“Productive labor may render a nation poorer, if the wealth it produces - that is, the increase it makes in the stock of useful or agreeable things - be of a kind not immediately wanted.” – John Stuart Mill, Principles of Political Economy, p. 76
Try to start a business by promising to create lots of jobs. Investors will run from you, and that’s not because they hate workers.
If anything, what you’ve read is a signal of how much investors revere workers. Eager to achieve upward sloping returns, they want the human capital they back with investment capital to be positioned to maximize individual employee potential. Put another way, productive workers are magnets for the investment that pushes their pay upwards.
It’s something to think about amid the layoffs at Meta. The popular narrative is that the shedding of workers is all about the automation of tasks formerly conducted by humans, all with an eye on Meta using AI to persistently shrink its workforce alongside rising profits. It’s all fun to imagine, but Meta couldn’t shrink its workforce even if it wanted to.
Why can’t it? The short answer is that Meta has investors. Those investors yet again require upward sloping returns. The returns can only be achieved via feverish attempts to discover a business future that will little resemble the present.
Crucial about the discovery is that it can’t and won’t happen without people. Which substantively explains why Meta, along with all valuable companies, must occasionally let high quality employees go. Excruciating as it is for employee and employer alike, it's good for workers precisely because it’s good for Meta.
For the employees laid off (four months of severance, plus an extra month of severance for every year they were in Meta’s employ), they have the opportunity maximize their own unique skills somewhere else, and in ways that will result in higher pay. Implied in their being made redundant is that they wouldn't achieve their earning potential at Meta.
As for Meta, the employee exits free up capital not for it to announce a shareholder dividend, or put the money saved in low-risk money market funds, but instead for Meta to hire the people necessary to lead the company's next iteration. Not said enough is that stasis in any business line is dangerous, but in technology it’s fatal.
Readers will hopefully remember this with Meta’s layoffs well in mind. If they were strictly a money-saving gesture, or the prelude to a dividend, Meta shares would be in relentless decline. Which is the point.
The share price of any corporation is never a reflection of the present. The present is priced. Which means share prices are a look ahead, and a speculation from investors on whether the businesses they own have a wise plan for a future that will look nothing like the present.
Hopefully this better explains what Meta is doing as it lets workers go. A failure to productively deploy workers, or a decision to employ them in ways that don’t maximize their talents, is the path to eventual unemployment for those improperly retained as their employer rushes toward obsolescence.
Meta has plainly chosen evolution over stasis, and evolution requires people. In other words, the surest sign that Meta intends to hire in a big way can be found in its occasional decisions to let valuable workers go.
