After learning about the wave of layoffs by many companies in the United States, this Sunday Bill Simon, former CEO of Walmart He stressed that the country is in a “madness moment” referring to the type of wage, product and cost inflation that has led many companies to make cuts in their jobs.
The businessman warned that these decisions produce a “detrimental impact” on the current US economy. “We are stuck in a loop, a cycle that continues, a byproduct of many of the moves that the Fed is currently making,” she said.
Although in December of last year, the labor force grew with some 223,000 jobs and even though the sector remains relatively stable, the signs of weakening are starting to show. Experts point out that the most viable solution It is the increase in the unemployment rate, to calm down the accelerated inflation a bit.
In this regard, Simon pointed out that “theoretically it can be part of the solution. But the problem is that, at the same time, this wage inflation is happening. For example, last week Walmart announced that it will increase its minimum wage to $14 per hour. That’s a 17% increase,” he replied.
Although analysts point out that the layoffs could further direct the country’s economy, to what extent this can be a great alternative and what would be the collateral consequences. Federal Reserve officials recently announced that the unemployment rate will continue to rise by the end of the year as a result of the increase in interest rates.
For the former CEO of the multinational corporation, actions would become a domino effect and he gives Walmart an example: “food costs have risen 23% in the last two years. Wages are up 17% at the company, 25% at Delta for pilots, 25% in the rail industry; and wage increases like this offset the employment and layoffs we are starting to see. So there’s a lot going on,” he said.
In addition, Simon exposed migration as a problem that could be imposing on the workforce, “we need workers that we can employ, who are in the country legally. What is happening now is that people who cannot participate in the labor force are being allowed inbut they increase the demand”, he highlighted.
The businessman explained that having greater demand “prices are boosted without the labor to be able to repair it. So, it’s a complicating factor. Certain inputs are trying to solve inflation, but there are forces that counteract them and that they spoil it,” he added.
Finally, he stated that if the Joe Biden administration does not soon take the necessary measures to solve the problem of inflation in the country, they will be consumers what they will live in a “world of pain”added the former CEO of Walmart.
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Source: La Opinion