Mass layoffs are plaguing more than just the Big Tech industry.
On Sunday, former Walmart CEO Bill Simon joined “Fox & Friends Weekend” to warn Americans of the detrimental impact that corporate layoffs could have on the U.S.’s feeble economy.
“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,” Simon told co-host Will Cain.
Although the labor market remains healthy and one of the few bright spots in the economy, there are signs that it is beginning to soften. In addition to a number of high-profile tech layoffs over the past month, the economy added 223,000 jobs in December, the smallest gain in two years.
Federal Reserve officials have said they expect unemployment to climb as a result of their aggressive interest rate hike campaign. Updated projections from the central bank’s December meeting show that officials expect unemployment to rise to 4.6% by the end of this year, up from the current rate of 3.5%.’
Cain pointedly remarked that unemployment “has to happen” in order to effectively cool inflation, leading him to ask the former Walmart president if he believes layoffs put the country “further down the road” to getting the economy back on track.
“Theoretically, yeah, I agree with you, Will. But the problem is, at the same time, 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% increase,” Simon replied.
“Food costs have gone up 23% in the last two years. So now, wages have gone up 17% at Walmart, 25% at Delta for pilots, 25% for the rail industry. And wage increases like that sort of counteract the employment layoffs that we’re starting to see. And so there’s a lot going on.”
The former Walmart president continued, bringing to light a unique problem that the U.S.’s immigration problem has imposed on the workforce.
“We need workers, but we need workers we can employ that are in the country legally. What’s happening now is you’re letting people in that can’t participate in the workforce but do increase demand. So, you have increased demand driving prices up without the workforce to be able to service it. So, it’s a complicated factor. Certain inputs are trying to solve inflation, but you have counteracting forces that kind of mess that up,” he said.
Simon further warned that consumers could be in a “world of hurt” if the Biden administration does not take action on the country’s inflation issue soon.
“I think the most critical thing that’s going to happen in ’23 is we have to get this inflation under control. 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% of the population,” Simon said.
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