Some companies are reassessing their workforce size after hiring sprees during the pandemic, leading to layoffs as they seek to eliminate redundancies. The Federal Reserve's interest rate increases and increased labor costs, which are becoming harder to pass on to consumers, are also prompting businesses to scale back expansion plans and trim their workforce as a cost-cutting measure.
Key takeaways:
- Several prominent companies, including Amazon, Citigroup, Xerox, Google and BlackRock, have announced plans to cut jobs in the first two weeks of 2024, despite improving economic conditions and a strong labor market.
- The job cuts are part of a continued push for efficiency and cost reduction, with some companies stating that their organizations are larger than necessary given the size of their businesses.
- The emergence of artificial intelligence (AI) technology, which can perform tasks traditionally handled by white-collar workers, is also contributing to the job cuts as companies divert resources toward its development.
- Increased labor costs and the Federal Reserve’s interest rate increases, which have raised borrowing costs, are prompting businesses to scale back expansion plans and trim their workforce as a cost-cutting measure.