Where the Ax Will Fall Next

Another week, another round of job cuts—this time Meta Platforms Inc. is adding to the 11,000 people it fired in November with thousands more, Bloomberg News has reported.

- Alex Webb

It raises the question: Even after the thousands of layoffs we’ve seen in recent months, which industries might be looking to toss more staff on the scrapheap? The answer, based on an analysis of earnings and stock performance, appears to be the financial and healthcare sectors.

Here’s how I reached that conclusion. In the S&P 500 there are 105 companies whose revenue per employee—the average amount of revenue generated by each worker—has declined from pre-pandemic levels; i.e., 2019. That’s a pretty good gauge for how efficiently a company is run. It means that either sales have declined or management hired new staff faster than it could expand the business—headcount growth exceeded sales growth.