The Disposable American: Layoffs and Their Consequences
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The Disposable American: Layoffs and Their Consequences [Hardcover]

Louis Uchitelle
3.9 out of 5 stars  See all reviews (38 customer reviews)

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Editorial Reviews

From Publishers Weekly

Devoting a book to the necessity of preserving jobs is perhaps a futile endeavor in this age of deregulation and outsourcing, but veteran New York Times business reporter Uchitelle manages to make the case that corporate responsibility should entail more than good accounting and that six (going on seven) successive administrations have failed miserably in protecting the American people from greedy executives, manipulative pension fund managers, leveraged buyouts and plain old bad business practices. In the process, he says, we've gone from a world where job security, benevolent interventionism and management/worker loyalty were taken for granted to a dysfunctional, narcissistic and callous incarnation of pre-Keynesian capitalism. The resulting "anxious class" now suffers from a host of frightening ills: downward mobility, loss of self-esteem, transgenerational trauma and income volatility, to name a few. Uchitelle animates his arguments through careful reporting on the plight of laid-off Stanley Works toolmakers and United Airlines mechanics. Descriptions of their difficulties are touching and even tragic; they are also, alas, laborious and repetitive. And Uchitelle's solutions are not entirely convincing: neither forcing companies to abide by a "just cause" clause when they fire someone, for instance, nor doubling the minimum wage are likely to increase employment. Yet Uchitelle's basic argument—that no American government has taken significant steps to curb "the unwinding of social value" caused by corporate greed— is all too accurate. (Mar. 31)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

In his first book, Uchitelle, an award--winning business reporter for the New York Times, delves into the unspoken consequences of corporate layoffs in America. He shatters the widely held myth that layoffs are ultimately good for the economy; that in America there is always work, and good pay, for the educated and skilled; and that new training creates jobs. Layoffs, which were mostly a blue-collar phenomena in the 1970s and were necessary to combat the influx of cheap competition from Asia, have become a way of life for corporate America and have cut deep into the white-collar workforce, ending job security as we knew it. Entire classes of people are being caught in a new trend of "downward mobility." Uchitelle takes examples from places such as Stanley Tool Works, the largest employer in New Britain, Connecticut, which slashed the workforce and moved operations overseas, and United Airlines, where mechanics receiving premium wages were "outsourced." Emphasizing the hidden psychological toll that layoffs take on the individual, Uchitelle examines the entire issue in a sympathetic yet realistic light. David Siegfried
Copyright © American Library Association. All rights reserved


“Uchitelle effectively wrecks the claim that all this downsizing makes the country more productive, more competitive, more flexible. . . . A strong case that the whole middle class is at risk.”
The New York Times

The Disposable American is an overdue wake-up call that could start making the wisdom of layoffs that much less conventional.”
San Francisco Chronicle

“Incisive. . . . An airtight case against the common wisdom that favors job cuts.”

“Uchitelle writes about the moral failings of our modern corporate structure with deep and persuasive insight. That alone makes the book a must-read.” —Detroit Free Press

From the Trade Paperback edition.

About the Author

Louis Uchitelle worked as a reporter, a foreign correspondent, and the editor of the business news department at the Associated Press before joining The New York Times in 1980. He has been writing about business, labor, and economics for the Times since 1987. He was the lead reporter for the Times series “The Downsizing of America,” which won a George Polk Award in 1996. He has taught at Columbia University and was a visiting scholar at the Russell Sage Foundation in New York in 2002–2003. He lives with his wife, Joan, in Scarsdale, New York.

From The Washington Post

In 1997, the board of directors of the Stanley Works, a Connecticut tool company, lured its new chief executive, John M. Trani, away from General Electric with a compensation package that was two or three times those given to any of his predecessors since its founding in 1873. Like many of his peers at other U.S. companies at the time, Trani closed plants, cut costs, downsized and outsourced the company's operations. Six years later, 5,500 Stanley employees had lost their jobs.

