Warning: The Reality of the Great Layoff Recession.

now we gotta talk about what the former

CEO of not just Home Depot had to say

but the former CEO of Chrysler and GE

power yeah three-time CEO all the same

person and what did he just have to say

about what might be coming to the U.S

markets and U.S companies

well take a listen over here because uh

it's something to pay attention to and

buckle up for you know I'm seeing

inventory bills uh in a lot of the

businesses both public and private you

know you remember when we spoke in 0789

there was singular focus on the banks

right their meltdown took everything

down today the banks are doing great but

now we have this mixed messaging

retail's not doing so well banks are

doing well transportation is up 13.9

percent over the last 12 months I think

we're we're in a very complex

environment and of course this debt

issue only adds to that it adds to the

certainty of uncertainty what what's

going to happen and again Mark's point

about a lot of the small Middle Market

companies that are under tremendous

pressure with debt I think we're going

to see a lot of bankruptcies like Bed

Bath and Beyond we got Walmart not only

laying people off but closing stores we

got

a lot of Accenture laying people off we

got Amazon closing distribution centers

so I think there's a tremendous mixed

message and and the complexity with

which we have to deal with this one is

different than any I I have seen in my

52 years Neil all right um on that I

hope you're wrong you can look at that

same Trend and it's one of the reasons

why you have a majority of investors

still very leery about the market that

could also be an opportunity

um that this is as low as we go and

things will turn around because so few

are optimistic having said that retail

sales did fall more than expected down

one percent X Autos down eight tenths of

a percent slowest growth we've seen

since uh June of 2020. I I'm wondering

what you make of all of this because on

the one hand uh you could talk about

that you know giving consumers second

thoughts about spending we don't see

much evidence of that because their

flights are booked and airlines are

saying they're very optimistic for a

busy summer travel season restaurants

are packed Walt Disney World their site

went down as people were booking Walt

Disney World Vacations so that doesn't

seem to be a worry so there does seem to

be a disconnect here what do you make of

that

yeah no I I think you're spot on Neil I

mean if you think about transportation

again uh it's up about 13.9 percent year

over year if you look at bookings it's

up tremendously if you look at our

hometown uh you know company here Delta

is having uh you know tremendous

bookings uh Ed came on and talked about

the future Hospitality has been one of

the biggest job creators uh over the

last couple of months that you and I

have talked about that but then again

you look at retail and I can just assure

you that we're starting to see more

cancellations and leaving us with bigger

inventories that we're going to have to

try to burn off or we're going to have

to Discount to try to get those moved so

again it's it's very mixed messages here

and and you talk about Auto being up and

again now we have this Administration

trying to tell the I'm gonna pause for a

second oh we got like 20 seconds left

but I want to talk about this mixed

messaging is exactly what we're seeing

in this sort of Tale of Two City Style

recession where yeah some people are

getting screwed subprime Auto is getting

screwed people are getting their cars

repossessed guess what happens then they

can't go to work can't go to work what

happens they got to cancel their their

Magic Kingdom visit so some of that is

happening yeah Amazon distribution

centers and Walmart they're conducting

layoffs a lot of these companies way

over hired way over hired because it was

so hard to hire people so it's easier to

hire a bunch of people and then fire now

those people have to go find new jobs

now what's actually really interesting

about firing people is you might

initially think oh my God that's

horrible but the reality is if somebody

is not productive at a job the best

thing the company could do is fire them

the reason for that is twofolded first

let me say the impression the impression

is oh no evil company fired somebody oh

no that means GDP is going to go down

because that person has less money to

spend right well that's the impression

but that's generally not the reality

because what actually happens let's say

that person works and produces a hundred

dollars of productivity a day and gets

fired because they're paid 300 a day and

they only produce a hundred dollars of

productivity a day well then they get

fired now they go they don't create a

hundred dollars of productivity a day so

it's like oh my gosh the economy lost

100 of productivity a day right and the

company's saving 300 a day right no the

company now has three hundred dollars to

spend on something else that might

create 300 of productivity and that

person

probably doesn't stay unemployed they go

find another job maybe they're not

getting paid 300 anymore maybe they're

getting paid 200 but they're actually

providing 200 of value now you actually

have a net GDP Boon I mean think about

it firing sounds so bad but when you

have firing and still have employment

growth it's actually freaking awesome

because now the company that fired has

more money to spend some other company

picks the person up and properly values

them hopefully and if they're not then

they get fired again in the future and

they're just a revolving door then maybe

the the you know the finger points at

the individual and out of the companies

so so now all of a sudden that person

gets another job

and what happens GDP actually goes

positive because both the company that

fired and the individual now introduce

more productivity into the world now the

question is well what happens if there

are no more jobs to get

but that's not actually what's happening

in this economy yes that could happen in

some economies but it's not what's

happening in this economy what's

happening in this economy is yes you are

seeing people get laid off of Consulting

people get laid off of tech and guess

what they're having to do they're having

again Lower wage Tech or consulting jobs

or go into a different industry yeah

that might seem like it's a terrible

thing but again if you're paying a

software engineer two hundred thousand

dollars for fifty thousand dollars of

productivity they are net they are

creating a deadweight loss of 150 000 of

potential economic power

the company saves the two hundred

thousand dollars person gets fired

person goes and works a hundred thousand

dollar job which is a fifty percent pay

cut but actually creates a hundred

thousand dollars of value now you have a

hundred thousand dollars of value here

200 000 of value here you actually have

more GDP output

so layoffs are not actually a horrible

thing as long as the con the the economy

is still functioning

which right now it appears that it is

really layoffs are just a sign of what I

like to call a re-jiggering right it's

kind of like companies did a bunch of

this and then they're like all right we

