Customer Reviews

The Disposable American: Layoffs and Their Consequences

5 star:		(14)
4 star:		(11)
3 star:		(2)
2 star:		(4)
1 star:		(3)

 

 

The essential point of THE DISPOSABLE AMERICAN is that layoffs, or involuntary separations, have become commonplace as a company strategy to enhance the bottom-line with profound consequences to not only the laid-off employees, but to many other parties, including family, community, and the company itself. Three main "myths" are promulgated concerning layoffs: (1) the flood of layoffs over the last twenty years is not indicative of a foreseeable, long-term trend to instability in employment; (2) laid-off workers have lost value and must correct that through training and education, and failure to do so is confirmation of personal shortcomings; and (3) layoffs are no more than issues of cost savings and wages lost with human concerns being irrelevant. These myths capture the stance that corporations and governmental agencies, employment consultants, and the mainstream media typically take regarding layoffs.

But the author rejects those simplistic and convenient myths. He contends that this multi-decade trend of layoffs is a decided break from the employer-employee rapport that existed for the seventy years before the 1970s. Companies are now mostly not restrained by strong unions. Employment-at-will has become the operative policy in lieu of the restrictions found in bargaining agreements that require "just cause" for layoffs. In other words, companies layoff arbitrarily because they can get away with it.

The author is especially concerned about the psychological devastation that often accompanies layoffs that is unacknowledged in official statistics. It is not unknown that individuals' self-esteem is largely tied to their jobs. Yet employers, who at one time regarded themselves as a part of communities, seem ever more willing to force communities and families to be the sole shock absorber for the damage of their actions. The author profiles several people in their attempts to get back on their feet: several aircraft mechanics and a variety of white-collar workers, though many of them did have substantial resources to weather unemployment.

There is considerable evidence that layoffs may produce short-term results, generally via increased stock prices. But companies can lose critical skills in layoffs, perhaps not realized, in addition to overburdening remaining employees. Layoff artists can often be gone before the full impact of their gutting becomes evident.

The most cynical myth is that education and training will result in getting better jobs after being laid off. The first problems are identifying viable fields, finding appropriate training, and being financially supported during training periods. However, the vast majority of projected jobs into the 21st century will require little more than a high school diploma. Even though the myth persists, funding for re-training is so miniscule as to be virtually non-existent. It is easier to hold that the unemployed have simply failed to apply themselves than to seriously examine the validity of the existence of jobs for so-called "symbolic analysts." The reality is that most of those who find work after being laid off are underemployed and paid substantially less.

The author is surely correct to call for communities to band together to slow down corporate layoffs and to require humane and realistic dealings with those laid off. Requiring annual certified reports by corporations detailing involuntary separations would give unwelcome exposure. Among other suggestions: labor law reform, mandatory severance pay, fair trade policies, and retraining options. In addition, the author wants the huge tax hit that states take in bidding for company relocations to be stopped. Obviously, those funds would go a long way in rebuilding infrastructure and easing the pain of unavoidable layoffs.

The book is an even-handed look at the phenomenon of layoffs in the US. The author seems to view the economic culture of the US more benignly than some might. Many view the relatively harmonious thirty years after WWII as an aberration in the generally contentious relations between employers and employees that has existed since the rise of industrialization. Yet layoffs in the context of globalization are new. The author offers his suggestions with little commentary on their feasibility. Giving the current political climate, it really seems quite likely that the situation will become far worse, literally transforming America into a Third World country of have and have-nots.

According to the "Who Moved My Cheese" myth and popular American groupthink, if you become involuntarily separated from your job, there's something kind of wrong with you, or at least your portfolio of skills and/or attitude. You're supposed to buck up, improve your education and attitude, bust your butt looking for a job, and by golly there will be one for you, at approximately your old salary if not a higher wage. This is one of three major myths journalist Louis Uchitelle does a spectacular job debunking through via in depth interviews with laid off workers, CEOs,headhunters and others; labor statistics, and an investigation into the history of the American work force, unions and labor laws.

The other two major myths are:

1. "Payoff" That in exchange for the approximately 30 million full-time workers who lost their jobs since the early 1980s, "a revitalized corporate America will emerge, once again offering job security, full employment, and rising incomes."

2. The dollar and cents savings in labor costs justifies the layoffs.

Rather than recapping Uchitelle's arguments, I refer you to the book which commendably argues all these points, and brings to life the employment situations of blue collar and white collar workers from all walks of life. One chapter that epitomizes our economy is chapter 3, "Retraining the Mechanics -- But for What?" Here we meet a conference room full of United Airlines mechanics, mostly family men in their 30s and 40s, typically making at least $25 an hour who are about to be laid off. They're cheerfully given post-layoff survival instructions including how to deal with creditors, collect unemployment, and retrain for other jobs.

