Why are major US Businesses laying-off their workers?

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Question: Why are major US Businesses laying-off their workers? The US economy seem to be contracting or that is what we are made to believe, with the slew of American Businesses that are cutting staff due to what business insiders and analysts are reporting as lower-than-expected revenues and profits coupled with rising labor costs. In this episode, we discuss why Businesses are really slowing and provided commentary on this within the present economic context of rising prices and falling median incomes while registering a significant increase in the Gini co-efficient which measures income inequality. 


According to Business Insider, several major companies are slashing jobs from Twitter to Peloton".  The article available on MSN news, reported that:  "A wave of layoffs has swept across American businesses in 2022. The cuts stem from slower business growth, paired with rising labor costs. The layoffs span across industries, from mortgage lending to digital-payment processing. Twitter is the latest high-profile company to get hit with layoffs this year after its new owner, Elon Musk, reportedly ordered a 25 percent headcount reduction". In fact, "major American businesses have picked up the pace of firing in 2022. Peloton has laid off thousands of their employees. Real Estate firm Re/Max slashed 17 % of its workforce. Even traditionally layoff-resistant companies like Netflix have made cuts & companies that saw a pandemic-era boom, like Shopify, are cutting hundreds of jobs". The article concluded that the reason for this is "two-fold: business growth is slowing, while labor costs are increasing. This combination is causing American companies... to slash headcount," (See Business Insider via MSN on 11.2.2022)

However, is it true that businesses are slowing and that this is due to rising labor and lower-than-expected earnings compared to the last period? We delve into this pointing out that real wages are falling due to rising inflation, while median incomes are also falling. Yet, businesses are downsizing and are faulting labor who has always been the scapegoat/ the victim of Capitalists seeking supernormal profits while enjoying increases in their incomes and net worth. Moreover, the Bureau of Labor and Statistics (BLS) data shows that since 2020 there's been a sharp rise represented by a steep or vertical slope in the incomes and wealth of people at the top percentile of the US population (You may refer to Podcast Season 4, episode 27, or visit The Neoliberal Corporation's website for the article for more on the BLS data showing US incomes since 1990's - Does St. Louis/US Cities with High Crime/Murder Rates suffer from Relative Deprivation? - The NeoLiberal Corporation). So that income inequality has reached its highest in years registering a Gini of nearly 1.0. Therefore, it is quite unusual that Businesses are now saying that they have to cut labor due to rising costs & lowering profits as if labor costs are really what's driving their loss and slowing business. But let's say its labor that is helping to slow business growth/profits, the next question would be then, what labor or which labor?  It is the top-level labor/executives who are demanding high salaries, wages and bonuses that's driving up labor cost, which is represented by the rise in the top 20 percent in incomes and wealth. In addition, the competition between and among billionaires & those at the top is what is driving up labor costs while Elon Musk, Jeff Bezos, Mark Zuckerberg and those wealthy tech and real estate companies compete to be the richest and most profitable in the world. Read on @ https://www.theneoliberal.com.

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