The impact of layoffs
Summary
TLDRThis script discusses the historical impact of technological advancements on job displacement, particularly in agriculture and customer service sectors. It highlights the short-term pain of job loss and the long-term benefits of increased efficiency and the need for humans to find new ways to contribute to the economy. The script also touches on the challenges companies face in balancing profits and shareholder value, often resulting in layoffs when revenue is down. It emphasizes the reactive nature of such decisions and the difficulties of rehiring and training new staff when business picks up.
Takeaways
- 🔧 Technology has historically displaced jobs, as seen in the agricultural industry 100 years ago where machinery and automation led to redundancy among manual laborers.
- 🏗️ In the short run, technological advancements can cause job loss and economic pain, but in the long run, they can lead to more efficient and optimized human work.
- 🛒 The automation wave has reached customer service and sales, with digital ordering, self-checkout, and offshoring reducing the need for human interaction in these roles.
- 📉 Despite the benefits of automation, rapid displacement can lead to unemployment and a period of adjustment for workers to find new employment.
- 💼 Sales roles may still require human interaction, especially when products are complex or require a convincing sales pitch, indicating that not all jobs can be easily automated.
- 💡 Companies often automate to reduce expenses, which can improve their financial appearance to shareholders and potentially boost stock prices, even if it means job losses.
- 📊 Layoffs are a reactionary measure often taken when a company's revenue is not meeting expectations, and cutting costs is seen as a way to improve profit margins.
- 🔄 The process of laying off and rehiring employees can be costly and time-consuming, involving training, onboarding, and dealing with the effects of turnover.
- 💼 Companies are cautious about layoffs as the rehiring process can involve higher costs due to market rate salaries and the loss of experienced staff.
- 📉 Stock prices and shareholder value often take precedence over employee retention, especially in times of financial stress for the company.
- 🤔 The decision to lay off employees is not taken lightly and is often a last resort when other measures to improve financial performance have failed.
Q & A
How has technological advancement historically impacted job displacement?
-Technological advancements have historically led to job displacement, such as in the agricultural industry 100 years ago where machinery and automation replaced manual labor, forcing people to find new employment.
What is the short-term impact of technology displacing jobs on the affected individuals?
-In the short term, job displacement can be detrimental as it results in loss of income and the need for individuals to find new ways to support themselves and their families.
What is the long-term perspective on technology displacing jobs?
-In the long run, job displacement due to technological advancements is generally seen as beneficial as it leads to optimization and efficiency, with humans being reallocated to more productive roles.
How has automation affected the customer service and sales industry?
-Automation has significantly impacted the customer service and sales industry by reducing the need for human labor through digital ordering, self-checkout systems, and offshoring, leading to a decrease in traditional customer service roles.
Why might a company choose to automate customer service or sales processes?
-Companies may choose to automate these processes to cut expenses, improve efficiency, and allow customers to access services more easily, ultimately reducing the need for a large workforce in these areas.
What role do salespeople still play in the context of automation?
-Salespeople are still necessary, especially when dealing with complex products or processes, as they can provide personalized follow-up and assistance to close sales, which automation may not fully replicate.
What are the consequences for a company if it lays off employees too hastily due to poor financial results?
-Laying off employees hastily can lead to a loss of valuable human capital and the need for extensive recruitment and training processes if the company needs to rehire when business picks up again.
Why might a company resort to mass layoffs or firings?
-Mass layoffs or firings often occur when a company's revenue has decreased and they need to cut expenses to present a better financial picture to shareholders, even if it means losing valuable employees.
What are the challenges a company faces when it needs to rehire after a layoff?
-The challenges include the time and financial cost of recruiting and training new employees, dealing with market rate salaries, and the potential loss of institutional knowledge from the previous workforce.
How does the need to maintain or boost stock prices influence a company's decision to lay off employees?
-The pressure to maintain or boost stock prices can force a company's management to prioritize cost-cutting measures, such as layoffs, over retaining staff, as it directly impacts their performance evaluation and shareholder value.
What are the potential long-term effects of rapid technological displacement on the workforce?
-Rapid technological displacement can lead to a large number of unemployed individuals who may struggle to find new employment or occupations that allow them to maintain their quality of life, potentially leading to social and economic challenges.
