Walmart CEO Warns Corporate Layoffs May Significantly Impact U.S. Economy in Near Future
Former Walmart CEO Bill Simon warned of the potential impact that corporate layoffs could have on the U.S. Economy in the near future.
“It’s crazy right now. We’re stuck in this loop of wage inflation, product inflation, and cost inflation. And it’s just that cycle keeps going. And I think, unfortunately, an inevitable byproduct of some of the Fed’s moves and as the necessary medicine we have to take to kind of cool things down and get the inflation back under control on some of these layoffs that are coming,” Bill Simon, the former CEO at the Arkansas-based retailer, said Fox Business Sunday
In the past few weeks, several large tech companies, including Microsoft, Twitter and Google, have conducted layoffs that have impacted tens of thousands. It’s prompted concerns that similar rounds of layoffs could be enacted in other industries in the near term.
Despite the recent bevy of tech layoffs, the U.S. economy’s labor market continues to remain relatively strong. According to Labor Department data the economy added 223,000 new jobs in December.
He said that wage inflation will lead to higher unemployment numbers in the near future. “There’s this wage inflation that’s going on. For example, last week, Walmart announced they’re raising their minimum wage, their starting wage to $14 an hour. That’s a 17 percent increase,” Simon said.
“Food costs have gone up 23 percent in the last two years. So now, wages have gone up 17 percent at Walmart, 25 percent at Delta for pilots, 25 percent for the rail industry. And wage increases like that sort of counteract the employment layoffs that we’re starting to see,” He added. “And so there’s a lot going on.”
Simon suggested that federal officials must try to keep inflation under control during the interview. However, the consumer price index was down to 5% December 2022. In an effort to reduce inflation, the Federal Reserve has raised interest rates at every Federal Open Market Committee meeting in recent years. Reports indicate that this is continuing. Another rate hike When the Fed members meet again in February, it will be a sign that something is up.
“I think the most critical thing that’s going to happen in ’23 is we have to get this inflation under control,” Simon spoke to Fox News. “Another year of high single-digit, low double-digit inflation, and we’re going to be in a world of hurt because inflation hurts 100 percent of the population.”
More Layoffs
IBM Corp. announced on Jan. 25 3,900 layoffs in part of asset divestments. This disappointed the crowds cheering for beating revenue expectations in fourth quarter. Hasbro, however, said a day later that it would reduce about 15% of its global workforce and project holiday-quarter results well below Wall Street expectations.
Wayfair Inc., an online furniture retailer, announced on Jan. 20 that they will reduce 1,750 jobs or 10% of their workforce in a cost-saving drive during a time when inflation is persistently high.
Google’s parent company, Alphabet, announced 12,000 layoffs on Jan. 20, while Microsoft said it would cut 10,000 employees. In December, Facebook said it would lay off more than 11,000 workers, while Twitter reportedly laid off thousands starting in November after Tesla CEO Elon Musk’s purchase of the firm.
This report was compiled by Reuters
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