By the spring of 2004, of more than 800 United mechanics who had gone through this program (one of the best-funded in the country), only 185 were working again. Of these 185, only 15 (8%) regained or exceed their United wage, primarily young beginning mechanics who were making $19 to $20 an hour. The majority earned $14 to $20 in a variety of jobs including auto repair, repairing heating and air-conditioning units, computer maintenance, conducting freight trains or long distance truck driving. Eighteen percent earned less than $13.25 an hour (poverty level for a family a four), in jobs including warehouse or restaurant work, or retailing.

In addition to the financial and psychological losses suffered by these men and their families, members of the flying public may be at increased safety risk as airplane maintenance is outsourced to less skilled workers at lower wages or offshore with less oversight by the FAA, especially in light of recent wage freezes for air traffic controllers. I add these examples to the many examples Uchitelle provides of the society-wide ramifications of layoffs.

The layoffs are not limited to blue collar workers. Among others we meet a former bank vice president who resorted to pumping gas to make ends meet, before he could find a more stable job in tourism which paid significantly less than his bank job.

Simply put, "there are not enough good jobs for the college educated, and neither the private sector nor government offers much help." And the ramifications for those trying to move out of the working poor are enormous given the increasing cost of a college education, plus the fact that one's chances of finding and keeping middleclass paying jobs for the college educated keep decreasing.

I highly recommend this book, which significantly increased my understanding of the changes in the American labor market since the 1800s and how layoffs are counterproductive not only for the laid off workers, but for the company's long term bottom line and society as a whole. Although the book is a bit dry in the spots where Uchitelle reviews labor law, overall the book is a very interesting read, particularly the highly descriptive interviews with laid off workers.

The Disposable American is passionately written and and a must read. Uchitelle skillfully debunks a long-cherished American belief that if you work hard, and are educated, you will have job security and/or ease in finding comparable work with another company. The Disposable American addresses the economic challenges layoffs cause for the middle class just as Ehrenreich's book, Nickel and Dimed, addressed those trying to survive in this country while working at minimum wage. Uchitelle makes his points about layoffs by getting close to his subjects and empathically describing their challenges.
The book addresses the negative impact that layoffs have on the financial and psychological structure of the family. This vulnerability adversely affects the community, and increasingly , the economic security of the middle class throughout this country.
Highly recommended!

New York Times economics reporter Louis Uchitelle has written a vital, sometimes quite emotional book about the polarizing topic of layoffs. While corporate leaders have concluded layoffs to be acceptable business behavior as a means toward increasing the bottom line, the rationale behind such decisions comes into question, and Uchitelle provides a most compelling case against taking such drastic measures. He accurately views layoffs as the consequence of companies intent on nonstop expansion. A longer-term solution against a down market is not even considered, and the author provides substantive data to prove that cuts in staffing do not lead to better stock performance. In fact, what receives much of the author's well justified ire is the myopic aspect of CEOs intent on building the perception that they are proactively responding to business performance. Employees are treated as short-term commodities, while many CEOs not only continue to pad their own compensation packages but also ignore huge non-staff costs that are comparatively more difficult to implement.

Uchitelle focuses on the area that companies refuse to take accountability, specifically the psychological fallout on employees once they no longer are employees and the broader effect on society as a whole. What I like about his approach is that it is not simply theoretical rhetoric that he espouses but empirical evidence that he presents, both historical and contemporary. In particular, Uchitelle focuses on several corporations in Cincinnati, Indianapolis and New Britain, Conn., interviewing the executives who opted for layoffs while continuing to live in luxury and researching the laid-off workers. What he finds out is that there simply aren't enough well-paying jobs with decent benefits to meet demand. Official statistics on the number of jobless omit the people who through severance packages are bought out but really exiled, as well as those who end up contracting and consequently become free agents who shift from company to company under the dictates of often substandard market rates.

