Why not just fire everybody?

Yesterday, the market to be kind was “weak.” Microsoft saw its stock rally. The reason was it announced plans to fire 17,000 workers; this means more profits for the company and greater dividends and buybacks for the shareholders. This is pretty good unless you were one of the 17,000 saps that got canned. While firing workers is rewarded in the insular world of Wall Street, is this the best way to grow our economy? Henry Ford realized the answer was no. Almost a century ago, Ford shocked the country by giving his workers big raises. He did not do this out of kindness. Ford, a well known anti-Semite also known for eating grass sandwiches, was not soft and cuddly. He knew he was losing too many employees because of low wages. The costs of retraining and lost productivity far outweighed the higher salaries. He also knew he could create a whole new batch of Ford customers. When people buy stuff, the economy grows. Stock prices will rise due to increased revenues. Maybe companies like Wal-Mart and McDonalds could learn something from Mr. Ford. A well trained, productive, and fairly paid worker can be a form of rocket fuel for stock prices. It is also a lot more fun than firing people.

Tags:

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.