2020 article but valid points: Many companies say they have 'operating leverage' — code for firing people cnbc.com/2020/07/29/lot…
“One reason the stock market is holding up well is because investors believe many corporations are going to fire a lot of people and replace them with technology that will make the companies more efficient and improve profits.”
“There's a fancy accounting term for this. It's called "operating leverage."
•For analysts and strategist, the term is like magic pixie dust, driving stocks higher.”
•For analysts and strategist, the term is like magic pixie dust, driving stocks higher.”
“The Street believes many corporations are going to fire a lot of people and replace them with technology that will make the companies more efficient and improve profits.”
This has been going on for years, of course. Companies are always trying to become more efficient, and increasingly that means firing people and replacing them with technology.
Mike Wilson, Morgan Stanley's chief U.S. equity strategist, told Bloomberg a short while ago that there is the potential for a "tremendous" increase in operating leverage when the economy recovers from the pandemic.
"When you go into a recession, cost-cutting is the focus," he said, noting that the improved "efficiency" from firing people will go right to the bottom line.
“Expect more layoffs in corporate America.
Why? Because people are expensive.”
Why? Because people are expensive.”
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