He raises the basic philosophical question that needs to be answered - Will there be a return to post-WWII values when basking from victory, people feel an obligation to take care of one another, or has a new mindset developed which emphasizes the individuality and self-absorption necessary not only to survive but thrive? The latter camp asserts that layoffs will bring about a rejuvenated economy that will ultimately lead to an even stronger era of true equilibrium with a hierarchy based on performance. This line of thinking would make sense if we have a social infrastructure that's supports it but we still live by the rules sets by men dedicated to their companies. Until Uchitelle brought it to light with this book, what remains unspoken is the shift that has occurred in who actually carries the economic burden. It's the worker, not the company. The author has me leaning toward his position, that the rampant income volatility produced by a layoff-happy business culture is creating a society of downwardly mobile, insecure workers. I have been one of them after working in a publicly traded company for a dozen years. This is strongly recommended reading.

I'm writing this review to correct some misconceptions made by the previous reviewer, who is obviously making a statement ideological faith supported by mis-statements of fact about labor growth in the US. Obviously, this reviewer has not even read the book whose ideas he asks us to dismiss!

Most of the economic analysis by free market fundamentalists written by the on the problem of displaced workers and outsourcing of factory jobs are more statements of ideological faith then economic analysis. What economic analysis that is presented is based on misstatements of fact about labor growth in the US. So Uchitelle's book is welcome addition to the massive misinformation campaign by the big Ivory Tower think tanks like the CATO Institute that dominate the Internet and the mass media.

This book documents the problem of layoffs. And clearly it's a problem---as Uchitelle thoroughly documents---since layoffs are widespread, and the great majority of laid off workers either drop out of the labor market, or take jobs with less skills and lower pay. Another fact of the layoffs that is often dismissed by free marketeers is that most of the layoffs in last 10 years were a result of management incompetence and short-term vision, not worker productivity.

As a result, American is left with an economy that is weaker and less productive. Worse, our economic growth has become completely dependent on monetary policy slight-of-hand tricks that Alan Greenspan pursued for over 10 years. Greenspan's economic plan is hardly a "free market" solution, as it consists of creating unsustainable economic bubbles with financial deregulation and artificially low interest rates. Worse, the low interest rates that the free market fundamentalists are so fond of are an illusion, made possible by massive deficit spending financed by foreign governments, first the Japanese and the Arabs, and recently to the Communist Chinese government.

Uchitelle proves that the force behind the massive layoffs of the last 10 years have been American management's unwillingness and inability to innovate new products, and instead taking the easy path of farming out their product development and manufacturing to contract manufacturers who outsource to offshore manufacturing plants. Since ultimately the standard of living of Americans is based on it's output and productivity---not financial insolvency and deficit spending that the politicians have been relying on for years. Thus the decadence of the American management classes has endangered the viability of our democracy.

As Uchitelle puts it, "Rather than try to outstrip foreign competitors in innovation, a costly and risky process, management gave up in product after product." On the other hand, companies with management that took responsibility for innovation and refused to layoff at all, like Southwest Airlines, are the stars of what's left of America's productivity based economic strength.

Uchitelle's most important message---which is directly opposite of the ideological bias of the free market fundamentalists---is to dismantle the myth that the workers are too blame for their declining economic insecurity. Obviously, the problem isn't job training, or work ethic, but lack of demand for jobs. Uchitelle documents the fact that laid off workers who re-enter the job market end up being forced to take lower skilled jobs at lower pay, and no benefits. Highly skilled airline mechanics end up running a water taxi for tourists, or going into building maintenance, or a job "throwing boxes" at Federal Express.

Of course, what's ironic of course is that the outsourcing that the CEO classes believe benefit them in the short run, end up hurting many of the corporate staggers who a few years earlier where praising the "innovation" of mergers and outsourcing. Uchitelle survey of the Harvard class of 1968 shows that a good number of the Harvard MBAs have found themselves in the same position that they put their workers in a few years ago. Many are working part time jobs as "consultants", involved in a series of insignificant business ventures. Many just retire to the country estates and palatial mansions that their stock compensation plans bought, and fiddling around with their dwindling stock portfolios, or borrowing equity out of their homes to make ends meet like everyone else.

But the real victim of the fantasy economics embraced by the federal government in last 20 years is the political bedrock of American democracy---our middle classes. The claim was that the United States was expanding high-wage, high-skilled jobs, and that the laid off could simply jump into jobs as good or better is proven by Uchitelle to be totally wrong. After all, he writes, as of 2004, more than 45 percent of American workers were earning $13.25 an hour or less. The jobs that the country has been "growing" the fastest include those like janitor, hospital orderly and cashier. It is simply not true that the downsizing, outsourcing and mergers of the last 20 years have yielded an improved labor market for the majority of workers.

Clearly, Uchitelle is no socialist---he supports private property and enterprise. But on the other hand, he points out the obvious---that it's self destructive to allow the dismantling of our economic base, and ultimately our political democracy.

