TBR: The Disposable American

Today’s book is The Disposable American: Layoffs and Their Consequences, by Louis Uchitelle.  It’s the book from which his NY Times article about displaced airline mechanics came from.

The book alternates chapters in which Uchitelle discusses the overall growth of layoffs as a phenomenon with ones in which he profiles specific laid-off workers.  One of the the arguments he makes is that white-collar workers who lose their jobs to "downsizing" or "outsourcing" or who accept early retirement packages are as much laid-off as the blue-collar workers that we associate with the word "layoffs."  (He notes that the specific questions that the government uses to ask workers if they’ve been laid off refer to "plant closings" and make it less likely that a professional will answer yes.)

Uchitelle makes a convincing case that layoffs have extensive hidden costs — beyond the well-documented loss of earnings — especially the emotional toll on workers who are told that they’re no longer needed, and who often can’t find a job at a comparable wage.  He also argues that they often don’t provide the expected economic benefits to companies that use them, as the remaining workers are demoralized and less productive.

His discussion of solutions is less convincing.  Even a die-hard liberal like me finds it hard to believe that increasing the minimum wage to $12 an hour would automatically result in productivity increases enough to cover the costs.  He suggests massive governmental public works spending, prohibitions on compensating executives with stock options, and a complicated system of reporting all layoffs.  By contrast, he sees most of the political solutions of the past decades — promoting lifetime learning, increasing the portability of health insurance and pensions — as acquiescing to layoffs.

At times, Uchitelle’s criticisms seem simply contrary.  For example, he writes: "Like Stiglitz, and many other academics, he [Robert Reich] accepted the findings of empirical research concerning education.  In virtually all of this research, people with a college degree earned more than workers with only a high school degree."  The implication seems to be that it was a mistake to accept this empirical research, but Uchitelle doesn’t offer any explanation of his critiques.  (The problem is that there’s also been an increase in within-group inequality, so the averages don’t mean that a college education is a guarantee of security.)

4 Responses to “TBR: The Disposable American”

  1. jen Says:

    I have lived through many layoffs in my career. And I’ve worked at places that move heaven and earth to avoid layoffs. My experience has been that both approaches have their problems.
    If you provide an employee with ongoing growth (which often means training/education) opportunity, and you decouple health care/pension from employment with a specific firm, you give the employee several gifts.
    First, you provide them with a means for recovering if they are laid off, or if something like Katrina destroys their place of work.
    But secondly, and IMHO just as importantly, you give them the tools they need to lay off their employer if they want. In such a world the employee can walk away from an employer where s/he is being discriminated against or harassed, where s/he is not being compensated properly, where s/he is not moving up or doing work they enjoy.
    Also, I believe market forces do have some impact on these layoffs. Companies that make frequent use of layoffs have suffered damage to their culture, in the form of embittered employees. And going forward such companies are also viewed with suspicion by those they try to recruit. I regularly hear job interviewees asking me about my current employer’s layoff history. Laying off is seen as bad management — and nobody wants to work for a bad manager.

  2. amy Says:

    This sounds interesting. I like Mark Schmitt’s recent post on education being the wrong answer (and agree, after reading a dated-sounding _Work of Nations_ a couple years ago). As one of his commenters pointed out, though, in an economy where US employers compete globally and have access to millions of low-wage professionals around the world, attempting to stop the job drain is likely impossible. I think it’d be impossible even to substantially impede it, and that remaining safety comes in the form of poor American-English — other-language communication making outside hires inefficient. For a while, anyway.
    I’m curious to see what Uchitelle recommends in terms of reporting, though.

  3. landismom Says:

    This is pretty interesting. I think that the idea of decoupling health insurance and pension benefits from specific jobs is a good one–kind of like what artists’ unions and the building trades have done. They’ve created industry-specific benefits programs. Of course, the much better thing would be to just have universal health care, but that seems like it’s a ways off.
    My only personal experience of being laid off was when I had to downsize myself–I was the only staffer of a small organization, and I had to lay myself off part-time. It was bizarre, to say the least, but at least I didn’t have embittered employees.

  4. dave.s. Says:

    McArdle posted on this Naked Capitalism post: http://www.nakedcapitalism.com/2008/08/many-former-wall-street-employees.html
    “Recall that in the dot-com bust, those who lost jobs in Silicon Valley faced similarly bleak situations, and stories abounded of principals of failed companies seeking work at the likes of Home Depot.”
    suggesting that narrowly specialized folks can find themselves beached when their particular skill set isn’t demanded.

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