Record-high inflation and soaring prices created nothing but difficulties and concerns for many low- and middle-income families across the country, prompting the Federal Reserve to aggressively raise interest rates in order to slow the economy and, eventually, lower prices and inflation. Combating inflation with increasing interest rates is a practice seen many times throughout history, but slowing down the economy also means that unemployment rates will go up.
The Federal Reserve raised interest rates by three-quarters of a percentage point early last month, its fourth consecutive hike of this magnitude. The FED is expected to slow the pace of hikes as soon as this month, but interest rates are expected to reach and remain at 5.0% through the rest of 2023. While investors are cautious in these difficult times, major companies have been working on cutting expenses for months now.
Mark Zuckerberg recently announced that Meta is reducing the team by about 13% and is letting more than 11,000 of the company’s employees go. Twitter laid off half of its workforce in the few weeks since Elon Musk took over the company. Amazon recently announced in a blog post its plans to lay off 10,000 employees, representing 3% of its white-collar professionals in corporate and technology roles. Tech companies are not the only impacted by the current situation and the fear of a recession that might hit as soon as next year.
Recently, the Daily Press reported that United Furniture Industries, one of the largest furniture companies in the country, laid off nearly 3,000 employees without severance or benefits, just days before Thanksgiving, leaving thousands without health insurance. According to local reports, all of the now-former employees were notified of their dismissal after the company sent them an email overnight on Monday telling them not to come in for their shifts on Tuesday. In a second email sent shortly after the initial one, the company informed its employees that “all benefits will be terminated immediately without the provision of COBRA.”
A total of 2,700 employees received the email out of approximately 3,000 who have been working at United Furniture Industries’ facilities in California, North Carolina, and Mississippi. The company stated in the email that the terminations would be “effective immediately” and that the “company was forced to make the difficult decision due to unforeseen business circumstances.”
The overnight emails caused additional complications because most of the employees were sleeping at the time they received the emails, while others showed up the next morning at work as per their regular schedule because they hadn’t seen the emails at all. Company drivers who were out making deliveries were told to return to a United Furniture location immediately to turn in their trucks, most were told that they would be paid through the end of the week.
United Furniture Industries is just another company on the growing list of companies that have laid off workers in recent weeks, and other companies across different industries are expected to take similar steps in the upcoming period as financial experts are convinced that a recession will hit America next year. Although a recession might be avoided, it’s highly unlikely at this point, and a long time to prepare will be crucial for companies with foresight.