Outlines
🤖 Automation and Job Displacement
The first paragraph discusses the historical context of technology displacing jobs, starting with the agricultural industry a century ago. It explains how the introduction of machinery made manual labor redundant, forcing workers to seek new employment. The speaker acknowledges the short-term pain of job loss but argues that in the long run, technological advancements are beneficial as they optimize human work. The paragraph also touches on the current impact of automation in customer service and sales, with digital ordering and self-checkout systems reducing the need for human interaction. The speaker notes that while this can lead to unemployment, it can also drive people to find more productive ways to contribute to the economy. However, they caution that rapid automation without adequate support for displaced workers can lead to social and economic issues.
📉 Corporate Layoffs and Economic Reactions
The second paragraph focuses on the recent layoffs at Intel as a response to poor financial performance. The company's decision to cut costs by reducing its workforce is presented as a short-term solution to appease investors and maintain stock prices. The speaker points out the risks of such reactionary measures, as a sudden upturn in the economy could leave the company understaffed and scrambling to recruit and train new employees. They also discuss the challenges and costs associated with hiring new staff, including the time and expense of onboarding and training, as well as the potential loss of valuable experienced employees. The paragraph concludes by emphasizing the difficult decisions companies face between maintaining a workforce for potential future needs and the immediate pressure to cut costs and boost shareholder value.
Mindmap
Keywords
💡Technology Displacement
💡Automation
💡Human Capital
💡Economic Efficiency
💡Mass Layoffs
💡Shareholder Value
💡Offshoring
💡Market Rate
💡Revenue
💡Onboarding Process
Highlights
Technology displacement has historically affected various industries, such as agriculture 100 years ago.
Advancements in agricultural machinery led to redundancy of human labor and forced people to seek new employment.
Short-term job loss due to technology can hurt individuals but may be beneficial in the long run by optimizing human work.
The rapid pace of automation can result in unemployment if people do not find new employment quickly.
Customer service and sales have been significantly impacted by digital ordering and self-checkout technologies.
Offshoring and internet automation have reduced the need for human involvement in sales and customer service processes.
Sales may still require human interaction for convincing products or complex processes.
Companies often automate to reduce expenses and improve efficiency, impacting customer service and sales roles.
Displaced workers need to find new ways to contribute to the economy after job loss.
Mass layoffs often occur when company revenue decreases, leading to cost-cutting measures.
Cutting costs can improve a company's financial appearance to shareholders, even if it means losing valuable employees.
Layoffs can be a reactionary measure to immediate financial pressures, with potential long-term consequences.
Rehiring after layoffs is a time-consuming and costly process, including training and onboarding new employees.
Companies may avoid layoffs if they foresee value in employees for the near future, due to the difficulty of rehiring.
Hiring new employees often requires paying market rates, which can be higher than keeping long-term employees.
The decision to lay off employees is often driven by the need to protect profits and shareholder value.
Top management is graded on profits and shareholder value, which can lead to prioritizing these over employee retention.
Transcripts
all right so technology displacing
people um it happens basically
throughout history you look back 100
years ago it was agriculture you know
technology advancements in that industry
had displaced a lot of people so people
that relied on being part of the
agricultural system and working with
their hands probably uh most likely were
displaced because Machinery came in
automation of certain parts of the
process made a lot of that human capital
redundant and so people were forced to
find something else to do so in the
short run that hurts the people right
because they lose their job or they they
lose their money and they're going to
have to find a way to support their
lifestyle or their family or whatever it
is in the long run it's usually a good
thing because it means that the
technology is better and it's um uh you
want to optimize what humans are doing
so if a machine can do something that a
human does and it can do it well then
all things being equal you want you know
you would prefer probably for the
machine to do it now when that happens
too fast though you you end up with a
lot of unemployed people or people that
don't have a use because they haven't
found new employment yet so it's it's
been happening with uh kind of customer
service and like you know think of like
grocery stores or restaurants with all
the digital ordering and the order in
the kiosk and the self checkout lane and
the offshoring of customer
service and the internet has been able
to automate a lot of the processes
involving sales and uh customer service
so that real people don't really have to
do that function uh anymore now
sales is still something where unless
you have just such a convincing product
or such an easy on-ramp process you
probably still need to have some amount
of
salespeople um you know to to follow up
with people and to try to make the sale
but customer service and even just basic
sales type stuff can probably and it's
already happening where it's being
automated or it's just they're they're
