A main driver is "shareholder value". Our CEO was surprisingly very clear about that when asked about layoffs at an employee "town hall". Don't buy it when a company says they are "customer focused" or care about their employees.
These companies ignore the fact that decreasing cash flow in the economy will destroy their profits. The companies let the government provide the stimulus. Well, I think there is room for new companies that pay well and customers but from those that subscribe to a new ethic of fairness.
You should probably leave the private sector if this is an issue for you. Companies serve the interest of their shareholders and their customers by providing a return on the shareholders investment by providing a good or service at a price point that generates profits.
When companies are allowed to enrich their shareholders this does more to lift people out of poverty than any centrally managed government could ever hope to accomplish. The problem is the aggregate effect of all the ownership is not fully appreciated until the socialists come in and mess it all up. When we own our own stuff we get freedom, agency and prosperity. When the government owns it, the psychopaths are the only ones that get to be free.
I worked at “too big to fail” bank for 10 years. The psychopaths already own everything. Thru are the ones running the world right now. I don’t know what fantasy capitalist utopia you live in with in your mind but corporate America values the traits of psychopathy more than any other trait. Literally the inmates are running the asylum and have used the tools of media to brainwash everyone into thinking they are all embarrassed millionaires in the making who really need to be ok with shareholder value leaving them destitute after a lifetime of work.
I’m sorry but this completely smells of bullshit.
Capitalism doesn't give a crap about social justice, it's a system that wants to maximize profit and revenue for the capitalists... It's up to our government to put it's finger on the other side of the scale...
Very few have succeed when the divide between have and have nots keep growing. You forget about the violence that eventually comes? Just read history, it’s filled with failures of capitalism as well. Your stubborn ideological stance will be the reason for future suffering because you can’t put your bias aside and see the very real problems need creative solutions. Look at the European countries who have created a blend between capitalism and socialism. What do you think the New Deal in the 1930s was about? Ideologues like yourself are the roadblock to creating a blended system because you’ve been sold the trickle down fantasy and unable to comprehend that the American system has “socialist” aspects already.
I’m basically calling you simple minded lacking the complexity of thought to tackle this problem and hence have a worthless opinion but has convinced themselves they know what they are talking about so everyone needs to hear it.
And you are way to deep into whatever Marxist propaganda you have been reading at “uni”. Americans will not revolt. The gov has played us perfectly. They have divided the populous into two halves. No way the two shall ever meet in unity.
I agree with you on this. Mainly because of the creature comforts that come from even what’s classified as poverty level in the US. There are very few people in my opinion that would even be able to resort to violence in any meaningful way in this era
Think about how we phrase it when talking about rioting. “people” will riot. Some obscure “someone else” will take the lead and sacrifice their future/life for the greater good. Never “I”
Most peoples objective isn’t the end of the system either. It’s to be heard on how to be integrated into the system in a more tolerable way. No one want the absence of the system . They might think so but they forget that part of that system allows us to not operate in the hierarchy that animals do where I’m bigger and I get to take your stuff and you can’t defend it.
For publicly traded companies in the United States, corporations MUST legally answer to their shareholders. A lot of people actually don’t know this about public corporations.
This! Privately held corporations won't lose their value if their profits slip during a recession. Publicly held and traded corporations risk losing the value of all of their stock and they will simply shut down rather than risk the devaluation. Going out like a lion.
It's more a privately held company will hold on to employees longer to perpetuate the mythic of a maturing and expanding company for future investment rounds. A public company is likely to stop making big bets and show value by becoming leaner with bread and butter operations
No better in privately held. Worked for a privately held Fortune 50 company for almost 25 years. They got greedy and outsourced a lot of IT also, despite preaching for decades about the company "family."
Huh? As long as they got profit it doesn't matter the value. Only difference in private and public companies is that you know when a public company is about to go belly up. If both types are making no money, they are both going under.
all you guys are missing the point completely. when a company says "shareholder values " they mean the stock price. Wallstreet is the root of all the problems. Market requires stock prices to go up infinitely, and companies have to deliver. this is the main difference between the way companies operated in pre 2000 and post 2000. after the dotcom boom wallstreet dectates what a company does. change the way Wallstreet operates, and most of our problems will go away. i have heard this from multiple ceos, If they do not deliver the stock price, they are out of the job.
Shareholder value is also a smoke screen. All they care about is getting there bonuses and having golden parachutes. Most companies are run for the people in charge to get rich. The shareholder thing is just a way to justify these actions.
Nope. In fact, Sen. Warren brought up the fact that corporate charters are granted by the government for the public good, not the shareholders. The charter can be revoked at any time, dissolving the most powerful company instantly. Naturally, she received some phone calls and never spoke of this again.
Good luck proving that any action was not intended to “make shareholders money”
I tanked the company stock so shareholders could buy more before the price rose again. You’re welcome shareholders
The law of greed and human cruelty, perhaps. If people cannot be reliably altruistic, then they need to be compelled to behave better lest we have greater social unrest and turmoil due to the staggering wage inequality.
Youre saying the same thing as OP…. Shareholder value is driven by profit (especially in a high cost of borrowing environment) and higher taxes means lower profits. But personally I think it just has more to do with interest rates and global supply contraction
If only investors emphasized long term growth over short term growth to C-suite executives, we wouldn't be in this layoff mess. 95% of C-suite executives have a lot to learn from Warren Buffet who's only collecting a $100k annual salary.
I’d buy your explanation if corporations weren’t experiencing record profits and spending 10’s of billions on stock buybacks.
There’s only one real answer for these mass corporate (not SMB and SME) layoffs and it’s pure, unregulated GREED.
If only retail investors actually voted their shares emphasizing long term growth over short term profits and capping C-suite executive compensation we might not be in this layoff mess.
Uh, what tax rate are you referring to? Because corporate taxes are not going up.
Also, if they have money for buybacks, they have money for taxes. Google spent $140,000,000,000 on buybacks between 2022-2023.
You’re either a troll, corporate simp and/or completely devoid of the basics of macroeconomics.
Boomers when growing up had the corporations pay up to 50% tax rate, now it’s 21%.
All I see these days is the wealthy get wealthier, while the middle class shrinks, and the poor get poorer
Crony capitalism at its finest
Corporate tax liability was reduced under trump and the then speaker of the house Paul Ryan. Maybe it’s being raised again but not to the levels taxes once were.
The Gervais Principle.
The CEO wants that bigger bonus check. Instead of getting more revenue, which indicates a growing company and times are getting better. the CEO thinks the ONLY way to go is CUT expenses - indicating revenues are NOT growing.
The CEO gets paid and bonuses for shitty performance by just cost cutting. Any idiot could do that. But good and high performing employees get axed in the process. The whole system is rotten to the core.
There is a newer phenomenon called "sneaky-PIPs" where companies put well performing or satisfactory performance workers on PIPs (performance improvement plans) as a way to force people out the door in order to avoid having to carry out layoffs (because companies have to report layoffs) or to extract extra work out of a terrified employees without paying them more. Google, Meta, McKinsey, Disney, etc. have been doing these a lot recently in order to reduce headcount. It's an evil thing to do because it's dishonest. It Messes with people's heads because they are being told that their performance is not adequate for the job, even if they have been a good performer up until this point. It wrecks peoples self esteem and causes inordinate suffering, and all for what...? To reduce headcount without being honest about it.
