Opinion
Don’t believe your lying eyes; at least, that’s what the Biden administration continues to tell Americans. Touting substantial job numbers and decreased inflation and unemployment, the White House continues to claim that all is well for the American worker and business owner.
However, other indicators beneath the surface of the numbers cited by the White House paint a very different picture. As usual, the ones most negatively impacted by poor economic conditions are the little guys or, in this case, small to mid-size businesses.
But a storm is coming for the larger companies, and what that means for the nation is a bleak future for everyone.
Trickle up disaster
The Federal Reserve’s rate hikes made financing costs skyrocket for businesses nationwide. This has caused private company earnings and profit margins to plummet, eventually resulting in many of these companies going broke.
While larger companies have, for the most part, weathered this storm, midsized and small companies are teetering on the edge of destruction due to these increased financing costs and subsequent decreased profits. Unfortunately, this will and has already started to affect the bigger companies because many of these smaller businesses are their suppliers.
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Looking into a crystal ball, it’s easy to see one of the domino effects of this – supply chain disruption. Marblegate Asset Management managing partner Andrew Milgram illustrates why these trends matter:
“The water looks fine from the shore but what’s happening underneath the surface is a very very troubled environment that is very dangerous.”
Essentially, Mr. Milgram is describing the idea that looking at the surface of the economy as the Biden administration prefers allows for a false sense of security because, digging deeper, things are not so stable and could quickly get worse.
Beneath the surface
If one digs deep enough, it’s easy to see that the numbers show a troubling economic environment for the average American worker. Last year, layoffs increased 98% from 2022—relatively large companies, including Hasbro and Spotify, executed layoffs.
The industry with the most layoffs was the tech industry, with over 191,000 employees laid off. The companies that reduced the largest amounts of tech employees were Amazon, Alphabet, Microsoft, and Meta.
This year doesn’t bode much better, with over 200 tech workers laid off since January 1st. This surge in tech layoffs is due to the increased use of Artificial Intelligence (AI).
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Outplacement firm Challenger explains:
“The tech sector will continue to be impacted by the onset of AI, mergers and acquisitions, and realigning of resources and talent.”
Replacing human tech workers with AI harkens back to when machines replaced human auto assembly workers. Couple this trend with the financing squeeze put on businesses, and it’s no wonder many are cutting employment costs in favor of cheaper AI capabilities.
A great year?
Last week, President Joe Biden released in a statement that:
“…2023 was a great year for American workers.”
The administration’s economic ignorance and refusal to broaden its spectrum of economic measurements will spell ruin for American workers who are already struggling. Spend just ten minutes on LinkedIn, and posts by former employees of all flavors lamenting getting laid off and struggling to find employment are aplenty.
Are these workers exaggerating their perceived angst over their economic and employment situation? The answer is it doesn’t matter.
When it comes to finances and the economy, perception is the reality. It is harder to provide for a family, advance in one’s career, and keep a business afloat today than before President Biden took office.
Last year, bankruptcy filings rose over 250% from 2022, with most of the filings coming from small businesses. This year, more layoffs are on the horizon, with companies like BlackRock, Duolingo, and Xerox already signaling 2024 layoffs.
Last year was not great for American workers and business owners, and 2024 is shaping up to be just as bad.
Now is the time to support and share the sources you trust.
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