Another tech company is now laying off in California marking another blow to the industry’s employment landscape.
VRChat, a prominent virtual reality company based in San Francisco, has announced a significant reduction in its workforce.
Initially launched as an application for the now-discontinued Oculus Rift in 2014, VRChat was eventually released on Steam, HTC Vive, Oculus Quest, Android, and PICO 4 in the years following.
Created by Graham Gaylor and Jesse Joudrey, VRChat is a platform that allows users to create 3D avatars and interact with one another in user-made environments.
CEO Graham Gaylor revealed on LinkedIn that approximately 30% of the company’s staff has been laid off.
Gaylor referred to the downsizing as “one of the toughest decisions” VRChat has faced in a decade of service.
To soften the impact on affected employees, the company is offering extended severance packages, prolonged healthcare coverage, and comprehensive career placement assistance.
This move by VRChat is part of a larger trend in the tech sector, which has seen widespread layoffs since 2020.
The COVID-19 pandemic initially sparked a hiring boom as people increasingly turned to online platforms during lockdowns.
However, many tech companies now find themselves overstaffed and are making cuts to reduce costs.
The San Francisco Bay Area, a hub for tech innovation, has been particularly affected by this downturn.
Industry giants like Apple and Google have already laid off hundreds of workers in the region this year alone.
As VRChat navigates this challenging period, the company remains focused on supporting its departing team members while striving to secure a stable future in the competitive virtual reality market.
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Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
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