Mass layoffs are plaguing more than just the Big Tech industry.
On Sunday, former Walmart CEO Bill Simon joined “Fox & Friends Weekend” to warn Americans of the corporate layoffs with detrimental impact could have on the weak US economy.
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“It’s crazy right now. We’re stuck in this cycle of wage inflation, product inflation, and cost inflation. And it’s just that the cycle continues. And I think, unfortunately, an inevitable byproduct of some of the moves by the Federal Reserve and as the necessary medicine that we have to take to cool things down and get inflation back under control in some of these layoffs that are coming,” Simon explained to co-host Will Cain.
Although the job market remains healthy and is one of the few bright spots in the economy, there are signs that it is beginning to weaken. In addition to a series of high-profile tech layoffs over the past month, the the economy added just 223,000 jobs in December, the smallest gain in two years.
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Federal Reserve officials they have made it clear that they expect unemployment to rise as a result of their aggressive campaign to raise interest rates. Updated projections from the central bank’s December meeting show that officials expect unemployment to rise to 4.6% by the end of this year, up from the current rate of 3.5%.
Will Cain pointedly pointed out that unemployment “has to happen” to effectively cool inflationwhich led him to ask the former Walmart chairman if he thinks the layoffs put the country “further ahead” to get the economy back on track.
“Theoretically, yes, I agree with you, Will. But the problem is, at the same time, there’s this wage inflation going on. For example, last week Walmart announced that they’re going to raise their minimum wage, their starting wage to $14 per hour. That’s a 17% increase,” Simon replied.
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“Food costs have gone up 23% in the last two years. So now, wages are up 17% at Walmart, 25% at Delta for pilots, 25% in the rail industry. And increases wages like that offset the job layoffs that we’re starting to see. So there’s a lot going on.”
The former Walmart president continued, bringing to light a singular problem that the The US immigration problem has imposed on the labor force.
“We need workers, but we need workers that we can employ who are in the country legally. What’s happening now is you’re letting in people who can’t participate in the workforce but increasing demand. Therefore, it has a greater demand that raises prices without the labor to be able to serve it. So it’s a complicating factor. Certain inputs are trying to solve inflation, but there are counteracting forces that mess it up,” he said.
Simon further warned that consumers could be in for a “world of pain” if the Biden administration doesn’t take action soon on the country’s inflation problem.
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“I think the most critical thing that’s going to happen in ’23 is we have to get this inflation under control. Another year of high single-digit inflation, low double-digit inflation, and we’re going to be in a world of pain.” , because inflation hurts 100% of the population”, Simón concluded.
FOX Business’s Megan Henney contributed to this report.