Getting Fired | Why 20% Of Workers Could Lose Their Job

What's up you guys? It's Graham here. So are you ready to make a lot of money? Because we've got some incredible news: unemployment is officially at its lowest level since prior to the pandemic. Wages are rising at the fastest pace in a decade, and wait, what's this? Mass layoffs at Oracle, Walmart lays off corporate employees after slashing forecast, jobless claims tick higher, pay cuts, market slowdown.

Okay, so here's the deal. Despite the headline numbers about what appears to be a strong labor market, there's no shortage of articles outlining a series of layoffs, slowing demand, and forecast for a destitute market that's just beginning to collapse. And that got me thinking: why did Klondike discontinue the Choco Taco? And are we barreling towards a market where people are about to lose their jobs?

After all, since the 1950s, the unemployment rate has never held below three and a half percent for more than a year. Every single time inflation peaks, job losses rise, and with the market beginning to soften, it could be helpful to understand exactly what's going on, what this means for you if the jobs market is about to drop, and how this is going to affect your wallet before it's reported anywhere else.

Although really quick, if you appreciate the investigative research to get to the bottom of what's really going on, it would mean a lot to me if you employed that like button by giving it a gentle tap or subscribing if you haven't done that already. Doing that helps out the almighty YouTube algorithm. And as a thank you for doing that, here is a picture of an emerald crab. So thank you guys so much! And also, big thank you to public.com for sponsoring this video, but more on that later.

Alright, so in terms of how we got here, no surprise, the shutdown of 2020 absolutely wrecked havoc on our economy. This is the time where the U.S. posted its highest unemployment rate since the Great Depression. And while the $600 a week stimulus was ideal for keeping people indoors, by the time the economy began reopening, there was a drastic shortage of workers throughout multiple industries. There were not enough applicants for each position, so the solution in the short term was to increase wages to attract more people to apply, and it worked. As demand skyrocketed back in 2021, businesses paid whatever they could and hired whoever they could to help ease manufacturing delays and continue growing.

But once activity began slowing down, there seemed to be this realization that many businesses had overhired, and unless they continued making record-breaking profits, they would have to downsize like we're beginning to see now. Throughout these last few months, we've seen quite a few of the largest companies on a mission of letting people go, including JP Morgan, who recently initiated a mass layoff affecting up to a thousand of their employees, or Tesla, who began warning that their work-from-home employees would be the first to get caught, or Amazon, who just shrunk their staff by a hundred thousand people. Netflix continues losing customers, Google warned about bloated staff and concerns about productivity, Robinhood just reduced their workforce by nearly 25%, and Walmart's adjusting to lower profits and less revenue. Even the company you would never expect: TikTok.

However, what's really unique about these job losses is that they're not coming during a time where profits are declining. In fact, Time Magazine pointed out that Oracle downsized their staff after reporting that revenue is up by five percent; Microsoft laid off a thousand employees while reporting two percent higher profits; and Ford is letting go of nearly ten thousand employees when net income was up almost 20%. It's almost kind of like these companies know something that we don't.

Well, before we go into that, on the surface, all of this seems completely out of the ordinary. After all, the United States added 528,000 jobs in July. The unemployment rate is currently at the lowest it's been since prior to the pandemic and the best it's been since 1969. And people are still spending a lot of money. Retail sales, for example, rose one percent in the month of June, which is 11.2 percent higher than the year prior, and spending was higher across all industries except for luxury items. There's also an abundant demand for Airbnbs, food delivery, travel, and even airlines. In fact, American Express saw their highest spending month since prior to the pandemic. So if that's the case, then why are all these companies letting go of their employees, and is that something of concern?

Although before we go into that, we got to say a huge thank you to the sponsor of today's video, public.com, because they're an investment platform that helps people be better investors. I really like what public is doing in that their platform helps you understand what's going on in the market at all times, whether it's through their active community feed, their public live shows, or their interactive town halls. They're also leveling up the entire experience with public premium, which is their first subscription offering. You'll get advanced data, custom company metrics, and expert analyst insights.

