The part of Fed Chairman Powell’s inflation fighting plan I’ll never understand is how he is basically rooting for people to lose their jobs as a means of alleviating wage pressure. The question of wealth inequality aside, is it really better to have no income and unable to afford anything, rather than paying slightly higher prices?
Now, Wall Street has joined in applauding layoffs, especially at tech companies, and, reluctantly, I find myself cheering along.
Since December, approximately 200,000 tech workers have been laid off, with most coming from the larger tech names, such as Amazon (AMZN), Alphabet (GOOGL) Microsoft (MSFT) and Salesforce (CRM). In total, each company has laid off about 5%-10% of their workforce.
But this barely puts a dent in the hiring frenzy that took place for most of the Covid-19 pandemic. In many cases, the layoffs will rewind the clock only about a year.
In each case, the day the company made the announcement the stock rallied on the notion the reduction in headcount is not only effective cost cutting that will drop to the bottom line, but will also force companies to become more productive and refocus on their core businesses. Basically, tech companies had become too bloated and were chasing too many ‘moonshots’. Wall Street likes the renewed emphasis on profitability, as well as…
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