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If I had 50 employees at $8.00/hr - working 40 hours a week . . . I'm paying them a total of $320.00 each per week - which is $16,000 per week total.
That's $64,000 per month. $786,000 per year.
If I fire half of them - my company then retains that extra $$ . . which is $384,000.
However - the problem, here, is that the remaining workers must pick of the slack.
I have thus netted myself more money. . . but I've ****ed over my other employees who are now working double-time. If I don't give them incentive to stay (which is the left over pay from the others who I let go of or increased benefits) then I have set myself up for a crappy business ethic - pushing too few people too hard to get work done for the same amount of $$.
They will be looking for work elsewhere and bailing out asap.
Either way you look at it - it paints an 'ultimate doom' scenario for a company.
The only way to actually save a failing company is to reduce or liquefy your assets. Maybe letting go of people who are directly related to those assets being *there* - *and then* based on that result of that - deciding if you need to let more of your employees go.
No offense but this is a pretty simplictic view of what happens. Surely there are cases when the above this happens. Usually in bad companies which over time will not be able to compete.
In other cmpanies changes in work force may be due to investments in IT for example so you can improve productivity. Better processes, finding things that you were doing that was not adding value to customers and stop doing that are other examples where there are reductions that do not hurt employees, customers but help both. That is because you can be more competitive, retain customers and be able to give remaining workers a stable work environment.