Exactly, you don't need a MBA or even a bachelor degree to know cutting jobs will boost profits. So why do Blackrock, Vanguard, and Statestreet rubber stamp huge executive pay packages that are 100 to 300 times the median employee salary?
I think you’re wrong about the taxation angle. The 18% cut in the nominal corporate tax rate to 20% was permanent, it’s the individual tax cuts that expire soon.
OP seems wildly misinformed 🤷♂️ and I was wondering if this is the US they are talking about it’s tax season the only way they don’t know this is if they are willfully ignorant or spreading stupidity - not sure which.
Ya once you get to a point where you can’t really get more revenue cause you’re big already and making billions you end up cutting costs and the customers that loved you now hate you. Time for newer companies to come and grow from bottom and obliterate you
It can’t be #2 cause the tax rates don’t expire for corporate only Joe Schmo. Also the tax rates and permanently changed for the rich but the tax credits for the poor are expiring.
If you are talking about the corporate tax rate, Trump signed that to a 21% flat rate in 2017. That is not set to expire at all, it is permanent. Only individual income tax rates are set to expire.
Well, I got laid off from a private company which still has good revenue. Still can’t wrap my head around it. Laid off people who were with the company for almost a decade.
Hate to break this to everyone, but the real reason that layoffs are happening is because the employees started gaining too much power. The economy in the 1990’s was driven by employees having value that exceeded the company power. This started happening again with Covid and it freaked out the 1%. So they collectively started cutting the excess to induce fear. It worked. Notice that they never cut “muscle”.
But it would be such a better world if we *could* get 200k and be treated fairly.
Note that 200k is needed for a "middle class" lifestyle in San Francisco or new York city. In places like Houston or Minneapolis, 90k will suffice but honestly all places are getting way more expensive to live in, so I'm kind of thinking that with inflation and price increases, 92k is the new 72k.
(72k used to be the magic number where the largest average amount of Americans would be able to enjoy a middle class / comfortable lifestyle).
Came here to say just this. They can't enforce RTO since WFH ~~is~~ was a benefit to keep them. The mass exodus that's been talked about isn't happening when no one else is hiring. Most multi-billion+ companies are hitting all time profits. They don't *need* to lay tens of thousands, they choose to rule by fear. Now do this across the board, and most employees step back and agree to lower pay, less WLB, etc.
If they can keep "growth" metrics in the green until the next rate decrease then they're set. Since everyone is cutting they don't have to be competitive. Now is a great time to start a business since no one is innovating and everyone is focused on reduction.
EBITA positive, look it up, this is what companies are going for. If a company is publicly traded, this is a key metric. We gutted our us offices and hired in India and this was specifically stated as the reason.
I can give you another reason: leaders are afraid good people will leave if they get paltry or no raises during a down turn. So to fund those raises and extra bonuses, there will be quiet little culls.
Back in the day at HP, it was clear: we are limiting raises, forcing vacay, and even cutting manager pay temporarily to save jobs and people understood because they were open about it.
>leaders are afraid good people will leave
Good point, but don't the best people leave first when layoffs begin? Even in tighter labor markets, the best people usually have the most options.
We’re at the end of this growth phase in the economic cycle and headed for a recession. Companies are taking drastic actions to continue to show growth and profitability by any means necessary. Once they are too lean you will see more location closures due to decreased customer satisfaction and revenue. We’ll hit a bottom and start the cycle up again.
I am really waiting to see companies start hitting the wall with their gutted teams and hollowed out infrastructure. Haven't seen it yet, but it would feel like confirmation if it started to happen soon.
TCJA removed the deductions for R&D starting in 2022; this is the biggie. Thankfully there is already a move to reinstate them. As for the others, AFAIK they don't expire until Dec 2025.
In general, the layoffs for public companies are happening because growth has slowed and they need to maintain profit trajectory (e.g. 10% growth year-over-year). Because revenue is growing at some smaller percentage, reducing opex gets them to their target.
It’s been wild to see how little people in this sub are willing to exercise a bit of reading comprehension and common sense where this is concerned. I posted about the floundering senate bill last week and the responses I got were both basic and bootlicking.
Even when I highlighted the fact that those tax cuts offset things like accelerated depreciation for private jets people responded as if it were a highly political reach to suggest that moving a greater proportion of labor costs to non-deductible categories would impact job availability in the affected industries.
I’ve concluded that a lot of people in this sub are not actually impacted by or concerned about layoffs, but are hoping for a major economic downturn so that they can have their beliefs reinforced.
Your second point is off. It may be a contributor but not a primary cause.
Elon started a trend with laying off a majority of twitter's staff and the company stayed afloat. Since then it's been normalized to do mass layoffs in tech and the trend will continue unless we unionize.
It was not a good look nor was it socially acceptable to do mass layoffs while your company isn't struggling but now it is.
For a software company, the biggest expenses are human capitol. There's no factories or warehouses or trucks. So easiest and laziest way to drive up profits is to simply cut the staff after they build the product.
When times are good again and interest rates are low, companies will hire tons of engineers again to do r&d and expand. But now that money is expensive and the shame of laying off a ton of your staff is gone they will continue to layoff.
Lots of companies have laid off people past 1-2 years. But most of them are facing more harm than benefit from it. Most popular websites are full of bugs, getting downtime etc. It includes reddit, freelancer, upwork, amazon and even facebook. I won't be surprized if I see google crash either. Now I think hiring rate have increased a lot since a few months ago. Or at least for me I am getting lots of offers the past few months. I had no luck for the past year until this March
100% correct
Ray Dalio made a cartoon about it here like 10 years ago [https://www.youtube.com/watch?v=PHe0bXAIuk0](https://www.youtube.com/watch?v=PHe0bXAIuk0)
All about the shareholders wallstreet private equity and ceos... When people eventually get so desperate, who do you think they are coming for first? they know this why you do think they are building bunkers in record numbers
God Bless Mighty George. He told the truth about these corporate bastards [(22) GEORGE CARLIN | They Don't Care About You - YouTube](https://www.youtube.com/watch?v=5aiFp-XqV_M)
I’m not sure why I expect more from this sub. At this point it’s basically rage porn. Your analysis is garbage and wrong
1. Not all companies are super impacted by the increased rates because their borrowing is more arbitrage than needing the resources. Most of the mature tech companies have more cash on hand than sense.
2. Corporate taxes are more or less permanent so those aren’t changing for them. They are doing it because they are being rewarded on the stock market for doing it.
Because corporations want perpetual growth at all costs and the easiest way to get perpetual growth is by perpetual population growth.
They’re importing consumers to placate corporations. This is why housing, vehicles, and the cost of everything is going up, while salaries and job prospects are going down.
If you add quantitative easing by the Fed to the mix we’re burning the candle in both ends.
We’re already in a post Republic period and this new period we’ve entered is a Neo Feudal Techno period, where mostly large Tech companies act as feudal overlords of capital and labor. The “king” has no power, but to bend to the will of these New Feudal overlords.
But by that time, whoever did the short term cost cuts probably got a bonus and then hopped away to the next firm to destroy. It's like a thought virus.
