Fourth months ago, Meta Platforms, Inc., the owner of Facebook and Instagram cut about 11,000 jobs back in November 2022, which represented roughly 13% of its workforce. Meta’s owner, Chief Executive Officer, and majority shareholder; Mark Zuckerberg, recently announced that more of their employees will soon become jobless. Based on many sources, the primary goal of this new round of layoffs is to meet financial goals. The company needs to save money and reinvest that money in the metaverse. For Mark Zuckerberg, the only way to save is to cut the labor force.
We should not expect Meta to be the only tech company to engage in a second round of layoffs. Amazon is expected to also do the same. Amazon originally said it would lay off 10,000 employees, but later expanded that figure to 18,000. Coinbase also laid off 950 employees, after letting go of 1,100 employees last June. Zuckerberg said that he wants 2023 to be the year of efficiency for Meta. Meta has stated that it is working on flattening its organizational structure and removing some layers of middle management to make decisions faster. It is also deploying artificial intelligence tools to help its engineers be more productive.
Source: Google Finance
Since the first round of layoffs in November 2022, Meta’s stock price rose consistently. Prior to the first round of layoffs, Meta’s stock price was above $150 a share. This price though dropped sharply from $150 a share on September 7, 2022, to $88.91 a share on November 3, 2022. After that, the stock price rose from $88.91 to $186 a share as of March 2023. This is an indication that Zuckerberg prioritizes shareholder value over maintaining a larger labor force. When the allocation of resources happens within a company, the main factor of production that will always be subjected to major changes; is the labor factor. The capital factor remains unchanged because capital is what allows the company to either increase or decrease its labor force. If the company is doing well financially, then the owner will hire more people, and even increase the wages of some of those employees as an incentive to increase productivity. If the company is doing poorly financially, then the owner is forced to reduce his labor force by cutting jobs or reducing wages. But no company owner will ever reduce its capital factor in order to maintain or even increase its labor factor.
In the case of Meta, Mark Zuckerberg wants to fully transition to the Metaverse, which will require less human effort to process that transition. And the rise of artificial intelligence is even more alarming for those employees in the tech industry because tech companies will try to maximize efficiency by cutting costs to increase gross and net profit margins. The result is very apparent. If the solution required cutting jobs to keep the stock price high in order to maintain shareholder value, Zuckerberg will not hesitate to fire more people. And this is what is going to happen very soon.
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