If you're in the U.S., unless you've been living in a cave, you're aware that major banks and investment firms have taken huge financial hits. As a result, they are laying off thousands of workers. This puzzles me.
I understand in the short term why these firms would slash payrolls (I'm not an idiot), but this implies one of three things about these firms' workforces:
- These workers weren't needed, and should have never been hired in the first place.
- These firms are firing more experienced workers with higher salaries, and replacing them with newer, lower paid workers (and hoping the lack of experience and the turnover don't hurt their performance).
- Laying these workers off is destructive in the long term, and these companies have done more harm than good.
I ask this because it's a shitty deal to lose your job because someone else screwed up (and received a golden parachute in the process).
Discuss.
- Log in to post comments
More like this
It's just been a week for metric errors. Via Media Matters comes an impressive
list of stories in the media about the automobile companies financial problems, where they cite labor costs as a major issue. So far, so good. But in virtually every
story about this, you'll find a statement along the…
Against my better judgement, I've ended up writing a lot about the
financial mess that we're currently going through. If you've read that, you
know that my opinion is that the mess amounts to a giant pile of fraud.
But even having spent so much time reading and studying what was
going on, the…
Recently, some people have been asking if Wall Street, Big Shitpile and the other elements of the Great Pandimensional Economic Clusterfuck of 2008-2009 would have been as bad if women were more common on Wall Street. My answer: absolutely not. What follows are some personal experiences as to why…
In case you missed it before the holidays, ProPublica's excellent "Temporary Work, Lasting Harm" piece is well worth a read. (Univision also produced and aired a version of the story.) Michael Grabell, Olga Pierce, and Jeff Larson tell the story of 21-year-old Day Davis, a temporary worker killed…
your implications only work under the assumption that it's incompetence at work. that's not necessarily true. maybe they tried opening a new department to handle a new type of business - one that was non-profitable or inefficient. perhaps they hired workers under the assumption that business would pick up, and the workers would gradually become more and more necessary - instead, business slacked, the outlook changed, and now keeping employees on as growing room is no long the proper course of action.
i'm not saying it's true - just that there are more reasons available than your 3.
You might also want to consider that maybe they are not reducing the number of employees, but shifting where those are located. Any number of service sector industries have been moving jobs off-shore, particularly to India, which has a highly educated workforce with excellent English language skills. This has been going on for a long time. I don't know if there are any prohibitions to such actions in financial services, but don't be surprised the next time you call your broker, you get someone in Bangalore. This is pretty much inevitable until there is a greater parity in labor costs.
In a business downturn, expect less business. A lot of people who were needed to prepare business deals, make loans and whatever won't be needed for the next couple of years.
Janne is correct. When you're not doing well, you can't pay as many employees and you don't need as many.
They were too loose with the subprime mortgages (and the Federal Reserve was too loose with the 1% interest rates).
Laying these workers off is destructive in the long term, and these companies have done more harm than good.
I think it is this one and they did what they had to in the short term, hoping the long term allows expansion again. Yes, it certainly is a drag! Here's hoping there is an upturn soon!
Dave Briggs :~)
I think it is this one and they did what they had to in the short term, hoping the long term allows expansion again. Yes, it certainly is a drag! Here's hoping there is an upturn soon!
Dave Briggs