This story is one of several that Louis Uchitelle, a New York Times economics reporter, uses to argue that there is something fundamentally wrong with the tolerance that this country has developed for large-scale layoffs. His The Disposable American is a nostalgic, anxious book. Uchitelle writes longingly about a time when corporate layoffs were seen as a stain on a company's reputation and when job security was a reasonable expectation -- a time when the worries of American workers had nothing to do with the vagaries of a globalized economy or the outsourcing of jobs to India or China. The author often relies on an idealized view of the employment practices of the past to sharpen the contrast with the more volatile and insecure present. Still, despite the book's occasional exaggerations ("a layoff is an emotional blow from which very few fully recover"), it is impossible not to be touched by Uchitelle's many real-life tales of sacked workers who, through no fault of their own, were thrown into an economic and psychological maelstrom with weak or nonexistent safety nets to help them and their families.

The problems Uchitelle highlights are important, and some of the solutions he proposes make sense. It is clearly wrong, for example, to give huge tax breaks to the wealthy when working families must struggle with limited health insurance or none at all. Cutting outrageous corporate-welfare programs and using the savings to improve health and education for workers is also an unassailable proposal. Unfortunately, not all of Uchitelle's prescriptions are so easy to defend. Government regulations that would make it costlier for employers to fire workers, for example, are good news for the workers who already have jobs but hurt those who are unemployed and looking for work because higher firing costs reduce companies' propensity to hire.

The Disposable American is too often silent on what could be done to avoid the well-known downsides of the policies it champions. Though Uchitelle knows better than to hold Europe up as a model, many of the policies he favors have a strong European flavor -- even though the usual European cocktail of welfare and labor conditions contributes to chronically high unemployment, sluggish economic growth, unfunded public programs and low productivity. Moreover, Europe's rigid labor markets especially penalize the poor, the unemployed and the unskilled, favoring instead a "labor oligarchy" of securely employed workers already ensconced in jobs. The above-average unemployment rates among Europe's youth and its impoverished immigrants are a factor behind the rising criminality, rioting and social turmoil that disproportionately afflict these groups.

It is also surprising that Uchitelle, who in his day job reports on the U.S. economy, could write a book so neglectful of America's distinct advantages. Although massive layoffs have important economic and social costs, the relative ease with which U.S. companies can trim their payrolls to adapt to changing conditions also has benefits. Millions of jobs regularly disappear from the U.S. economy, but with equal regularity, millions more are created. Indeed, no other industrialized country systematically creates as many jobs as the United States. The problem is that while the job losses resulting from plant closings and downsizing are highly concentrated in time, location and industry, the new jobs appear broadly dispersed throughout the nation, over different sectors and over time.

True, workers who lose jobs often must accept new ones at lower salaries; true, all of that is traumatic and undesirable. But the fact remains that, between 1980 and 2002, the U.S. population grew 23.9 percent -- and the number of jobs increased by 37.4 percent. And the painful private-sector restructuring that has taken place in the United States since the mid-1990s, like the one epitomized by the Stanley Works vignette, has created stronger companies that are the backbone of one of the world's most prosperous, competitive economies -- one that continues to create jobs while all other industrialized economies are growing too slowly or stagnating. Last February, for example, New York Times readers learned that, "in one of the strongest job reports since the start of the recovery in late 2001, the government reported yesterday that the unemployment rate fell to 4.7 percent, its lowest in more than four years. The nation's employers hired workers in nearly every industry." The author of the article? The same Louis Uchitelle who in The Disposable American claims that labor conditions in the United States are a "festering national crisis."

The Uchitelle who wrote this passionate but flawed book would correctly insist that we should be alarmed about the poor quality of the jobs being created, rather than being mollified by their quantity. Unfortunately, his compassionate desire to improve the quality of American jobs makes him too eager to experiment with policies that in the long run are known to hurt those whom he seeks to help.

