Jerry White
Corporations are continuing to announce thousands of layoffs as signs of a major downturn in the US economy are growing. On Thursday, the Commerce Department reported that the US gross domestic product rose by an anemic 1.1 percent annual rate in the first three months of 2023. This was a sharp decline from the 2.6 percent annual growth rate in the final quarter of 2022, and 3.2 in the previous quarter.
The slowdown was largely due to a falloff in business investment and residential fixed investment, which includes money spent on construction and home buying. At the same time, manufacturing activity slowed down for the fifth straight month in a row.
The number of new jobs rose by 236,000 in March, down significantly from the average 334,000 jobs added each month over the previous six months. The number of job openings has fallen to a two-year low, down by 1.3 million in the first two months of 2023 alone, according to a previous government report.
The growth of unemployment is a deliberate policy aimed at undermining the demands of workers for wage increases that keep up with persistently high inflation. Over the last year, the US Federal Reserve, with the full backing of the Biden administration, has raised interest rates nine times to slow the economy, enlarge the pool of unemployed workers competing for fewer jobs and lower wages. The rate hikes have also triggered the failure of several banks and the ongoing meltdown of the First Republic Bank in San Francisco.
While workers are being threatened with destitution, the Biden administration has assured the super-rich that their holdings will be backstopped by another massive government bailout. “We have used important tools to quickly stabilize the banking system. We could use those tools again, if needed,” Biden’s press secretary told reporters Thursday.
Despite the signs of major economic downturn and fears of a wider financial crisis, Wall Street rallied Thursday on news of higher first-quarter profits for Amazon, Microsoft, Apple, Caterpillar and other corporations. Earlier in the week, General Motors beat Wall Street’s expectations by announcing $3.8 billion in first-quarter profits.
Although GM’s haul was down 6 percent due to expenses related to the “buyout” of 5,000 salaried workers in the US, who were removed as part of the company’s $2 billion worldwide cost-cutting campaign, CEO Mary Barra told investors GM expected to make $11-$13 billion this year.
One company after another is slashing jobs in anticipation of the economic slowdown and to maximize profits. This week Disney began thousands of layoffs at the cable sports network ESPN, Disney’s entertainment division, Disney Parks and its Experiences and Product division. The company media giant is eliminating 7,000 jobs as part of a $5.5 billion cost-cutting plan.
Retailer Bed, Bath and Beyond filed for bankruptcy earlier this week, and it will close hundreds of stores and lay off 14,000 workers if it does not find a new buyer. One of the major causes of its bankruptcy was the decision of the cash-strapped company to take on enormous debt for an $11.8 billion stock repurchase program for its richest investors.
Meat giant Tyson Foods is laying off about 15 percent of senior leadership roles and 10 percent of corporate roles, according to an internal memo shared with CNN. This follows the layoffs of nearly 1,700 workers in March after closing two poultry plants to boost profits. 3M is laying off 6,000 employees around the world, after a January announcement of 2,500 layoffs at its manufacturing plants.
Tech companies workers continue to get hammered. Facebook’s parent company Meta announced last week that it was cutting 10,000 jobs over the coming months, on top of the 11,000 job cuts last November.
Amazon said this week that it is shutting down its Halo Health Division by July 31, as part of the 9,000 job cuts it announced last month. Dropbox announced 500 layoffs Thursday. Ride-sharing company Lyft said it was laying off 26 percent of its workforce, about 1,072 workers. Since the beginning of the year, the tech sector has announced 168,243 job cuts and has already exceeded last year’s total, according to the tracker Layoffs.fyi.
The world’s third largest automaker Stellantis made $18 billion in profits last year and will report first-quarter earnings next week. The company is planning to cut 3,500 hourly workers in its US plants over the next several months to maximize profits and finance the costs for the transition to electric vehicles (EVs).
New United Auto Workers President Shawn Fain denounced the cuts as “disgusting” but did not propose a single thing to oppose them. In fact, UAW officials are collaborating in the cost-cutting plan and implementing a jointly run “voluntary employment termination” and early retirement program, which will pay workers a pittance to permanently sever their connections to the company.
In the run up to the contract battle by 160,000 GM, Ford and Stellantis workers in the US and Canada this summer, the UAW and the Unifor union in Canada, are deliberately concealing the global automakers’ plans to slash hundreds of thousands of jobs as they transition to EVs. The union bureaucracy has already agreed to such a jobs massacre and is prepared to accept a drastically lower-wage scale in the new EV battery and component factories in exchange for union recognition.
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