BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

The New Reality: Fears Of Layoffs, A Return To The Office And Concerns Over Banks And Commercial Real Estate

Following

The sudden closures of Silicon Valley Bank, Signature Bank and Silvergate Bank sent shock waves throughout the banking system. There are still lingering concerns over the health of small and regional banks in the United States.

Swiss-based bank Credit Suisse was acquired by its cross-town rival Union Bank of Switzerland (UBS) for around $1 billion to avert a potential financial disaster, according to the Financial Times. Swiss regulators called for action to help restore trust and calm in a volatile global banking environment.

UBS and Credit Suisse provide similar investment services, including banking, high-net-worth wealth management, asset management, stock and bond sales and trading. UBS has more than 74,000 employees working from nearly 50 countries. Credit Suisse also has an international reach and is the second-largest Swiss bank with around 50,480 employees.

It is likely that once the two similar institutions combine, significant layoffs will be announced due to redundancies. The Financial Times reported that the job cuts could total as much as a third of the more than 120,000 roles.

The Layoffs Keep Coming

More than 150,000 people have been laid off in the U.S. tech sector since the beginning of 2023. On a nearly weekly basis, top companies—from tech to Wall Street—cut jobs. Some companies initiated several rounds of downsizing. Meta let go of 11,000 in November and announced this month that it would release 10,000 people in a second round of layoffs. Additionally, the social media giant dispensed with 5,000 open job requisites.

Bob Iger formerly ran Disney, left and recently returned to the company as the CEO for a second time. One of his first orders of business was to commence laying off people. It would be the first of three rounds of headcount reduction, eliminating 7,000 jobs. Much like other chief executives, Iger said that downsizing is needed to streamline the company due to the uncertainty of the economy.

The unrelenting waves of downsizing take a toll on the impacted personnel and the remainers. The laid-off workers worry about finding a new job amid significant layoffs and hiring freezes. The remaining people face survivor's guilt and an onslaught of extra work to pick up the slack from those who left.

Workers Are Out, And Investors Are In

Companies that downsized workers saw their stock share price pop in value. Investors applauded layoffs, contending that it was necessary to wring out the excesses accumulated over the last decade, creating too much hiring and corporate bloat. Leadership adopted a new mantra of slashing costs, cutting jobs and doing away with lush perks, such as free food and laundry services. This was a radical departure from kowtowing to employees to keep them happy and not leaving for a competitor or building their own startup that could compete against the firm.

Silicon Valley Bank Workers Lose Their Stock And Dreams Of Wealth

The SVB implosion and closure wiped out the stock holdings of workers at the bank. Tech employees are typically paid a salary, along with generous stock options. The stock grants are coveted by employees, as it offers the possibility of getting wealthy quickly if the company takes off. According to Business Insider, an SVB employee witnessed the value of stock in the company plummet from $1 million to nothing.

Commercial Real Estate May Be The Next Shock To The System

There is growing fear over the $20 trillion commercial real estate (CRE) market. Higher interest rates and inflation are anathemas to CRE. Remote work left many commercial buildings empty, as people worked from home.

According to the Wall Street Journal, large commercial real estate company Brookfield Asset Management defaulted on prime building, and investment management firm Pimco also defaulted on a mortgage.

San Francisco tech companies wholeheartedly adopted remote work. While employees worked from home, the streets of San Francisco became ghost towns, and crime and drugs took over, causing people to avoid coming into the city. Without the steady flow of people into the city, mom-and-pop shops and an array of businesses close shop, as they don’t have enough customers to keep them afloat. Also, lower building occupancy results in falling property valuations.

This trend could harm the already-reeling banks. If people opt out of going to the office and stay away from inner cities, the prices of buildings will plummet. If things don’t change, the banks may take possession of the commercial buildings. The lending to commercial real estate developers comes largely from small and regional banks—the same ones already experiencing challenges.

End Of Remote Work

In light of the difficulties in the commercial real estate market, it is now understandable why companies are pushing people to return to the office. New York City Mayor Eric Adams cajoled business leaders into nudging workers to return to keep the Big Apple vibrant and viable.

In a tougher job market with the balance of power returning to the bosses, they have the leverage to strong-arm employees to return. Consequently, people seeking remote work are not finding as many opportunities as they did in the past, as remote job listings decline. Remote jobs on LinkedIn comprise slightly more than 13% of postings, down from 20.6%.

For a while, “Zoom towns” flourished, as workers in high-cost cities moved to lower-cost locations during the pandemic, tripling from 2019 to 2021. These workers now have to choose between relocating, or quitting and taking their chances in a competitive job market.

Amazon And Twitter Pushing People Back To The Office

Reflecting the new and cold reality for workers, Twitter CEO Elon Musk informed workers that they couldn’t continue working remotely, according to Platformer managing editor Zoë Schiffer. Musk emailed employees at 2:30 a.m. on Wednesday, writing that the "office is not optional," cutting Twitter’s work-from-home “forever” promise from former CEO Jack Dorsey. Musk ordered staff within driving distance of the office to show up in person. Failure to do so would be considered as their resignation.

Around 30,000 Amazon employees, who wanted to remain working remotely, signed a petition and sent it to the online-retailing giant’s human resources chief and senior vice president of people experience and technology, Beth Galetti. To the dismay of workers, Galetti rejected the petition. The petition followed the return-to-office mandate made by Amazon CEO Andy Jassy, calling for employees to come into the office three times a week beginning in May.

The signatories are brave, given that Amazon said it would be laying off 9,000 employees, in addition to the 18,000 roles it cut in January.

Similarly, Apple is intimating that there will be repercussions for people who do not return to the office three days a week, Schiffer tweeted.

Follow me on Twitter or LinkedInCheck out my website or some of my other work here