Reviewed by Moisés Naím
Copyright 2006, The Washington Post. All Rights Reserved.

Excerpt. © Reprinted by permission. All rights reserved.

The Stanley Works

Several years ago, Donald W. Davis stopped making visits back to New Britain, Connecticut. He felt shame for what had happened to the Stanley Works, the city’s largest employer, which he had led from 1966 to 1988—from its best days to the beginning of the layoffs and plant closings that, after he was gone, finally reduced Stanley’s presence in New Britain to a collection of mostly empty factory buildings and reproachful former workers.

Davis by then no longer lived in New Britain. He had sold his Dutch Colonial home, which he had painted a bright and optimistic yellow, and had moved with his wife to Martha’s Vineyard, where their summer house on seven acres of rolling lawn became their main residence. It was an entirely different setting, but the trip back to New Britain for visits was easy enough—less than four hours by ferry and car—and Davis at first made it often. Like many chief executives of his era, he had been deeply involved in the life of the city that, in his day, had supplied thousands of Stanley’s workers. He had served on the board of education for many years and was its president for a while. The six Davis children attended the public elementary schools.

But in the late 1990s, the visits home stopped. Meeting former Stanley employees on the streets, in restaurants, at the YMCA, where Davis still went to exercise, became too painful. “They just moaned about what was happening to this great company,” Davis told me. He had tried to share their sadness, to distinguish his stewardship from the accelerated pace of layoffs and the disregard for New Britain that had become so striking after he was gone—as if he were a victim too. But he wasn’t really. The people he encountered had lost their jobs against their wishes, while he had retired on schedule, a wealthy man. And he had, after all, initiated the layoffs. No one blamed him, Davis maintained. But the encounters with former Stanley workers became, as Davis put it, “much too personal.” So he stayed away.

When we renewed our acquaintance a few years into his self-exile, I found a restless, often passionate man, unable to put behind him his final years as chief executive. At eighty-one, still stocky and agile, he was grateful for good health so late in life. Age showed only in his hair, which was pure white, and in his eyes, which became tired and bloodshot in the late afternoon, although when I suggested that we take a break in our conversation, which had started in the morning and had continued through lunch at a noisy seafood restaurant, he waved me off, intent on his recollections. He no longer bothered with the suits and sports jackets of his CEO days, but he did have on a white button-down shirt. He was running a leadership seminar twice a week during the fall semester at the Massachusetts Institute of Technology, where he shared a small, cluttered office with two other instructors.

Davis rarely canceled a class; the seminar he led became a last connection to his former business world, a final public platform. Sitting in on a class in the late afternoon, listening to him draw on his experiences from his Stanley days, I imagined that beyond the nineteen young peo- ple seated in the room, he was speaking to all those he knew back home, explaining that he had done as well as any executive could, in a very changed world, to preserve Stanley as it was. And that could not be done.

The Stanley Works illustrates, as well as any Fortune 1000 company, the accelerating deterioration of job security in America over three gen-erations of chief executives, a deterioration that Davis and his counterparts in the first generation resisted for a while, reluctant to let go of the expiring norms. So did their workers. For almost ninety years, from the 1890s until the late 1970s, the thrust of American labor practices had been toward lasting attachments of employers to workers and vice versa. There were lapses and backsliding in those decades. Descriptions of labor practices during the 1921–22 recession, for example, are remarkably similar to labor practices today. But the direction was toward job security, not away from it. Efficiency seemed to require it. So did union power, government policies, community expectations, and social norms. Even the Depression, with its mass unemployment, produced in reaction labor laws that in the post–World War II years strengthened job security. We had decided as a people—managers, politicians, and workers—that job security had value, and in pursuit of that value, we lifted ourselves out of insecurity. And then, starting about 1977, midway through Davis’s twenty-one-year term as chief executive, there was a U-turn.