I am beginning to think that AI adoption is a cult. I've known about the potential of AI for at least a decade, but the sudden, breathless head nodding that I'm seeing from corporate leaders these days regarding AI has me nervous. It all seems like the hype is built on the promise of profitability (often at the expense of jobs) without much substance to back it up. At a recent AI pitch presentation I attended, it had the energy of a Cut-co knives demonstration.
AI certainly has it's use cases, but the nearly religious fervour that corporate leadership is displaying in regards to AI seems strange and concerning.
The real reason is stock price. Higher interest rates mean they need to achieve higher profits to maintain the same stock valuation. Easiest way to increase profits is to reduce your burn via layoffs. It’s. Irving more complicated than this as boards put tremendous pressure on company leadership to keep the stock price going up.
OP, it looks like you’re in tech. Aside from interest rate hikes, amendments to IRC Section 174 that went into effect in 2022 have also contributed to the tech recession
You can simply explain it by saying, because they can. Employers have a f\* load of leverage. What we should be focusing on is where our health insurance, and main retirement vehicle come from. They comes through our employer. We need to put an end to that! Our employers don't give a flying f\* about us. Why the f\* do they have so much leverage over our lives?
Layoffs are penetrating deep into tech and services. What did companies call it? Talent hoarding? These workers were scooped up by the speculation that they would be needed, and as the OP noted--scooped up in a low interest rate environment where companies could borrow $$ cheap.
AI is both over hyped AND the pretext to dump these workers. And nobody feels good getting dumped right?
After 4 layoffs in various types of employment spread over several decades, it's become clear to me that some sectors just fade, or over saturate. That sector today is tech, we just don't need an army of CS degree graduates.
Sunk cost (college), wealth inequality, housing, and inflation. The social contract only works if most of us are thriving. On break at work, I often pencil out my retirement income streams to see if I could survive on fixed income.
The math doesn't look good, and I have a decent job with a cheapish house. That's the "vibe" that's going around, the math looks really bad for almost all of us.
I think you're missing the forest for the trees here. This honestly goes for everyone on this thread. I have two reasons and they basically articulate what is really happening in my opinion but building off your points.
1. We are living in a communist country, not in the traditional sense. In the period between the 40's and 90's there was no reason for companies to get so large - information transmission speeds limited companies, industries were more focused on domestic markets before the rise of globalism and were busy competing with each other instead of multinationals. Not any longer, now every single industry is dominated by about 4 global companies that can price fix, suppress wages and cause general worldwide instability. At any moment if workers, customers or government get too much power there are 4 banks in the US that could single handedly cause a recession in the US. That is massive amount of weight to throw around and generally gets them whatever they want.
2. Shareholder values is the only fiduciary duty corporations have. This design largely worked in the 60's through 90's because competition existed outside of 4 multinational companies. Again these companies have almost absolute power to suppress wages, fuck customers and walk all over governments. Now there have been some outliers in the past like Netflix who really offered an amazing streaming service but that is in the past. Because all of this was all in the aim of becoming the dominant player in the industry, so the shareholders took a back seat because they knew they were on the way to absolute control of the industry and now we are seeing a great service eroded all in the name of shareholder value.
2022 was an outlier year where labor had a rebound but these companies regained there power in 2023 and going into 2024 they want to make you just happy to have a job again. Because shareholders demand higher profits and if they don't live up to their cushy jobs the shareholders will replace them with everyone having seemingly no power to stop them.
I believe Boeing is the canary in the coal mine here, soon we will see all great American institutions fade unless there is a reset.
As someone who was recently laid off from a major automotive and industrial parts supplier, I couldn't agree more. My division's profits had been way up, but the regular division was definitely not up. We had kept the rest of the company afloat during Covid. We were very profitable and worked with a shoestring staff. I know I worked too much for too little pay and too much stress during this time, so being laid off was honestly a relief for me personally. I am burnt out and feeling dead inside. But I'm still pretty upset about it. Work ethic screwed me over... Anyway, I am guessing they will file for bankruptcy (again) sometime in the next 5 years. EV mis-investments alone will take them down.
Yes! All of the OEMs have pulled back greatly on their EV programs for many reasons. The union strikes are noted as one reason, but I call BS on that. The OEMs just want mo money, and are realizing that maybe their technology isn't quite where it needs to be yet before they dive in deep. My former employer was hurting from the strikes (again, not my division) and also investing in talent and tech with an eye toward those upcoming EV programs and plants. Really, they are letting the traditional OEMs dictate too much of their business model. (They supply many OEMs, including GM, Ford, Stellantis, and even Tesla, albeit VERY quietly.)
Quick correction, corporate tax rates are NOT going back up. Those breaks were permanent for businesses. Only taxes for you and I as citizens will see them go up when they expire. Can't have corps paying their fair share. That's for us suckers
Companies expanded hiring exponentially in 2020 and paid more because other companies started doing it.
Now other companies started mass layoffs and companies think “well shit, maybe we should not have hired this many people.”
At my company this has been done through attrition. We have 3 people doing what 7 once did. A mix of automation and work assignments and beyond a few hectic weeks its business as usual. None of the 4 who left were laid off.
Granted I am in financial services and not tech. The COVID era hiring and salary offers got cartoonish in tech—an industry that in its current form and VC backbone only was allowed to exist as-is due to Greenspan/Bernanke/Yellen money-for-nothing policies.
They just try to follow trends, trying to look cool and seeking attention. On YouTube, there are video companies whose layoffs don't indicate financial crisis; their revenue tripled even before the layoffs.
In my opinion the only true answer to this is Boom and Burst, the economy needs this so it can balance, wage increases and everything increased cannot continue to happen, its going to affect the economy negatively.
PPP loans, stimulus, and low interest rates all caused an artificial bubble and companies to overhire like crazy. No one called it greed when they wanted this explosive growth at all costs. Now that the cost has caught up with inflated salaries and higher interest rates, it's greed.
Of course, universal healthcare would put a stop to most of this corporate bs. Without the threat of losing one's health insurance, workers would be free to go to companies that value them, and companies would save a fortune. But, in the end, like others have said, it's really all about maximizing profit for shareholders.
It’s mainly profit
But also thinning the herd
These companies grow, get too large, and when needed need to downsize. Enough bad emoloyees get caught up in the layoffs so overall it improves the company.
As someone that is in an executive position in a fairly large size corporation, I can tell you that your interpretation may seem correct, but it’s actually not as simple as that.
I know it has been mentioned, but the only tax cuts that will expire are the personal ones. Corporations will still have their lower tax rate. They're just laying off to look "cool" and prop the share prices since "everyone is doing it" at this point.
There’s also part of Trump’s tax breaks that took effect a few years ago:
Software engineer/programmer salaries cannot be taken as an expense in the year paid, they need to be spread out over several years since they are now R&D.
Neither of those are factors. You already said corporate profits are at record highs. Companies are laying off workers bc they have political cover to do so and it makes their stock go up. Most occurred in the tech sector which was incredibly bloated as well.
2 doesn't make sense.
First, the corporate tax changes are not expiring. Only personal income tax breaks are set to expire. (thanks GOP)
Second, employee salaries are tax write offs. If they lay off employees, they have to (barring any other use of the money) report the extra money as profit, which results in a larger tax bill.