cutting out the the the real person so
the company is uh cutting the expense of
paying these real human work ERS and
they're automating it or they're
building in technology that makes it
easier for customers to get what they
want and then the company doesn't have
to pay or they have to you know they get
the advantage of having less uh customer
service people or less salese or less
people on their payroll so if that's
done well it's probably a good thing for
the company uh like I said it hurts the
employee because they lose their job or
they maybe get cut back on their hours
but ultimately in the long run it's
usually the most efficient thing because
it means that the people that got
displaced now have to find a new
productive way of contributing to the
economy but like I said if that happens
if that happens too fast you end up with
a lot of people that have nothing to do
or there's no real Avenue of where
they're going to go find employment or
an
occupation um where they can be where
they can maintain their quality of life
life so that's kind of what's been
happening um you know with people
getting fired or laid off because the
the company the company's profits the
company's results don't look as good as
they did a year ago or two years ago and
so if the company can't show that
they've made more revenue or
more well they can't show that they've
made more Revenue right so what they do
is they cut the
expenses that way it looks like they
have a better profit or less of a
loss if they were growing and the
revenue was there then they probably
wouldn't cut back on any or they
wouldn't cut back on a lot of positions
but a lot of times the mass layoffs or
the mass firings happen
because they happen because the the
revenue is not there it's dried up and
now they have a bunch of overhead that
they still need to pay and they have no
new revenue or they have lessened
revenues so in order to paint a better
picture they say hey we cut we can't
show you that we've grown our Revenue
cuz you can see that we haven't but what
we can do is cut our expenses so we
don't have to pay out as much now we
might lose human capital and we might
you we might lose some support roles and
people that uh were valuable to our
company but you know we want to we want
to show shareholders and we want to uh
you know try to boost the stock price or
make the stock price be not as impacted
to the negative and so that's what a lot
of the companies are are doing I think
intel was down very big last week I I
didn't look to see if it rebounded
significantly but they laid off a bunch
of people and probably just because the
numbers were not good and they uh their
only way to show investors that they
were focused on it was hey we're going
to cut our expenses like big time we're
going to lay off a bunch of these people
and you know resize the company that we
have to fit what the current economy
is all those reactions though um are
very it's very reactionary when this
happens because things can change pretty
quickly so if you lay off a bunch of
people and then in six months or a year
you know things start to pick up again
well now you just lost 10,000 employees
or 12,000
employees and now you have to now you
don't have the people so now you have to
go you know hire a bunch of people you
have to put them through the the
onboarding process you got to train them
for a period of time you got to deal
with the turnover of people quitting you
know starting quitting you know all the
it most jobs there's like quite a bit of
stuff that has to happen you got to get
training you got to get logged into like
all the right systems with it they have
to give you the equipment so it's a big
process to hire new people on in a uh in
most companies so you you don't really
want to let people go if uh if you don't
have to because it's hard to bring them
back and then when you do bring them
back you typically have to pay people at
the market rate um if you're hiring them
you can't continue to pay if you've have
if you've had employees that have been
in a company for 10 years uh often times
you can get away with paying them less
than market rate because you're just
giving them a very small raise every
year but if you're bringing on a new
person and you're negotiating a new uh
you know salary with them or whatever
they're going to expect that they get
paid the market rate because it's a new
job it's you know they're they're
they're they're having that conversation
right now and uh you're going to have to
pay most likely a higher price so it
also involves dealing with you know
interviews and having to interview a
bunch of people and that takes time away
from the current employees that are that
are already there so companies don't
want to lay people off especially if
they can see that they have value or
will have value in the near term because
in order to bring people back it's just
it's a very uh time intensive
process and if you need a couple
thousand people that's going to take a
good amount of time and money and energy
to uh bring them all back or to bring
hire new people so um let me know what
you guys think on it I don't think uh
you know I don't think they make these
decisions lightly but you know if things
aren't looking good and they can sense
that their stock price is going to be
really negatively impacted then they
they have to you know their hand is kind
of forced to do things uh because
ultimately it's about the profits of the
company and about the shareholder uh
value that's how the top management
people get graded so they're going to
put that ahead of you know a lot of
times they're going to put that ahead of
keeping people on staff right they're
going to they're going to lay off people
if it's better for the uh for the share
price so
let me know what you think subscribe see
you on the next one
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