A lot of the solutions obvious, such as reforming CEO compensation packages and increasing stockholder rights. Corporate Management shouldn't be rewarded for dismantling their companies by walking out with millions of dollars--enough money earned in a few years of reckless, destructive policies---to live for the rest of their lives in luxury and idleness. Another obvious reform would be ending the role of the Export Import bank in financing the exporting of American factory jobs and technology. Withdrawing from "free trade" treaties like NAFTA and CAFTA in favor of "fair trade" treaties is another. Getting tough on the Communist Chinese in currency manipulation is another. Mostly importantly, reevaluating the role of government in guiding the economy to productive ends instead financial insolvency and deficit spending so popular among the politicians.

But the most important solution is to establish a new management compensated for results, not short term profits at the expense of long term viability. America needs a new management class that values it's citizenship, and commitment to the ideals that in past years made America the economic power, and guiding light of democracy and freedom throughout the world.

Some of the criticisms ofThe Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead this book are valid, but I completely disagree with those who sound more and more like a corporate fascist every day, equating the "social contract" with socialism. If they would take the time to read William Greider's book The Soul of Capitalism: Opening Paths to a Moral Economy or Herman Daly's Ecological Economics: Principles And Applications or John Perkins Confessions of an Economic Hit Man or any of a wide variety of books that I have reviewed for Amazon readers, they might realize that the concept of the corporation as a legal entity that absolves its managers and stock-holders from immoral, predatory and even illegal behavior, is one that we can do without. I will go further--I have coined the term "Communal Capitalism" to describe that condition where the people retain ownership of the factors of production, and the managers are well-paid employees but not war profiteers or out and out thieves against the commonwealth."

Hans Morganthau clearly identified the people--the demography of a nation--as a major sources of national power, and Thomas Jefferson was among the first to say that "A Nation's best defense is an educated citizenry." Most recently I have reviewed the new book by Alvin and Heidi Toffler on Revolutionary Wealth: How it will be created and how it will change our lives and there is much agreement between the two books, both of which address the dysfunctionality of our educational, health, energy, and transportation systems.

I am especially taken by the author's tracing of how a series of Presidents, but most terribly, President Clinton, essentially left the American worker to the wolves at the door, and made them disposable. Perhaps Clinton sold out to Wall Street and to bribes from corporations, a standard practice in our (see my review of the book by that title). Whatever the case, what this book clearly documents, albeit with more personal vignettes than I really cared to deal with, is that we are killing not just our middle class, but our worker class as well. This is nothing short of economic and social suicide.

There is one thing and one thing only that we can do to address this unhealthy economic situation that is exhacerbated by the double deficits (trade and debt): this book should be a call to arms for the public, which should demand that both its legislative candidates its presidential candidates in 2008, restore their integrity by once again serving as the champions of the worker-people rather than the corporate special interests.

There is a great deal that is wrong with our predatory form of capitalism, one reason why I champion communal capitalism (my term, not to be confused with socialism or communism but rather with capitalism of, by, and for the people). This author has very capably summarized the real costs to the people, and to the country, of irresponsible lay-offs from which we do not recover.

This excellent book examines the phenomenon of job insecurity in America. Author and newspaper reporter Louis Uchitelle traces the development and decline of the American expectation of stable, remunerative, virtually lifetime employment. Republicans may have taken the boldest steps in rolling back the expectation of job security (Ronald Reagan's firing of the air traffic controllers spoke eloquently for the new order), but they did not do so alone or unopposed. Democratic presidents and politicians did not make preventing layoffs a major campaign issue or administrative priority. Uchitelle writes smoothly and evocatively, particularly about the individual experiences of laid-off workers for whom the surviving avenues of American opportunity were dead ends. We recommend this book to anyone who wants to know what killed the historic American trust between workers and employers, and how to staunch the bleeding caused by layoffs.

"The Disposable American" is a well-intentioned work that addresses a very serious problem. Uchitelle begins by citing myths that help us justify layoffs as an unfortunate necessity: 1)In exchange for the nearly 30 million full-time workers losing their jobs since the early 1980s, a revitalized corporate America will emerge and once again offer full-employment, rising incomes, and job security. Reality - the number of layoffs just keeps growing. 2)Laid-off workers must simply raise their value via education and training. Reality - there are not enough good jobs for the college educated. Seven of the ten fastest growing occupations for 2002-12 pay less than $13.25, and do not require degrees - retail sales, customer service representatives, food service workers, cashiers, janitors, nurses' aides, hospital orderlies. Further, national data indicate that two years after layoff, 27 out of 100 are making at least their old salary, while 33 are not working, and the rest are making less than before.