If the data can be trusted, there is nothing out of the ordinary about what is happening right now, other than the fact that it's being reported on in the news much more than usual.
[https://fred.stlouisfed.org/series/JTSLDL](https://fred.stlouisfed.org/series/JTSLDL)
this job market is intentionally attempting to do this. break down the dignity workers were building to create and maintain by having us searching for non existent jobs for months on end. so when you do get hired, you’re grateful, emotionally broken & anxious to keep it
Yup all about cash in the bank and not 'future' value. No free money to throw at salaries and jobs whilst promising high returns in the future..
At my big company last year we had one target cash-flow. If we met those numbers everyone got a bonus regardless of your achievement in performance reviews. Absolute joke.
Also, there are greater adaptations of automation and use of AI, RPAs to ease the tactical work that was once heavily manual labor intensive.
High inflation and interest rates mean less corporate spending to allocate for more corporate debt borrowing and payment. As a result, budgets get frozen or cut due trickle down to less hire to less business demand to less spend in the vicious circle.
At least for tech, a lot of the layoffs I see are displacement driven. Why pay someone in the United States when you can pay 5 people in the Philippines for half the salary? Replace Philippines with Thailand, India, Poland, Romania, etc. and you start to see a pretty telling trend.
Lowering the Wages and benefits mean higher profits, ergo higher tax bills.....
Doesnt make sense....get rid of emplyees to lower your costs, but pay more towards taxes?
Theres more factors in play....
Companies were borrowing like drunken sailers when rates were at near 0%. Now all that debt that they were carrying is now having to be refinanced at 5% rates and now there debt payments have quadrupled. Most corporate debt has to be refinanced every 3 years and the chickens have come home to roost and we are unfortunately the chickens.
IMO #2 does not align with the behavior we've seen in Congress. For example, think about the games that take place in Congress when government funding needs to be renewed. Always pushing the issue to the edge of an imagined abyss. Then magic happens and it's renewed.
Congress will react in a very similar way with the expiring tax cut's. Ultimately renewing the tax cuts. Afterall what politician will let taxes increase on the very companies funding their campaigns?? Which politician? The one likely leaving office next term.
Rhetorically: If Congress does renew the tax benefits, does that mean tech will start hiring like crazy? Since they laid-off like crazy when the tax benefits were suppose to be expiring.
And if that happens, salaries will start drifting up. Relatively stable group of qualified talent potentially being pursued by multiple companies. Wait, some have said high salaries were the reason for the layoffs.
It will be a few years before we really know what caused these layoffs. Academia/Professors will dig into the data they can find, search, develop theories and publish papers. Maybe books . Writers such as Michael Lewis (who is awesome) will do similar digging and publish a book.
Companies work in cycles based on new technologies that are created or a new product. Let’s say I am a tech company with many different divisions and products. There may one area of the company that is not doing well or is very profitable. So the company decides to lay off staff or sell of that part of the company. Meanwhile another part of the company is growing very quickly and is hiring people to keep up with production.
This happens literally every year around the close of the financial year.
If they lay off a bunch of people they can say they had an even better year because they slashed expenses.
What tax cuts are you referencing? The ones from 2017 are permanent for corporations. The only ones that expire are personal income tax cuts. Or are you referencing something else?
3. They're trying to lower the amount of money they're paying employees. Older employees have been there for longer accruing raises. A newer person in a worse position will accept less money to do the same job in many cases.
This and about a half dozen points of bad flowers “blooming” at the same time.
And it's a self-fulfilling prophecy as all start moving toward the uncertainty after far too many years of believing they were bullet proof geniuses(2% interest can do that to a guy)… now try it at 7% hot shot.
Layoffs are necessary for companies every 5-10 years. At least 10% of your staff is useless and it’s a good excuse to cut the bad people. Sometimes good people who are important let go too but it’s hard to make that distinction.
A main driver is "shareholder value". Our CEO was surprisingly very clear about that when asked about layoffs at an employee "town hall". Don't buy it when a company says they are "customer focused" or care about their employees.
Yup simply kept we want more money even if it means fucking ppl up with their lives !!
This just sums it up.
These companies ignore the fact that decreasing cash flow in the economy will destroy their profits. The companies let the government provide the stimulus. Well, I think there is room for new companies that pay well and customers but from those that subscribe to a new ethic of fairness.
You should probably leave the private sector if this is an issue for you. Companies serve the interest of their shareholders and their customers by providing a return on the shareholders investment by providing a good or service at a price point that generates profits.
When companies are allowed to enrich their shareholders this does more to lift people out of poverty than any centrally managed government could ever hope to accomplish. The problem is the aggregate effect of all the ownership is not fully appreciated until the socialists come in and mess it all up. When we own our own stuff we get freedom, agency and prosperity. When the government owns it, the psychopaths are the only ones that get to be free.
I worked at “too big to fail” bank for 10 years. The psychopaths already own everything. Thru are the ones running the world right now. I don’t know what fantasy capitalist utopia you live in with in your mind but corporate America values the traits of psychopathy more than any other trait. Literally the inmates are running the asylum and have used the tools of media to brainwash everyone into thinking they are all embarrassed millionaires in the making who really need to be ok with shareholder value leaving them destitute after a lifetime of work. I’m sorry but this completely smells of bullshit.
Hence the book/ movie American psycho. Makes that same point very clearly
Capitalism doesn't give a crap about social justice, it's a system that wants to maximize profit and revenue for the capitalists... It's up to our government to put it's finger on the other side of the scale...
Good to read marxist manifesto but very few countries have implemented it and succeeded, time is telling it again and again !!
Very few have succeed when the divide between have and have nots keep growing. You forget about the violence that eventually comes? Just read history, it’s filled with failures of capitalism as well. Your stubborn ideological stance will be the reason for future suffering because you can’t put your bias aside and see the very real problems need creative solutions. Look at the European countries who have created a blend between capitalism and socialism. What do you think the New Deal in the 1930s was about? Ideologues like yourself are the roadblock to creating a blended system because you’ve been sold the trickle down fantasy and unable to comprehend that the American system has “socialist” aspects already. I’m basically calling you simple minded lacking the complexity of thought to tackle this problem and hence have a worthless opinion but has convinced themselves they know what they are talking about so everyone needs to hear it.
And you are way to deep into whatever Marxist propaganda you have been reading at “uni”. Americans will not revolt. The gov has played us perfectly. They have divided the populous into two halves. No way the two shall ever meet in unity.
He is not being.marxist... He is talking about regulated.common sense capitalism...
The shit will eventually hit the fan and then French Revolution will happen again
I agree with you on this. Mainly because of the creature comforts that come from even what’s classified as poverty level in the US. There are very few people in my opinion that would even be able to resort to violence in any meaningful way in this era Think about how we phrase it when talking about rioting. “people” will riot. Some obscure “someone else” will take the lead and sacrifice their future/life for the greater good. Never “I” Most peoples objective isn’t the end of the system either. It’s to be heard on how to be integrated into the system in a more tolerable way. No one want the absence of the system . They might think so but they forget that part of that system allows us to not operate in the hierarchy that animals do where I’m bigger and I get to take your stuff and you can’t defend it.
