Cheddar News Senior Reporter Michelle Castillo explains why some of America's biggest hirers are now becoming the country's biggest firers.

<div class="block">More corporate layoffs have hit headlines this week, from a Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-03-07/meta-is-said-to-plan-thousands-more-layoffs-as-soon-as-this-week?leadSource=uverify%20wall">report</a> that another large round of layoffs will be carried out at Meta before founder Mark Zukerberg goes on parental leave, to GM's announcement that it is encouraging most of its white-collar employees to take a payout to walk away,</div><div class="block">Cheddar News Senior Reporter Michelle Castillo explains why some of America's biggest hirers are now becoming the country's biggest firers.</div>

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Explaining the Business Behind Big Layoffs

So Michelle, a report from Bloomberg said that metal will go through another round of layoffs. This follows a 13% reduction in headcount so far this past November. So why are they in this situation again? Well, Shannon, yes, that 13% reduction in headcount that was 11,000 workers and that was metas first widespread company layoff and that happened last year. But now these reports are saying that thousands more could be let go as soon as this week and the company is entering what Mark Zuckerberg calls a quote year of efficiency. So I spoke to Columbia Business School, Associate Professor Daniel Kuma about why meta has to go through two rounds of layoffs so close to each other. And here's what he said, there's a realization that over the pandemic era, that people are not pulling their weight. Um So I think that's number one, I think number two is that they have made unusual amount of investments even for these tech companies into new business areas. So, I mean, they are being, being a a virtual virtual investments, being a key example and they're not really picking up. So, speaking of, er, he's right So Metas, VR and Metaverse Division, it's called Reality Labs. It lost $13.7 billion last year and it said it expects to lose billions more for years to come. So this is all on top of a downturn and advertising investment as marketers pull back ahead of what they expect as a recession. And we know that advertising is the company's main revenue driver. So layoffs can be expected and there will be probably more to come. Yeah. But Michelle, a lot of people may be asking why not do all the layoffs all at once instead. Now everybody's always afraid they're gonna lose their job. And the next. Well, that's a good point. Shannon. And I think that's what most companies want to do, just do one large round of layoffs and then maybe hire people back if they did too much. But the economy is much shakier than expected. So, here's coon with a little bit more. One thing they really wanted to do was that they didn't want to do this drip by drip layoffs. It's, it's demoralizing. Um, it just interferes with every aspect of running a business. And so they thought that, okay, let's go a little bit aggressive. Um, so that, and if, if you're going too far, we can pull back by rehiring some of the people we laid off. But they're realizing that the recession, um, it's going to be a little bit longer than they hoped that they grew a little bit more, actually a lot more aggressive than, than warranted by the business reality. So, what you're seeing across the board in the text fear or even other businesses that people who thought they overcompensated with letting people go are actually finding that they need to do cuts again. And as Kuhn pointed out, this is horrible for morale and it really leads to greater discontent within companies. And that's really something that's not great at this time, especially when you see so many people without jobs. Yeah, that's so true is hurting a lot of families out there. But okay. What about companies like GM, they're offering buyouts? Is that a better option? Well, let's walk through those buyout. GM is offering. Um right now there, it includes salaried employees in more than five years at the company and international executives with two or more years at the company. So that's the majority of us employees. According to the latest numbers at the end of 2022, it's about 58,000 salaried employees in the us that we offered this deal. Most of them and 35,000 of those are in Michigan alone, but it's going to cost the company 1.5 billion to execute these offerings if they get what they want. Um So it will be pricey in the short term, but this signifies that GM believes a recession is coming and in the end, this upfront costs will give them savings. So, buyouts might be a good option because it gives the choice back to the people who are deciding if they want to stay with that career. But at the same time, it isn't going to boost that company's stock right away because they're gonna have to pay a lot for those benefits, those years of service to get people to leave at the time they want.