Another problem with layoffs, often swept under the rug, is the devastation imposed on its victims - feeling shame and inadequacy.

Uchitelle also reports that layoff numbers are understated - only one layoff/person within three years is counted, workers reaching the end of their contract are not counted as laid off, nor those shifted by employers to lower-paying work who then quit.

However, "The Disposable American" also understates the problem. Nationally, 34 percent of those between 18 and 34 receive cash from their parents annually, according to a study by the Institute of Social Research at the University of Michigan published in "On the Frontier of Adulthood" in 2005. Cash is only part of the picture; parents also make generous presents of clothes, cars and help with down payments. Secondly, more than four out of 10 companies are either making or considering making fundamental changes to their defined benefit plans, according to Delloite and Touche - in addition to those that already have. Meanwhile, the uninsured rose 800,000 between 2003 and 2004 and has increased by 6 million since 2000. Thus, layoffs are only part of the problem.

"The Disposable American" also misses the "elephants in the room" - legal/illegal immigrants, and outsourcing. The number of illegal immigrants now account for about one in every twenty workers; in addition, there are thousands more admitted legally under H1 and L1 visas, and President Bush is trying to allow countless Mexican truck-drivers into the U.S. As for outsourcing, one in fourteen white-collar jobs is viewed as vulnerable (in addition to those already lost), while manufacturing employment (blue- and white-collar) has been decimated already over the last two decades.

So what should we do? Uchitelle recommends a higher minimum wage, and a minimum severance package - without any rationale as to how this would not make the situation worse. (It will - look at Europe!) He also recommends that cities and states stop competing with cash and other subsidies to land employers - $30 billion/year is spent, and all wasted when looked at from a national perspective. True! Other good recommendations include higher taxes on the wealthy (eg. support Social Security), and no special tax treatment for overseas earning. However, what is really needed is to recognize that "Free" Trade and open borders have severe unrecognized costs, and thus need to be reigned in. Perhaps the "local content" laws that motivate foreign auto manufacturers to establish plants in the U.S. is part of the answer. Regardless, illegal immigration should be curtailed by requiring accurate Social Security # verification by employers.

Anyone who has ever experienced a layoff or had friends or family who've experienced layoffs should read this book. If nothing else, it will help put things in perspective in terms of personal experience and in terms of historical changes in how jobs and employment are viewed in this country. Uchitelle traces the evolution of the layoff from what was originally a temporary experience affecting only blue-collar workers, who could always count on being recalled back to work after the layoff was over, to what has become a permanent experience, the job gone forever, affecting everyone from the lowest skilled workers all the way up to white-collar workers who were once considered immune and even executives. What was once a course of last resort, carried out with reluctance, has become the course of first resort carried out with steadily diminishing regard for the people affected.

Uchitelle shows, through numerous anecdotal accounts, the cost of these rampant modern layoffs on people's lives, not only in economic terms but in emotional and psychological terms. He interviews people at various stages, coming back again and again, documenting their experiences at dealing with being laid off, some faring better than others and some worse. He also shows the cost in the corrosive effect that endemic layoffs have on the national economy and on the national social framework. Layoffs as a short-term solution have long-term consequences for the companies that engage in them.

Uchitelle also suggests possible solutions, beginning that chapter with these words: "Layoffs are not going to go away, but they don't have to be as numerous as they now are. Shrinking the number is possible, but before we can make it happen, we have to address a philosophical issue: Are we going to once again be a community of people who feel obligated to take care of one another, or are we going to continue as a collection of individuals, each one increasingly concerned only with his or her well-being? If we can band together again, as we did during a forty-year stretch that started in the Depression and ended with the Vietnam War, then job security will gradually return to the United States -- not to the degree that once existed, but more than we have today."

This book is worth reading, not only for helping people touched by layoffs to understand what is happening, but also for raising the possibility that things don't necessarily have to be the way they are now.

Its nice to see someone cut through all the nonsense about a "flexible" workplace. And I guess one could argue whether its better to have a country where some people have job security or a country where no one does.

But there is something unworkable about a situation where employers demand 110% while reserving the right to fire at the drop of a hat.

I think the best and fairest solution would be to charge healthy companies a tax for dumping their workers. After all, these people won't be going to restaurants or the dry cleaner (or even the doctor) so we all suffer and as a taxpayer I don't want to subsidize more firing.