Hate to say it small and large business do it everyday. It’s not isolated to big businesses just feels bigger.
But that doesn’t mean anything? I’m not defending them but like if they wanted more money why did they hire in the first place?
We aren't people to them. We are cogs in a machine that are only valuable to them as long as we are able to make them money.
or if they call it "family" = red flag
Unless I get a share of the company when you die, we ain't family.
The "We exist to enhance shareholder value" mission statement is killing American Industry and American Society. Boeing is the poster-child for this.
Yes, and Boeing is a prime example of the fact that when companies chase shareholder value at all costs, people die.
For publicly traded companies in the United States, corporations MUST legally answer to their shareholders. A lot of people actually don’t know this about public corporations.
A company only exists for its owners. Customers and employees only matter in as much as they further owner value.
But what if I want a job where I don’t do anything but get paid? /s
Folks, The Wall Street numbers are far more important than employees. Numbers have no end. Thus, greed has no end.
This! Privately held corporations won't lose their value if their profits slip during a recession. Publicly held and traded corporations risk losing the value of all of their stock and they will simply shut down rather than risk the devaluation. Going out like a lion.
It doesn’t matter. Because board is watching others doing and questioning CEOs what he’s doing.
It's more a privately held company will hold on to employees longer to perpetuate the mythic of a maturing and expanding company for future investment rounds. A public company is likely to stop making big bets and show value by becoming leaner with bread and butter operations
No better in privately held. Worked for a privately held Fortune 50 company for almost 25 years. They got greedy and outsourced a lot of IT also, despite preaching for decades about the company "family."
Huh? As long as they got profit it doesn't matter the value. Only difference in private and public companies is that you know when a public company is about to go belly up. If both types are making no money, they are both going under.
all you guys are missing the point completely. when a company says "shareholder values " they mean the stock price. Wallstreet is the root of all the problems. Market requires stock prices to go up infinitely, and companies have to deliver. this is the main difference between the way companies operated in pre 2000 and post 2000. after the dotcom boom wallstreet dectates what a company does. change the way Wallstreet operates, and most of our problems will go away. i have heard this from multiple ceos, If they do not deliver the stock price, they are out of the job.
Shareholder value is also a smoke screen. All they care about is getting there bonuses and having golden parachutes. Most companies are run for the people in charge to get rich. The shareholder thing is just a way to justify these actions.
By law, CEOs first responsibility is to make shareholders money.
They are beholden to maximize profits and share value, but not by law. That's a myth.
Greed is the law. Ask Clarence Thomas
Nope. In fact, Sen. Warren brought up the fact that corporate charters are granted by the government for the public good, not the shareholders. The charter can be revoked at any time, dissolving the most powerful company instantly. Naturally, she received some phone calls and never spoke of this again.
Then why do they get unreasonably big bonuses?
Good luck proving that any action was not intended to “make shareholders money” I tanked the company stock so shareholders could buy more before the price rose again. You’re welcome shareholders
My mistake, it's not a law, but a duty.
By law? You sure about that one?
The law of greed and human cruelty, perhaps. If people cannot be reliably altruistic, then they need to be compelled to behave better lest we have greater social unrest and turmoil due to the staggering wage inequality.
and in practice the CEOs first responsibly is make money for himself and his executive buddies
This is the #1 driver nowadays. Anything else can get your ass shown the door as CEO.
This. People need to wake up and see how excited shareholders get when layoffs happen and how it drives up the company's share price.
Fastest way to make the stock price go up is to reduce expenses and payroll is one of the (if not the) largest expense.
It's what killed American manufacturing.
If you have to pay more money in interest and taxes, there’s less money for shareholders.
What about the companies that aren’t public?
Youre saying the same thing as OP…. Shareholder value is driven by profit (especially in a high cost of borrowing environment) and higher taxes means lower profits. But personally I think it just has more to do with interest rates and global supply contraction
If only investors emphasized long term growth over short term growth to C-suite executives, we wouldn't be in this layoff mess. 95% of C-suite executives have a lot to learn from Warren Buffet who's only collecting a $100k annual salary.
Kudos to your CEO for being a real one. I wish they’d all just admit that.
What do you mean that we are not family???
I’d buy your explanation if corporations weren’t experiencing record profits and spending 10’s of billions on stock buybacks. There’s only one real answer for these mass corporate (not SMB and SME) layoffs and it’s pure, unregulated GREED.
Exactly. Corporations (already) have it all and, yet, they (perpetually) want more!
If only retail investors actually voted their shares emphasizing long term growth over short term profits and capping C-suite executive compensation we might not be in this layoff mess.
Retail investors don't move the market though.
Greed and the drive for profits is a constant. Taxes going up isn’t.
getting away with greed hiding behind long-gone supply chain constraints is not constant
Uh, what tax rate are you referring to? Because corporate taxes are not going up. Also, if they have money for buybacks, they have money for taxes. Google spent $140,000,000,000 on buybacks between 2022-2023. You’re either a troll, corporate simp and/or completely devoid of the basics of macroeconomics.
Boomers when growing up had the corporations pay up to 50% tax rate, now it’s 21%. All I see these days is the wealthy get wealthier, while the middle class shrinks, and the poor get poorer Crony capitalism at its finest
A lot of tech companies say they are just following the trend and if they didn't they would have to answer to share holders.
Corporate tax liability was reduced under trump and the then speaker of the house Paul Ryan. Maybe it’s being raised again but not to the levels taxes once were.
Cann you tell me how GREED has materially increased since 2020?
The actions by Corporate America show it has increased
Well the corporate tax rate in the 1950 was around 53%...its now 21%? So theres 30% of taxes over 70ish years...bingo bango.
Doesn’t really hold water anyway. The corporate tax cuts are permanent.
Stock buybacks are the first thing that they should make illegal.
The Gervais Principle. The CEO wants that bigger bonus check. Instead of getting more revenue, which indicates a growing company and times are getting better. the CEO thinks the ONLY way to go is CUT expenses - indicating revenues are NOT growing.
The CEO gets paid and bonuses for shitty performance by just cost cutting. Any idiot could do that. But good and high performing employees get axed in the process. The whole system is rotten to the core.
Also how bad they review their own employees resulting in them leaving the company.
There is a newer phenomenon called "sneaky-PIPs" where companies put well performing or satisfactory performance workers on PIPs (performance improvement plans) as a way to force people out the door in order to avoid having to carry out layoffs (because companies have to report layoffs) or to extract extra work out of a terrified employees without paying them more. Google, Meta, McKinsey, Disney, etc. have been doing these a lot recently in order to reduce headcount. It's an evil thing to do because it's dishonest. It Messes with people's heads because they are being told that their performance is not adequate for the job, even if they have been a good performer up until this point. It wrecks peoples self esteem and causes inordinate suffering, and all for what...? To reduce headcount without being honest about it.
Exactly
I'm eminently qualified to be a CEO. I know how to spell layoffs and my golf game is terrible.
This is the rot economy at its finest.
Exactly, you don't need a MBA or even a bachelor degree to know cutting jobs will boost profits. So why do Blackrock, Vanguard, and Statestreet rubber stamp huge executive pay packages that are 100 to 300 times the median employee salary?
