Zombie company to me sounds like a shell company with one or two people - that is not going to spike unemployment. Unless I don't understand what a zombie company is
Based on context, I’m guessing they mean companies that are “Alive” when they should be “Dead”
For example, many public company SPACs, many highly funded VC startups, and a vast variety of other companies that employee hundreds / thousands of people without ever having made a profit (and worse, many of them with negative gross margins - meaning even if they trimmed operations to barebones they still wouldn’t be profitable)
These sort of companies proliferate when VCs and investors run out of high quality companies to put their cash into. Which tends to happen when money is “cheap” (which is another way of saying “when interest rates are extremely low”)
That, and unprofitable companies taking on larger and larger piles of debt to continue their operations. IIRC some 15-20% of listed companies fall in that category.
That's not what they're talking about. They're talking about companies that are inherently unprofitable or barely profitable but hire huge sales or marketing teams to drive revenue growth, which enables them to seek cheap debt and venture capital to keep the music playing. These companies employ hundreds, thousands, maybe tens of thousands of sales people, marketers, and all the HR/security/facilities/IT staff that support them.
Killing zombie companies will be devastating to all these people.
For example, many public company SPACs, many highly funded VC startups, and a vast variety of other companies that employee hundreds / thousands of people without ever having made a profit (and worse, many of them with negative gross margins - meaning even if they trimmed operations to barebones they still wouldn’t be profitable)
These sort of companies proliferate when VCs and investors run out of high quality companies to put their cash into. Which tends to happen when money is “cheap” (which is another way of saying “when interest rates are extremely low”)