Looking at job cuts from a moral point of view of an investor


#1

When a company annouces job cuts like Microsoft did yesterday, investors are happy and the stock price usually heads north. That’s because the company is basically cutting cost and that will improve its margins. So that’s good news for investors as they get to profit from that.

On the other hand, we are talking of people losing their jobs. In the case of MSFT, we are talking of 18.000 jobs.

So I am wondering how a Catholic investor in such a company should react other than hoping that the affected find new jobs or equally invest in the company. I mean, it’s a public company. So everyone can buy their shares if they want.

:shrug:


#2

Hello. I really don’t know an answer to your question but I did want to post a news article so people can read what you are talking about with the Microsoft Layoffs. I will be paying attention to this thread for the answer though.

seattletimes.com/html/businesstechnology/2024098177_microsoftlayoffsxml.html


#3

The traditional economic view would be that greater efficiency in the economy ultimately benefits all, despite temporary dislocations. Look at the much higher standard of living in the US since the 1950’s despite entire industries being forced out business in that period. Nobody worked at Microsoft until the 1980’s. It was inevitable that their near monopolistic position would end.


#4

I had a discussion about this once with my boss, who was a senior VP at a Fortune 50 company and had to make decisions like this about layoffs and “restructurings.”

His point was that if the company does not stay competitive and increase profits for its investors, it will go out of business and all the employees will lose their jobs, not just some.

That’s a major simplification, but as we now compete in a global marketplace, there’s a lot of truth in that. As wages begin to rise in places like India, we’ll get closer to equilibrium, but that’s not going to happen for a long time.


#5

As far as I am concerned most of the lay-offs in this country, that started in 1981, have been nothing but immoral. They are all rooted in a few at the top increasing their profits at the expense of the masses. Hence the gradual, but very effective loss of the Middle Class in this country, stagnant wages and the general decline in the economy. Nasty stuff.

If there are going to be lay-offs they should always start at the top, not the bottom. And if the lay-off percentage is going to be say 15% for the bottom then double that for the top. That would fix a lot of problems at the get go!


#6

To paraphrase Jason Lewis:

In times of economic hardships, jobs are usually cut because salaries are often the biggest expense.

The companies stocks are going up not because rich people are happy that someone has lost a job, but because there is more confidence in the financial solvency of the company.


#7

=Cricket2;12180434]As far as I am concerned most of the lay-offs in this country, that started in 1981, have been nothing but immoral. They are all rooted in a few at the top increasing their profits at the expense of the masses.

:rolleyes:

If this comment references the USA, there was an economic boom the 1980s. Millions of jobs were created starting in 1983 and well into the early 1990s.

Hence the gradual, but very effective loss of the Middle Class in this country, stagnant wages and the general decline in the economy. Nasty stuff.

That’s what happens when government gets involved in the economy.

If there are going to be lay-offs they should always start at the top, not the bottom.

As I wrote in a previous comment, salaries are usually the biggest expense for a company to paraphrase Jason Lewis.

It may make sense to do that in some cases, but a linear, one-size fits all solution is not helpful.


#8

Which is something I explain to my clients who are in financial difficulty. When you cut payroll you not only cut their salaries you cut the amount of payroll taxes you pay, unemployment tax you pay pay and Health Insurance you pay. So cutting a dollar of payroll will probably save an employer a $1.20 while cutting other operating expenses a dollar only saves and a dollar.

Businesses don’t lay off people because there are evil or because they want more money in their pockets and the pockets of their investors. They lay off people because it is necessary. Would it be better that the company EFT hold on to more people than can afford and let the company go under resulting in everybody losing their job?


#9

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