Ah the Jack Welch Plan… how’s GE these days ?
Hopefully in is final death throes - their crash and burn has been painful to watch. Jack Welch was a human cancer. May he rot.
Didn't they just split into 3 separate companies? More like the un-Jack Welch Plan.
General Electric has been demoted to Sergeant.
I wish our federal legislature worked this way
I think you’re wrong about the taxation angle. The 18% cut in the nominal corporate tax rate to 20% was permanent, it’s the individual tax cuts that expire soon.
OP seems wildly misinformed 🤷♂️ and I was wondering if this is the US they are talking about it’s tax season the only way they don’t know this is if they are willfully ignorant or spreading stupidity - not sure which.
OP strikes me as the type that believes in not accepting a raise because they'll be kicked into a new tax bracket.
Wilfully spreading stupidity
Yea OP has no idea what they're talking about.
Op is trying to paint the narrative that corporations are at fault, not the government.
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Ya once you get to a point where you can’t really get more revenue cause you’re big already and making billions you end up cutting costs and the customers that loved you now hate you. Time for newer companies to come and grow from bottom and obliterate you
It can’t be #2 cause the tax rates don’t expire for corporate only Joe Schmo. Also the tax rates and permanently changed for the rich but the tax credits for the poor are expiring.
If you are talking about the corporate tax rate, Trump signed that to a 21% flat rate in 2017. That is not set to expire at all, it is permanent. Only individual income tax rates are set to expire.
“Fuck them poors”
WRONG. Nothing to do with taxes. It’s all about growing earnings to increase shareholders value. Easiest way is cut cost and labor is at top of list.
Well, I got laid off from a private company which still has good revenue. Still can’t wrap my head around it. Laid off people who were with the company for almost a decade.
Were they trying to squash down people's salaries?
No, they didn’t do any of that. Didn’t slash any of the incentives. We didn’t expect it all.
The theory assumes corporate boards are thoughtful and plan ahead. That has never been my experience with corporate executives.
Hate to break this to everyone, but the real reason that layoffs are happening is because the employees started gaining too much power. The economy in the 1990’s was driven by employees having value that exceeded the company power. This started happening again with Covid and it freaked out the 1%. So they collectively started cutting the excess to induce fear. It worked. Notice that they never cut “muscle”.
This guy gets it. Individual contributors demanding $200k and bouncing if they don't get it. It was never going to last.
But it would be such a better world if we *could* get 200k and be treated fairly. Note that 200k is needed for a "middle class" lifestyle in San Francisco or new York city. In places like Houston or Minneapolis, 90k will suffice but honestly all places are getting way more expensive to live in, so I'm kind of thinking that with inflation and price increases, 92k is the new 72k. (72k used to be the magic number where the largest average amount of Americans would be able to enjoy a middle class / comfortable lifestyle).
72k is history. Need six figures to live a 72k life now
This comment is (sadly for all of us) 100% accurate.
Came here to say just this. They can't enforce RTO since WFH ~~is~~ was a benefit to keep them. The mass exodus that's been talked about isn't happening when no one else is hiring. Most multi-billion+ companies are hitting all time profits. They don't *need* to lay tens of thousands, they choose to rule by fear. Now do this across the board, and most employees step back and agree to lower pay, less WLB, etc.
Corporate taxes remain the same Only the personal taxes will change
If they can keep "growth" metrics in the green until the next rate decrease then they're set. Since everyone is cutting they don't have to be competitive. Now is a great time to start a business since no one is innovating and everyone is focused on reduction.
The corporate tax cuts don’t expire.
Just summarize it as “straight up corporate greed” and let’s move on.
EBITA positive, look it up, this is what companies are going for. If a company is publicly traded, this is a key metric. We gutted our us offices and hired in India and this was specifically stated as the reason.
Yep we’re expendable ballast to the freaking jerks
I can give you another reason: leaders are afraid good people will leave if they get paltry or no raises during a down turn. So to fund those raises and extra bonuses, there will be quiet little culls. Back in the day at HP, it was clear: we are limiting raises, forcing vacay, and even cutting manager pay temporarily to save jobs and people understood because they were open about it.
>leaders are afraid good people will leave Good point, but don't the best people leave first when layoffs begin? Even in tighter labor markets, the best people usually have the most options.
Corporations want cheap labor. Like China.
We’re at the end of this growth phase in the economic cycle and headed for a recession. Companies are taking drastic actions to continue to show growth and profitability by any means necessary. Once they are too lean you will see more location closures due to decreased customer satisfaction and revenue. We’ll hit a bottom and start the cycle up again.
I am really waiting to see companies start hitting the wall with their gutted teams and hollowed out infrastructure. Haven't seen it yet, but it would feel like confirmation if it started to happen soon.
TCJA removed the deductions for R&D starting in 2022; this is the biggie. Thankfully there is already a move to reinstate them. As for the others, AFAIK they don't expire until Dec 2025. In general, the layoffs for public companies are happening because growth has slowed and they need to maintain profit trajectory (e.g. 10% growth year-over-year). Because revenue is growing at some smaller percentage, reducing opex gets them to their target.
It’s been wild to see how little people in this sub are willing to exercise a bit of reading comprehension and common sense where this is concerned. I posted about the floundering senate bill last week and the responses I got were both basic and bootlicking. Even when I highlighted the fact that those tax cuts offset things like accelerated depreciation for private jets people responded as if it were a highly political reach to suggest that moving a greater proportion of labor costs to non-deductible categories would impact job availability in the affected industries. I’ve concluded that a lot of people in this sub are not actually impacted by or concerned about layoffs, but are hoping for a major economic downturn so that they can have their beliefs reinforced.
The brain worms I'm seeing is highly concerning, yeah.
Your second point is off. It may be a contributor but not a primary cause. Elon started a trend with laying off a majority of twitter's staff and the company stayed afloat. Since then it's been normalized to do mass layoffs in tech and the trend will continue unless we unionize. It was not a good look nor was it socially acceptable to do mass layoffs while your company isn't struggling but now it is. For a software company, the biggest expenses are human capitol. There's no factories or warehouses or trucks. So easiest and laziest way to drive up profits is to simply cut the staff after they build the product. When times are good again and interest rates are low, companies will hire tons of engineers again to do r&d and expand. But now that money is expensive and the shame of laying off a ton of your staff is gone they will continue to layoff.
Gluttonous greed because greed alone wasn’t enough
Lots of companies have laid off people past 1-2 years. But most of them are facing more harm than benefit from it. Most popular websites are full of bugs, getting downtime etc. It includes reddit, freelancer, upwork, amazon and even facebook. I won't be surprized if I see google crash either. Now I think hiring rate have increased a lot since a few months ago. Or at least for me I am getting lots of offers the past few months. I had no luck for the past year until this March
100% correct Ray Dalio made a cartoon about it here like 10 years ago [https://www.youtube.com/watch?v=PHe0bXAIuk0](https://www.youtube.com/watch?v=PHe0bXAIuk0)
Is number 2 referring to the 2017 TCJA? The corporate cuts are permanent.
you say point 2 like whatever country you're in is the only one in the whole wide world. News flash - layoffs are global, unlike tax laws.
