Dell to Slash Over 6K Jobs

    Photo: Getty Images [via CNBC]

    The Facts

    • Dell Technologies Inc. has announced its intention to cut roughly 6,650 employees — about 5% of its overall workforce — amid slumping demand for PCs. The news comes amid a wave of mass layoffs in the tech sector, with companies such as Amazon and Alphabet having announced jobs cuts in recent weeks.

    • The news was made public in a memo released on Monday, which saw Dell's Co-Chief Operating Officer Jeff Clarke state that attempts to cut costs by pausing hiring and limiting travel, among other measures, had been insufficient. Clarke also said that market conditions were continuing to "erode," creating "an uncertain future."

    The Spin

    Pro-establishment narrative

    This movement towards mass redundancy in tech firms is not indicative of any significant market changes. The layoffs are sparking media attention on an inordinate scale, but the tech sector only accounts for roughly 3% of jobs. In addition, tech workers are relatively well educated, and evidence shows they rapidly find new work in comparison to the rest of the labor market.

    Establishment-critical narrative

    These layoffs spark cause for concern. The bounce in stock prices following most tech redundancies may make this move more popular among executives, even though not enough emphasis has been put on the potential impact on consumer spending of layoffs. Tech workers are mostly highly paid and the US economy is heavily dependent on the spending of the top fifth of earners. This ongoing strategy in the sector could easily cause the elite to slow spending.

    Nerd narrative

    There is a 50% chance that the annual US unemployment rate will be at least 6.09% in 2027, according to the Metaculus prediction community.

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