got too much let's do a little bit of

that all right now we're good we're good

over here right or you bring on people

who actually help create productive

productive margin you should always

as an individual whether you're an

employee or you're a self-employed or

whatever

you should every single day be asking

yourself how much value did I generate

today

and then compare that to what you're

being paid

and if you got paid let's say you're

you're working at Walmart Okay and and

your job is to do inventory

and you took 17 bathroom breaks and yeah

sent 200 messages or whatever on your

phone and you did maybe an hour worth of

inventory work and maybe you're really

good in that hour maybe you get paid 20

bucks an hour but you did 30 dollars

worth of work but the company paid you

200. well the company didn't actually

pay I mean they may have paid you 200

but it cost the company probably 30

percent more so it probably cost the

company 260 dollars that day for you to

basically do thirty dollars worth of

work well in such a case it is in the

best interest of the company to do the

hard thing and fire that person who's

not being productive no there's always

the question of like well was the person

not trained or are they just a misfit

right like maybe that's not what they

should be doing maybe they're not

motivated for whatever reason so this

idea of layoffs always being bad is very

flawed it's actually very healthy for

businesses to go bankrupt and people to

get laid off because it's a wake-up call

that you can't keep doing the same thing

expecting different results

what is it a Bed Bath and Beyond never

adapted to really getting into

e-commerce Best Buy did Best Buy and and

Bed Bath and Beyond were both on the

same path they were both trending

towards bankruptcy

Best Buy is like we need same day pickup

we need to have the best customer

service possible we need to have a

better return policy we need to have

better CX we need to have better

availability of Supply our inventory

management system has to match that is

what's in the store has to actually be

reflected online and what's reflected

online has to actually be on the store

and we got to get our ship together

and they did and now Best Buy's killing

it

whereas Bed Bath and Beyond's not they

deserve to go bankrupt some businesses

don't adapt and they die adapt or die

that's Evolution this is a very normal

part of the business cycle so when I

hear about like oh my gosh Bed Bath and

Beyond and they're going to be more

bankruptcies good

I want more

tumor what they're going to be able to

buy going forward right you know with

electric vehicles yeah to get more and

more of those in but they went what six

out of 10 sales to be that uh just

another few years I don't know if we're

ready for that because they're just

about one out of 20 sales right now uh

all right Bob thank you very much hope

you have a safe weekend my friend very

good seeing you again

thank you Neil very much you too all

right so that uh that addresses that a

little bit more on layoffs here you know

Mr Ops are uh says here Kevin doesn't

take into account the period of time the

replacement worker is unproductive who

cares that's called business you have to

wake up and realize that if you run a

business and there are unproductive

people well hopefully you could train

them better and you could try to train

them better anytime you train people

there's going to be a a a a phase where

they are less productive right so you

have to think about the life cycle of of

basically uh somebody had a job you

started a job they are extremely

unproductive when they start but they

have very high potential so let's say

you pay somebody a hundred thousand

dollar salary the first six months where

it's their first time doing stuff

they're extremely unproductive and they

generate twenty five thousand dollars of

value but then in the future after six

months they generate 200 000 of value

well first of all that it would be

incumbent upon the company to eventually

give the person a raise right 125

hundred fifty thousand dollars and now

all of a sudden the company is starting

to get paid back for the training period

right but now it's net net for both

sides the employee gets paid more and

the company makes more money

but this idea that oh well you know we

keep giving second chance look I'm all

for

two chances three chances but at some

point people are not a fit for a company

and they gotta go so you know I'm a big

fan of hey you know six months you know

within six months you know and then it's

time to trade them in so I mean you know

it sometimes people are like oh that

sounds so insensive it's like that's

hello that's good for both sides if a

person's working for a company and

they're not productive

for whatever reason training culture fit

uh the type of work who cares they are

affecting the US economy they're they're

sandbagging the US economy because money

is being wasted we don't want waste in

the economy America is so great because

we are so operationally efficient

because you can get fired you are

motivated to work harder everybody's not

protected by a union and it's not

impossible to fire people or we have a

lot of right to work states like even

California is one imagine this one the

like literally I would say the most

liberal state in the country is a right

to work state

which means you get fired at any moment

for any reason

well maybe not any reason

but uh yeah that's uh uh you know that's

uh that's that's in my opinion how many

people have 200 000 salaries and a

lifestyle set on a 200 000 job and are

laid off and can only get a hundred

thousand dollar a job will not lead to

higher GDP well it's a fair question so

let's analyze this first of all if you

have a 200 000 salary and you're living

a 200 000 life and you're at risk of

potentially getting laid off because

you're not actually providing more value

than you're hitting paid or you can't

get a replacement job at that sort of

salary that's your own fault

sorry that's a harsh reality that's your

fault that's not the economy's fault

that's your fault that's why I mean it

seems like you still have what forty

percent of people living paycheck to

paycheck making six figure salaries it

doesn't make sense

that that's not sustainable

so the reality is

people making two hundred thousand

dollars should be aware that okay well

what are my other options if I didn't

have a job here and and my lifestyle

should be conducive to to to that level

of value

so that's always a risk so that

individual should always be prepared for

that I mean that's just the nature of of

the world now uh if the company that was

employing them at two hundred thousand

dollars now potentially has to lay them

off and uh and then doesn't hire a

replacement worker and their earnings go

down because that person has their

lifestyle cut in half our earnings going

to go down absolutely

could that lead to a recession

absolutely

that's what recessions are so I'm not

saying GDP is not going to go negative

don't get me wrong I'm not saying it's

not I'm just saying in the long term

it's healthier in the short term

absolutely it could be recessionary in

the long term it's a benefit to both the

employee

and the company