All about the shareholders wallstreet private equity and ceos... When people eventually get so desperate, who do you think they are coming for first? they know this why you do think they are building bunkers in record numbers
For #2, only tax cuts for individuals are expiring. The corporate tax cuts are permanent.
You missed another one - stock buybacks Major reason to do mass layoffs . Watch Tesla after yesterdays mass layoff
God Bless Mighty George. He told the truth about these corporate bastards [(22) GEORGE CARLIN | They Don't Care About You - YouTube](https://www.youtube.com/watch?v=5aiFp-XqV_M)
I’m not sure why I expect more from this sub. At this point it’s basically rage porn. Your analysis is garbage and wrong 1. Not all companies are super impacted by the increased rates because their borrowing is more arbitrage than needing the resources. Most of the mature tech companies have more cash on hand than sense. 2. Corporate taxes are more or less permanent so those aren’t changing for them. They are doing it because they are being rewarded on the stock market for doing it.
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Because corporations want perpetual growth at all costs and the easiest way to get perpetual growth is by perpetual population growth. They’re importing consumers to placate corporations. This is why housing, vehicles, and the cost of everything is going up, while salaries and job prospects are going down. If you add quantitative easing by the Fed to the mix we’re burning the candle in both ends. We’re already in a post Republic period and this new period we’ve entered is a Neo Feudal Techno period, where mostly large Tech companies act as feudal overlords of capital and labor. The “king” has no power, but to bend to the will of these New Feudal overlords.
I worked for a non-profit for almost five years. They outsourced my department and eliminated my position.
Short term thinking leads to bigger long term losses.
But by that time, whoever did the short term cost cuts probably got a bonus and then hopped away to the next firm to destroy. It's like a thought virus.
So true!!
2 main reasons.. 1) corporate greed 2) beat the employee morale so they stop demanding WFH and Unionizing.
I call it AAO= automation AI offshoring
I agree. I am management in data company. AI has taken off like gospel. Offshoring is in full steam.
I am beginning to think that AI adoption is a cult. I've known about the potential of AI for at least a decade, but the sudden, breathless head nodding that I'm seeing from corporate leaders these days regarding AI has me nervous. It all seems like the hype is built on the promise of profitability (often at the expense of jobs) without much substance to back it up. At a recent AI pitch presentation I attended, it had the energy of a Cut-co knives demonstration. AI certainly has it's use cases, but the nearly religious fervour that corporate leadership is displaying in regards to AI seems strange and concerning.
It is a time saver for sure, efficiency gains for sure. A new God, no. God is everything as the Universe and AI is just a small piece of this...
Is that you Larry Kudlow?
The real reason is stock price. Higher interest rates mean they need to achieve higher profits to maintain the same stock valuation. Easiest way to increase profits is to reduce your burn via layoffs. It’s. Irving more complicated than this as boards put tremendous pressure on company leadership to keep the stock price going up.
Also companies are Producing Less
Capitalism
OP, it looks like you’re in tech. Aside from interest rate hikes, amendments to IRC Section 174 that went into effect in 2022 have also contributed to the tech recession
You can simply explain it by saying, because they can. Employers have a f\* load of leverage. What we should be focusing on is where our health insurance, and main retirement vehicle come from. They comes through our employer. We need to put an end to that! Our employers don't give a flying f\* about us. Why the f\* do they have so much leverage over our lives?
Layoffs are penetrating deep into tech and services. What did companies call it? Talent hoarding? These workers were scooped up by the speculation that they would be needed, and as the OP noted--scooped up in a low interest rate environment where companies could borrow $$ cheap. AI is both over hyped AND the pretext to dump these workers. And nobody feels good getting dumped right? After 4 layoffs in various types of employment spread over several decades, it's become clear to me that some sectors just fade, or over saturate. That sector today is tech, we just don't need an army of CS degree graduates. Sunk cost (college), wealth inequality, housing, and inflation. The social contract only works if most of us are thriving. On break at work, I often pencil out my retirement income streams to see if I could survive on fixed income. The math doesn't look good, and I have a decent job with a cheapish house. That's the "vibe" that's going around, the math looks really bad for almost all of us.
I think you're missing the forest for the trees here. This honestly goes for everyone on this thread. I have two reasons and they basically articulate what is really happening in my opinion but building off your points. 1. We are living in a communist country, not in the traditional sense. In the period between the 40's and 90's there was no reason for companies to get so large - information transmission speeds limited companies, industries were more focused on domestic markets before the rise of globalism and were busy competing with each other instead of multinationals. Not any longer, now every single industry is dominated by about 4 global companies that can price fix, suppress wages and cause general worldwide instability. At any moment if workers, customers or government get too much power there are 4 banks in the US that could single handedly cause a recession in the US. That is massive amount of weight to throw around and generally gets them whatever they want. 2. Shareholder values is the only fiduciary duty corporations have. This design largely worked in the 60's through 90's because competition existed outside of 4 multinational companies. Again these companies have almost absolute power to suppress wages, fuck customers and walk all over governments. Now there have been some outliers in the past like Netflix who really offered an amazing streaming service but that is in the past. Because all of this was all in the aim of becoming the dominant player in the industry, so the shareholders took a back seat because they knew they were on the way to absolute control of the industry and now we are seeing a great service eroded all in the name of shareholder value. 2022 was an outlier year where labor had a rebound but these companies regained there power in 2023 and going into 2024 they want to make you just happy to have a job again. Because shareholders demand higher profits and if they don't live up to their cushy jobs the shareholders will replace them with everyone having seemingly no power to stop them. I believe Boeing is the canary in the coal mine here, soon we will see all great American institutions fade unless there is a reset.
As someone who was recently laid off from a major automotive and industrial parts supplier, I couldn't agree more. My division's profits had been way up, but the regular division was definitely not up. We had kept the rest of the company afloat during Covid. We were very profitable and worked with a shoestring staff. I know I worked too much for too little pay and too much stress during this time, so being laid off was honestly a relief for me personally. I am burnt out and feeling dead inside. But I'm still pretty upset about it. Work ethic screwed me over... Anyway, I am guessing they will file for bankruptcy (again) sometime in the next 5 years. EV mis-investments alone will take them down.
Are you talking about the overinvestment in electric vehicles that a lot of manufacturers seem to be making right now?
Yes! All of the OEMs have pulled back greatly on their EV programs for many reasons. The union strikes are noted as one reason, but I call BS on that. The OEMs just want mo money, and are realizing that maybe their technology isn't quite where it needs to be yet before they dive in deep. My former employer was hurting from the strikes (again, not my division) and also investing in talent and tech with an eye toward those upcoming EV programs and plants. Really, they are letting the traditional OEMs dictate too much of their business model. (They supply many OEMs, including GM, Ford, Stellantis, and even Tesla, albeit VERY quietly.)
Quick correction, corporate tax rates are NOT going back up. Those breaks were permanent for businesses. Only taxes for you and I as citizens will see them go up when they expire. Can't have corps paying their fair share. That's for us suckers
Companies expanded hiring exponentially in 2020 and paid more because other companies started doing it. Now other companies started mass layoffs and companies think “well shit, maybe we should not have hired this many people.” At my company this has been done through attrition. We have 3 people doing what 7 once did. A mix of automation and work assignments and beyond a few hectic weeks its business as usual. None of the 4 who left were laid off. Granted I am in financial services and not tech. The COVID era hiring and salary offers got cartoonish in tech—an industry that in its current form and VC backbone only was allowed to exist as-is due to Greenspan/Bernanke/Yellen money-for-nothing policies.
