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Snap (SNAP) on Monday became the latest technology company to announce job cuts, cutting 10% of its workforce “to ensure the ability to make incremental investments to support long-term growth.” This followed the company’s decision to cut 20% of its workforce in 2022, in addition to smaller layoffs last year.
And in doing so, Snap made the simplest decision available to any technology company today. A framework that reduces headcount, reduces costs, and provides flexibility for tomorrow’s investments.
This logic, invoked during the Snap and many other layoffs, has a basis because it is clearly true. The entire tech industry suffered a massive hiring glut during the pandemic, and many of the moves these investments were designed to target either cooled down or never materialized.
According to this logic, it makes good business sense to reduce costs to ensure future flexibility. Tech industry layoffs this year now total more than 32,000 jobs, according to data from layoffs.fyi, with major companies from Microsoft (MSFT) to PayPal (PYPL) to eBay (EBAY) all participating.
But the trend of layoffs that started a year ago at Big Tech companies has spread across the corporate world, making it almost mandatory for executives to find a way to participate.
Estée Lauder (EL) stock rose 12% after the beauty giant announced its own layoffs on Monday. Companies from Xerox (XRX) to UPS (UPS) have also slashed their workforces this year.
The stock market clearly shows that management has an incentive to participate.
And the overall labor market environment in the U.S.—one in which steady overall employment growth contrasts with periodic drumbeats of white-collar layoffs—is inconvenient for leaders to make such a request. We offer additional cover.
Because not only are they responding to industry ebbs and flows by cutting jobs, they’re doing so in a labor market that generally suggests there’s plenty of demand for services for these workers elsewhere. .
Fast forward to March 2023, and we believe that the wave of technology layoffs and the rapid collapse of Silicon Valley banks, taken together, demonstrate how closely the technology industry is moving along the same lines. insisted.
The 2024 Corporate Strategy Handbook being used outside of our industry shows that the trend to follow is a stronger and deeper force in American companies than we previously believed.
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