What The Second Wave Of Layoffs Means For Workers And Startups

After the 2024-25 job cuts at Google, Amazon and other tech companies, the second wave of tech layoffs is rewriting the startup labor market.

Skilled professionals are suddenly available, creating both opportunity and pressure for founders and workers alike. Startups now compete for talent that once seemed untouchable, while employees face longer job hunts and rethink how and where they work.

Higher expectations, more side gigs

Pavel Shynkarenko of Mellow — Pavel Shynkarenko

With talent flooding the market, candidates are demanding more flexibility and clearer growth paths, even as many accept contract work or lower pay to stay employed. The typical job search now stretches six to seven months, even longer for those needing visas or relocation. That uncertainty has fueled a surge in freelancing and side projects.

Bankrate reports that 36% of American adults now have a side gig, with more than half of them having started in the past two years. While many professionals didn’t plan to freelance, they turned to it because they had no other choice. For some, it has proved liberating, with confidence and job satisfaction rising compared with corporate roles, according to our internal data.

Despite all the buzz in the media and even on Reddit, overemployment — the trend of holding two jobs — remains a niche phenomenon, affecting roughly 5% of workers, according to the Federal Reserve Bank of St. Louis. The more common pattern is a mix of contract work and short-term projects, which gives startups a chance to hire A-level talent for fractional roles they couldn’t have afforded before.

Smaller, sharper teams

Payroll is every startup’s biggest cost, and founders are trimming teams while raising output per employee. The examples are striking. Midjourney reports about $200 million in ARR with a staff of only 11.

Cursor has reached roughly $100 million with 15-20 people. Data from Carta shows that the average seed-stage team in the consumer and fintech sectors has declined by nearly half since 2022.

This lean approach is spreading beyond early-stage ventures. Around 90% of tech executives say they are open to hiring freelancers during peak workloads; more than 28% already integrate them into daily operations. As this makes clear, smaller core teams, supplemented by trusted project-based workers, can move faster and spend less.

Opportunity on both sides

For workers, the takeaway is that startups may now be the safer bet. Mid-sized firms that once promised stability are cutting jobs, while startups are candid about their risks and can reward performance with equity or future roles. A short contract can become a long-term stake.

On the other hand, for founders, today’s market is a chance to recruit top engineers, designers and operators at terms that were impossible two years ago. It also demands a new mindset involving compensation flexibility, project-based roles and hiring processes built for speed.

All in all, the second wave of layoffs has changed expectations and shifted supply and demand in the job market. Workers are blending traditional jobs with side gigs, and startups are proving that small, focused teams can out-execute much larger competitors.

On both sides, adaptability is now the ultimate advantage; companies that remain nimble will win.

Pavel Shynkarenko, founder and CEO of Mellow, is an entrepreneur with more than 20 years of experience, and a freelance economy pioneer who aims to transform how companies engage with contractors. In 2014, Shynkarenko launched his first HR tech company, Solar Staff, a fintech payroll company for freelancers, which showed $10 million-plus in revenue for 2022 and 2023. In early 2024, responding to the growing demand for specialized solutions for long-term interaction with contractors, Solar Staff, as a global company, pivoted to Mellow ($1 million MRR).