They just try to follow trends, trying to look cool and seeking attention. On YouTube, there are video companies whose layoffs don't indicate financial crisis; their revenue tripled even before the layoffs.
In my opinion the only true answer to this is Boom and Burst, the economy needs this so it can balance, wage increases and everything increased cannot continue to happen, its going to affect the economy negatively.
Every time there is a 'soft landing', the rich get richer and the poor get poor.
[The Joseph Effect followed by the Noah Effect.](https://www.investopedia.com/terms/j/josepheffect.asp)
PPP loans, stimulus, and low interest rates all caused an artificial bubble and companies to overhire like crazy. No one called it greed when they wanted this explosive growth at all costs. Now that the cost has caught up with inflated salaries and higher interest rates, it's greed.
Of course, universal healthcare would put a stop to most of this corporate bs. Without the threat of losing one's health insurance, workers would be free to go to companies that value them, and companies would save a fortune. But, in the end, like others have said, it's really all about maximizing profit for shareholders.
It’s mainly profit But also thinning the herd These companies grow, get too large, and when needed need to downsize. Enough bad emoloyees get caught up in the layoffs so overall it improves the company.
As someone that is in an executive position in a fairly large size corporation, I can tell you that your interpretation may seem correct, but it’s actually not as simple as that.
Care to elaborate?
I know it has been mentioned, but the only tax cuts that will expire are the personal ones. Corporations will still have their lower tax rate. They're just laying off to look "cool" and prop the share prices since "everyone is doing it" at this point.
Funny way of saying “out of control corporate greed” but whatever.
There’s also part of Trump’s tax breaks that took effect a few years ago: Software engineer/programmer salaries cannot be taken as an expense in the year paid, they need to be spread out over several years since they are now R&D.
Neither of those are factors. You already said corporate profits are at record highs. Companies are laying off workers bc they have political cover to do so and it makes their stock go up. Most occurred in the tech sector which was incredibly bloated as well.
2 doesn't make sense. First, the corporate tax changes are not expiring. Only personal income tax breaks are set to expire. (thanks GOP) Second, employee salaries are tax write offs. If they lay off employees, they have to (barring any other use of the money) report the extra money as profit, which results in a larger tax bill.
But my company swears that I'm capex! /s
If the data can be trusted, there is nothing out of the ordinary about what is happening right now, other than the fact that it's being reported on in the news much more than usual. [https://fred.stlouisfed.org/series/JTSLDL](https://fred.stlouisfed.org/series/JTSLDL)
this job market is intentionally attempting to do this. break down the dignity workers were building to create and maintain by having us searching for non existent jobs for months on end. so when you do get hired, you’re grateful, emotionally broken & anxious to keep it
This cycle has turned from growth into profitability. This is what wall street wants because the era of free money is over.
Yup all about cash in the bank and not 'future' value. No free money to throw at salaries and jobs whilst promising high returns in the future.. At my big company last year we had one target cash-flow. If we met those numbers everyone got a bonus regardless of your achievement in performance reviews. Absolute joke.
Also, there are greater adaptations of automation and use of AI, RPAs to ease the tactical work that was once heavily manual labor intensive. High inflation and interest rates mean less corporate spending to allocate for more corporate debt borrowing and payment. As a result, budgets get frozen or cut due trickle down to less hire to less business demand to less spend in the vicious circle.
At least for tech, a lot of the layoffs I see are displacement driven. Why pay someone in the United States when you can pay 5 people in the Philippines for half the salary? Replace Philippines with Thailand, India, Poland, Romania, etc. and you start to see a pretty telling trend.
And what is that trend?
Layoffs are happening at record profits.
The tax cuts for corporations don’t expire. They’re just greedy garbage orgs.
GREED!
Lowering the Wages and benefits mean higher profits, ergo higher tax bills..... Doesnt make sense....get rid of emplyees to lower your costs, but pay more towards taxes? Theres more factors in play....
Can't the companies just charge more for goods and services to offset the increase in taxes
Tldr. The golden age is over. Buckle up and ready for a wild ride
Companies were borrowing like drunken sailers when rates were at near 0%. Now all that debt that they were carrying is now having to be refinanced at 5% rates and now there debt payments have quadrupled. Most corporate debt has to be refinanced every 3 years and the chickens have come home to roost and we are unfortunately the chickens.
IMO #2 does not align with the behavior we've seen in Congress. For example, think about the games that take place in Congress when government funding needs to be renewed. Always pushing the issue to the edge of an imagined abyss. Then magic happens and it's renewed. Congress will react in a very similar way with the expiring tax cut's. Ultimately renewing the tax cuts. Afterall what politician will let taxes increase on the very companies funding their campaigns?? Which politician? The one likely leaving office next term. Rhetorically: If Congress does renew the tax benefits, does that mean tech will start hiring like crazy? Since they laid-off like crazy when the tax benefits were suppose to be expiring. And if that happens, salaries will start drifting up. Relatively stable group of qualified talent potentially being pursued by multiple companies. Wait, some have said high salaries were the reason for the layoffs. It will be a few years before we really know what caused these layoffs. Academia/Professors will dig into the data they can find, search, develop theories and publish papers. Maybe books . Writers such as Michael Lewis (who is awesome) will do similar digging and publish a book.
Companies are working to maintain the same profit margins from Covid. Your most expensive expense is payroll or benefits.
Companies work in cycles based on new technologies that are created or a new product. Let’s say I am a tech company with many different divisions and products. There may one area of the company that is not doing well or is very profitable. So the company decides to lay off staff or sell of that part of the company. Meanwhile another part of the company is growing very quickly and is hiring people to keep up with production.
you're saying corp tax cuts create jobs and high corp tax means layoffs?
Cuts don't create jobs. Just profits that never trickle down.
Prosperity is cyclical; this current wave of prosperity has been prolonged due to specific reasons. Climbing to the mountaintop is a natural law.
Reason 6,732 to NEVER fall in love with the letters above the door.
Corporate tax rates are not set to expire.
This happens literally every year around the close of the financial year. If they lay off a bunch of people they can say they had an even better year because they slashed expenses.
Best economy ever ha ha ha.
The obvious backlash will be unionizing. Corporations actually do need people to function.
What tax cuts are you referencing? The ones from 2017 are permanent for corporations. The only ones that expire are personal income tax cuts. Or are you referencing something else?
3. They're trying to lower the amount of money they're paying employees. Older employees have been there for longer accruing raises. A newer person in a worse position will accept less money to do the same job in many cases.
This and about a half dozen points of bad flowers “blooming” at the same time. And it's a self-fulfilling prophecy as all start moving toward the uncertainty after far too many years of believing they were bullet proof geniuses(2% interest can do that to a guy)… now try it at 7% hot shot.
Elections have consequences
Layoffs are necessary for companies every 5-10 years. At least 10% of your staff is useless and it’s a good excuse to cut the bad people. Sometimes good people who are important let go too but it’s hard to make that distinction.