The current labor market might not yet feel the effects of layoffs, but Silicon Valley is certainly feeling the pinch. Thousands of tech employees have been let go in the first two weeks of 2023, with Amazon and Salesforce leading the way. Investors have grown impatient with companies that don't produce positive cash flow and high margins, so the easiest way to reduce costs is to let people go. This has the effect of widening the advantage of companies that can afford to keep their workers and invest in longer-term projects. Hiring tech employees is much more expensive than it was 15 years ago, with total compensation for a software engineer ranging from $170K to $250K. Add in the perks that tech workers now expect, and the overhead for a younger firm can be tens of thousands of dollars per employee. This makes it difficult for startups to compete with larger companies in terms of labor, especially during difficult economic times when external funding is scarce.