Danger: Mass layoffs ahead.
For any political party in a campaign season, the move is painfully obvious: Emphasize the positives — low unemployment numbers; avoid the negatives — runaway inflation.
The campaign strategy worked (sort of); the American electorate decided to give Democrats in Washington two more years to improve the economy (sort of).
But now that the midterm election is over (sort of), the reality is settling in: The United States is still beset by immediate, serious challenges. Chief among them is inflation.
Consumers are confronting higher fuel prices heading into winter; higher prices for everything they buy, every day. Higher rents are here to stay, at least for the foreseeable future. Higher prices at the pump might be the new normal as well.
Nervous, already-strapped consumers are relying more and more heavily on credit to survive this current downturn, on top of the COVID-19 2020–2022 downturn. Credit is about to get a lot more expensive.
The situation is untenable.
While today’s relatively low unemployment numbers are nice, unemployment is a lagging indicator. Most voters understand how an economic downturn works, whatever Beltway insiders want to call it.
A recession by any other name is still a recession.
First, financially-squeezed consumers stop spending. Next, companies lose money. Then, companies begin downsizing.
“Amazon Is Said to Plan to Lay Off Thousands of Employees,” reported Karen Weise for the New York Times on November 14, citing the ubiquitous, ever-mysterious, “people with knowledge of the matter.”
The news is grim, any way you slice it.
“The job cuts of approximately 10,000, which would start as soon as this week, would focus on the company’s devices organization, retail division and human resources,” Weise said bleakly.
Additional “people familiar with the matter,” repeated the rumor to The Wall Street Journal that same day.
“Amazon reportedly plans to lay off about 10,000 employees starting this week,” echoed CNBC dutifully.
And with that, it is all but official: Amazon, that erstwhile untouchable retail giant, is downsizing. The layoffs, needless to say, are the largest in Amazon’s 28-year history.
Considering the bigger picture of Amazon, the cuts are still minimal: Only about 3% of Amazon’s corporate staff.
Still, the Amazon job cuts aren’t happening in a vacuum.
“Disney to Begin Layoffs, Targeted Hiring Freeze and Limiting Travel,” reported Variety on November 11.
“I am fully aware this will be a difficult process for many of you and your teams,” wrote Disney CEO Bob Chapek in a memo “obtained by Variety” — no doubt from “people with knowledge of the matter”.
“We are going to have to make tough and uncomfortable decisions,” warned Chapek. “But that is just what leadership requires, and I thank you in advance for stepping up during this important time. Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow.”
Over at Twitter, mass firings have become the order of the day. Elon Musk, Twitter’s new owner, began ruthlessly trimming the social media giant’s bloated workforce the moment he formally took the helm, if not before.
So far, Musk’s cuts have reduced Twitter’s workforce by about half, something for which former Twitter CEO Jack Dorsey is claiming responsibility.
“I own the responsibility for why everyone is in this situation,” Dorsey tweeted, admitting to growing the company too quickly.
Musk can hardly be blamed for cutting his workforce: In the second quarter of 2022, Twitter posted a loss of $270 million. In the second quarter of 2021, by comparison, Twitter had a profit of $66 million.
Meta, nee Facebook, owner Mark Zuckerberg claims to have, “handled the layoff situation at his organization better than Musk,” — more “thoughtfully.”
More thoughtful he might have been — and no doubt that is of great comfort to fired employees — but Zuckerberg still thoughtfully culled more than 11,000 employees, a full 13% of Meta’s staff.
The Silicon Valley layoff numbers bode ill for the economy. The growing list of afflicted companies includes many household names.
Lyft — 13%, 650 employees — and Stripe — 14%, 1,100 employees — recently announced cuts.
Juul is cutting about 400 people, a third of its employees. Coinbase — 18%, 1,000 employees — Redfin — 13%, 862 employees. Salesforce, Gap, Snap, Wayfair, Robinhood, Peloton, Shopify, 7-Eleven, Vimeo, Tesla, Rivian, GoPuff, Netflix; the list of layoffs goes on and on.
From the Bay Area to Los Angeles, California tech workers are feeling the pinch. From coast to coast, workers in other industries are feeling it, too.
The question on every mind: Which company will be next?
There is a growing sense that it is no longer a question of if more mass layoffs will occur.
The only question is when.
(contributing writer, Brooke Bell)