5 ms·

So I wonder. If we ever go back to zero interest rates, will companies start hiring like crazy again, or will they have learned?

• paxys 3y ago
  As long as there are middle managers and executives with kingdom-building ambition there will be overhiring.
  • nine_zeros 3y ago
    This is the right answer. As long as corporations continue to promote management based on headcount instead of promoting based on outcomes/leadership in tough situations, there will only be more and more empire building. Even if interest rates do not decline, the empire builders will only migrate from current set of tech companies to other companies that are seeing a boom. Remember, the goal of management is not innovation or working in specific industry. It is to build larger empires and to climb up an arbitrary ladder.
    • badpun 3y ago
      The companies themselves were empire-builders. In the absence of profits, wall street had to use other metrics to assess future profitability, and headcount, as dumb as it sounds, was one of them.
      • cutemonster 3y ago
        What types of companies do you have in mind? I've gotten the impression that some startups hire a bit many people (to impress investors, and friends/peers?), otherwise I haven't heard about that. I'd thought shareholders of public companies, though, care more about revenue and mostly don't know how many employees each company has? (And that primarily middle managers are doing the over-hiring?) If you have a link where I can read more :-)
• alismayilov 3y ago
  They've learned that they can do cuts later.
• eYrKEC2 3y ago
  If the return on investment for purchasing a s/w engineer's salary, properly scaled by the probability/risk that the investment will yield no result, beats the absolutely certain return on investment of purchasing treasury bonds and every other class of probable-yield-adjusted investment, then investors will invest in s/w engineer salaries rather than t-bills or other investments.
  • onyxringer 3y ago
    The idea that anyone is going to get real term returns on bonds of a government > $30T in debt already and increasing it by like $1T every ~140 days now is silly.
• matrix_overload 3y ago
  Learned what? When it's zero interest rates, funding from desperate investors would dwarf any possible profits you could make, and the bigger headcount makes raising money easier. It's the policymakers and society in general that should learn. A decade of low interest rates together with outsourcing of everything that can be outsourced created hordes of useless people that add little value and feel entitled to their salary. As you get more and more of those, the value of money decreases, and inflation starts piling up (COVID accelerated it nicely, but things like housing, educational and medical were off the charts for a long while). The hangover from those rates will last longer than most expect.
• madboston 3y ago
  close to 0 interest rate is not something that will happen for a long time now. But as someone else has pointed out, empire building will never stop once companies open up hiring and budget freezes.
• pciexpgpu 3y ago
  It’s always a space filling curve.
• duped 3y ago
  When money is cheap it's easy to fund new ventures, and the bigger companies have an incentive to raise headcounts to prevent people from taking easy money to build things that would compete with them.
• paulddraper 3y ago
  The implicit assumption being that R&D-heavy endeavors should operate at constant (or increasing) headcount?