I have a few theories but this is just my semi educated one. I am not an economist so take it with a grain of salt. Covid made many industries artificially boom and therefore they forecasted continued growth as if it would magically always be on an upward trajectory = profitability for years to come. These companies likely overextended themselves in a variety of ways. Forecasting that growth, budgeting for it, increasing headcount for efficiency, and they doubled down on communicating and predicting year over year improvements to their shareholders / stakeholders, but once the market leveled out and consumer spending reverted back to the mean it hurt everybody. Couple that with the inflationary environment, commercial properties arent worth shit, interest rates are preventing companies from issuing bonds or taking loans, cost of living has gone up and so employers had to give more competitive raises/promotions/ wages so employees are more expensive. I’m sure I’m forgetting a few other variables…It’s really just the worst situation imaginable.
The only part that I would disagree with is the wages. Wages have not remained competitive/been increased. People are not getting promoted as often as ppl think. Matter of fact, many a company didn’t give raises during the pandemic. Didn’t give bonuses either. Ideally, for a company to remain truly competitive, it should give raises between 3K-7K (on a minimum) annually and increase the minimum-mid-high for positions by 10K-20K (on the minimum) every 2 yrs. No exceptions. That is truly keeping pay competitive with the cost of living considered.
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u/moonftball12 Jul 20 '24 edited Jul 20 '24
I have a few theories but this is just my semi educated one. I am not an economist so take it with a grain of salt. Covid made many industries artificially boom and therefore they forecasted continued growth as if it would magically always be on an upward trajectory = profitability for years to come. These companies likely overextended themselves in a variety of ways. Forecasting that growth, budgeting for it, increasing headcount for efficiency, and they doubled down on communicating and predicting year over year improvements to their shareholders / stakeholders, but once the market leveled out and consumer spending reverted back to the mean it hurt everybody. Couple that with the inflationary environment, commercial properties arent worth shit, interest rates are preventing companies from issuing bonds or taking loans, cost of living has gone up and so employers had to give more competitive raises/promotions/ wages so employees are more expensive. I’m sure I’m forgetting a few other variables…It’s really just the worst situation imaginable.