Former Walmart CEO Bill Simon warned that corporate layoffs might have a significant impact 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 of the Arkansas-based retailer, told Fox Business on Sunday.
In recent weeks, several large big tech firms including Twitter, Facebook, Google, Spotify, and Microsoft have carried out layoffs impacting tens of thousands of workers. 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. The economy added 223,000 jobs in December, according to Labor Department data.
Higher unemployment figures are sure to happen soon due to wage inflation, he said. “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.”
During the interview, Simon suggested that federal officials need to attempt to get inflation under control, although the consumer price index dropped to 5 percent in December 2022. The Federal Reserve, meanwhile, has continually raised interest rates during the past several Federal Open Market Committee meetings in a bid to tamp down inflation, and reports indicate that another rate hike is on the way when the Fed members again meet in late January.
“I think the most critical thing that’s going to happen in ’23 is we have to get this inflation under control,” Simon told 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.”
IBM Corp. on Jan. 25 announced 3,900 layoffs as part of some asset divestments and missed its annual cash target, dampening cheer around beating revenue expectations in the fourth quarter, while Hasbro said a day later it would cut about 15 percent of its global workforce this year, and projected holiday-quarter results to be well below Wall Street expectations.
Online furniture retailer Wayfair Inc. said on Jan. 20 that it will cut 1,750 jobs, or 10 percent of its workforce, in a cost-saving drive at a time when persistently high inflation has pressured consumer spending.
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.
Reuters contributed to this report.
This content is published through a licensing agreement with Acquire Media using its NewsEdge technology.