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And now with that said, let's get back to the video. But anyway, I digress. Like I mentioned earlier, it is surprising that besides the 1950s after World War II, the unemployment rate has never been able to sustain a level below three and a half percent for more than a year. Just take a look at the data. When unemployment was at its lowest in 1953, high inflation caused a recession that more than doubled the unemployment rate. The same occurred in 1958 and 1969 when interest rates were increased. The 1970s and 80s recession was also caused by an era of high inflation, high unemployment, and rising rates. While the 1990s saw a time of restrictive Federal Reserve policies, 2000 saw the burst of the dot-com bubble, and 2008 sent us into the Great Financial Crisis. And now, here we are again with similar patterns to every other recession before us.

It's also quite interesting that as inflation slows down, unemployment historically goes up, as shown throughout every year since 1949, most likely as a result of raising interest rates to bring down prices, which again is what we're seeing today. Just consider this: new companies are now reporting the highest level of layoffs since the peak of the pandemic, with over 65,000 let go in 2022 alone, with most of those in just the last few months. It's also apparent the job market is beginning to slow down, with jobless claims beginning to rise to the highest level since November. On top of that, it's also reported that only nine percent of tech workers feel confident about their job security right now. And the economist Peter Schiff also pointed out that all of the net 528,000 jobs added were part-time jobs, most of them low-paying service sector jobs.

Okay, now that might sound a little over the top, but some of his thinking makes sense. Credit card balances are higher because everyday items cost more. Wages are rising, but they're not keeping up with inflation. Spending has increased, but only because each of those sectors is now significantly more expensive than they were a year ago. Interestingly enough, when you adjust for inflation, real spending has actually decreased across a multitude of industries. For example, it doesn't matter that fuel spending is up by 32 percent when prices have risen by 40. The same applies to groceries: even though you could look and say, "Hey, people spent 16.8 percent more money," they don't tell you that items like eggs are now 197 percent more expensive than they were a year ago. This means it might not be a good thing that people are spending more money right now, especially as credit card balances are increasing.

This gives us a full, well-balanced view that sure, people are spending more money, but only because they have to spend more money to buy the exact same things that they had to a year ago. So in terms of what this means for all of us and the future of our economy, I have to say the data is somewhat concerning and worth taking into consideration of how it might impact you. From a business perspective, it appears as though companies are taking on a much more pessimistic approach in terms of future growth, slowing demand, and higher expenses, so they're taking an abundance of caution by laying off their workers now before they absolutely have to. After all, you don't want to save for an emergency fund the moment you actually need it. Instead, you take measures ahead of time so that you're prepared for whatever the economy throws your way, and that seems to be what's happening here.

From my perspective, this appears to be the time where businesses are trimming the fat, optimizing their workforce, adjusting to shifting conditions, and making sure that they're in the best place possible to post a profit. Unfortunately, that comes at the cost of their employees. For shareholders, this actually seems to be celebrated because this would boost the company's bottom line. But for the employees, this seems to be a survival of the fittest mentality where only the top talent is able to stay. In a way, this is how the Federal Reserve could finally tame inflation, and with less money chasing a higher quantity of goods, prices can finally begin to decrease. This also explains why unemployment is always so low at the peak of the market, with loose monetary policy that allows businesses to overexpand, and then as soon as that reverses, unemployment skyrockets back up.

This also applies to spending, where in this case, inflation needs to be considered. And when that's factored in, you can actually see a net decline as early as May of this year. From that, it's no wonder that businesses are preemptively laying off their workforce and preparing for a time where maybe they will need extra cash on hand to operate more efficiently. As far as what you could do about all of this, my honest advice is to make yourself as indispensable as possible. Now is absolutely not the time to be complacent, fly under the radar, and hope that no one notices that you're watching YouTube videos while you're at work. Yeah, I'm looking at you right now, except for my videos though, those are fine. Even though that might work temporarily, if we see a downturn, that job could be at risk, and you would be so much better off just making sure you're so good at what you do that they couldn't possibly let you go.

After all, Google said word for word that we need to be more entrepreneurial, working with greater urgency, sharper focus, and more hunger than we've shown on sunnier days. And I agree, we're no longer in an environment where people are rewarded for simply showing up, and now is the time to double down to ensure job security. Overall though, this is definitely something to keep an eye on, and just because the jobs market is strong right now doesn't mean it always will be in the future. So with that said, you guys, thank you so much for watching. Also, feel free to add me on Instagram. Thank you so much for watching, and until next time!