Over the next twenty years, the achieved job security disintegrated in the United States. Layoffs were the medium. Each step in the disintegration was a novelty and a shock. But the layoffs continued, and in 1984 the Bureau of Labor Statistics began to count “worker displacement.” By 2004, the bureau had counted at least 30 million full-time workers who had been permanently separated from their jobs and their paychecks against their wishes. Huge as that number was, it did not include the millions more who had been forced into early retirement or had suffered some other form of disguised layoff, masking the magnitude of the problem. A more comprehensive survey would very probably have found that 7 or 8 percent of the nation’s full-time workers had been laid off annually on average—nearly double the recognized layoff rate. And the percentages crept higher as the years passed.

Davis remembers vividly the circumstances that brought on the U-turn. The experience was, in his word, “traumatic.” He awoke in 1979 to find that customers for Stanley’s hand tools were defecting in alarm- ing numbers. The lure was Asian tools. Once-shoddy socket wrenches, screwdrivers, claw hammers, saws, levels, chisels, pliers, and measuring tapes imported from Asia had gradually become indistinguishable in quality from Stanley’s offerings, and at 60 percent of the price—a feat Davis and his counterparts in many other industries had not anticipated.

Scrambling to respond, they cut prices and, hoping to preserve profits, they began to cut labor costs, at first through attrition and then through layoffs. Hundreds of other companies were caught in a similar experience. From then on, job security unwound in America. Layoffs became the measure of our national retreat from the dignity that had been gradually bestowed on American workers over the previous ninety years. What started as a necessary response to the intrusion of foreign manufacturers into the American marketplace got out of hand. By the late 1990s, getting rid of workers had become normal practice, ingrained behavior, just as job security had been twenty-five years earlier.

That did not happen without resistance, particularly in the 1980s and early 1990s. Community groups, for example, tried to purchase and reopen shut factories, the goal being to reemploy the working people who gave the community its existence. The Roman Catholic Church joined in this endeavor, and issued two pastoral letters in the 1980s opposing job destruction. But then the church fell silent, as did the communities, which disintegrated without the steady jobs that had sustained them. Government regulation had protected the jobs of nearly 13 percent of the workforce, those employed in airlines, trucking, public utilities, telephones, banking, and railroads. And then deregulation, starting with President Jimmy Carter, precipitated endless reorganizations in those industries, and endless layoffs to accommodate the reorganizations, until reorganization and layoff finally became the norm. Organized labor also protested, but union membership and power were already in decline, and after 1981, when President Ronald Reagan fired and then replaced the nation’s striking air traffic controllers, strike activity in support of job security—or in support of any other demand, for that matter—declined precipitously. The old assumption that a worker out on strike had his job waiting once the strike ended was gone.

Just as layoffs began to be a source of national anxiety, mainstream economic theory completed an about-face that in effect endorsed layoffs and diminished the pressure on the nation’s presidents and on Con- gress to preserve job security. The dethroned way of thinking had recognized a central role for government in protecting workers in a free market economy. Entrepreneurial, hard-driving managers were essential to keep the economy vibrant and growing. But they ran roughshod over workers unless they were restrained by government rules and regulations, including rules that strengthened labor’s bargaining power. The marketplace would not provide job security without pressure from government. That way of thinking, born in the New Deal in the 1930s and greatly expanded over the next three decades, died in the 1970s.

The new intellectual framework took the opposite view, and in so doing validated what was already beginning to happen. Companies were freeing themselves from the many obligations to their employees that had accumulated over the years, and now mainstream economics blessed that endeavor. In the process, government was depicted as an obstacle to prosperity. Unfettered enterprises, the argument now went, would expand more rapidly and, over the long run, share their rising profits with their workers, doing so voluntarily through job creation and raises. If that did not happen—and it did not happen for tens of millions of people who lost their jobs—well, that was the fault of the job losers themselves. They had failed to acquire the necessary skills and education to qualify for ...
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