good morning. The wave of layoff announcements over the past few weeks is telling us something. Most importantly, it is not as easily measured as the number of jobs eliminated. It’s a change in the business environment. We’re seeing it especially in big corporate culture, where we’re seeing a shift in where it’s OK and even a virtue to be loud. Perhaps it signals a new norm for hiring and leadership. Of course, AI is at the root of this, whether companies directly say so or not.
In the past two weeks, we’ve learned that Amazon has cut 14,000 jobs and plans to cut more. Target plans to cut 1,800 corporate jobs, the company’s biggest layoffs in a decade. United Parcel Service reported cutting a staggering 48,000 jobs so far this year. Verizon will lay off 15,000 people. Nestlé has announced that it will cut 16,000 jobs, mainly white-collar jobs, over the next two years. Why have such massive layoffs been announced in just a few weeks? The usual reasons don’t explain it. The economy has not suddenly changed significantly. Businesses may be preparing for a recession, but it’s not clear when or if it will arrive. of wall street journalThe October Economist Survey shows that growth will increase next year. The traditional time for common “slim-down” layoffs is December and January.
The obvious explanation is AI. Amazon CEO Andy Jassy has already warned employees about what’s to come, announcing in June that Amazon would reduce its workforce across the company “over the next few years as we drive efficiencies through the widespread use of AI across the company.” Recent announcements have emphasized “layer removal.” Target Chief Operating Officer Michael Fidelke, who took over as CEO in February, did not explicitly say “AI,” but said the company has “multiple layers of redundant work” and would “accelerate the technology.” JPMorgan Chase & Co. has not announced any layoffs, but it has avoided hiring despite expectations for growth. CFO Jeremy Burnham recently told analysts that the company “has a very strong bias against knee-jerk reactions to a given need to hire more people.” “There is definitely a productivity tailwind from AI.”
Be careful with the language. It’s not a defense or an apology. Just the opposite: direct and confident. Having a small workforce is becoming a badge of honor among Fortune 500 CEOs. We call the new model “Human Capital Lite,” or from an employee perspective, “Right Sizing, Left Standing.”
In January 2024, OpenAI CEO Sam Altman said, “In a quick group chat with my tech CEO friends, these are the stakes in the first year of building a single-person billion-dollar company. It would be unimaginable without AI, and it will be.” We are not there yet and may never be there. But we’re getting closer.Jeff Colvin
Contact CEO Daily via Diane Brady at diane.brady@fortune.com.
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market
S&P500 Futures prices fell 0.21% this morning. The stock closed 1.66% lower in early trading. STOXX Europe 600 The stock fell 0.79% in early trading. UK FTSE100 The stock fell 1.18% in early trading. Japan’s Nikkei Stock Average fell by 1.77%. China’s CSI300 fell 1.57%. Korea KOSPI It fell by 3.81%. India’s NIFTY 50 It is down 0.45%. Bitcoin It went down to $97,000.
Around the water cooler
Top economist Mohamed El-Erian warns AI bubble will “end in tears” and trust will be full of “cockroaches” Written by Nick Lichtenberg
Economist behind the K-shaped economy sees a ‘sea of despair’ for the bottom 90% and a ‘crisis of confidence’ in the American Dream Written by Sasha Rogelberg
Credit card class discrimination may be coming: new Visa and Mastercard swipe payments could reshape benefits and surcharges Written by Preston Foer
Legendary Washington, D.C. diplomat feels ‘like Paul Revere’ about $38 trillion national debt: ‘The crisis is coming!’ Written by Eva Roitberg
CEO Daily is written and edited by Joey Abrams and Claire Zillman.
