do it again," Jeff Mahacek, the VP of product design at Redfin, commented on the Linkedin post of a Redfin hire whose offer was revoked. "What's going on in the economy now is happening quickly and leaders are having to make tough decisions."
Rescinding offers may spook future hires away from certain companies
Tech leaders like Mahacek point to the state of the economy to explain the current hiring pileup, but workers might still have reservations about working with companies like Redfin in the future, Joe Moglia, the chairman of investment firm FG New America Acquisition, wrote on Linkedin.
"Decisions like this to halt hirings and rescind offers can have a real chilling effect much farther down the line," Moglia said. "This sort of thing conveys a message of potential disorganization or mismanagement and can scare off a lot of really smart and talented people, especially in an industry where folks don't lack job options."
Although it's the tech industry that's experiencing the sudden squeeze at this moment, many warned that a mass retraction of job offers could deter talent from applying to any company in the future, especially as workers hold the upper hand in a persisting Great Resignation.
"Rescinding accepted offers really feels like a good way to never be able to hire again," Thomas Powell, a software engineer at Progress Chief, wrote on Linkedin.