Recommended Reading: The Disposable American by Louis Uchitelle
I’ve just finished reading Louis Uchitelle’s The Disposable American: Layoffs and Their Consequences.
With several decades of reporting experience, Uchitelle (a New York Times reporter) has witnessed a seismic shift in labor markets. Beginning around the World War I period and continuing through the mid-1970s, the modus operandi at major U.S. companies was to promote job security and long tenure. Private pensions and other benefits that tied workers to their employers were implemented initially in the name of efficiency with the idea that long tenured workers would develop the necessary skills over a career to work. Post Depression, there was tremendous normative and political pressure on even non-unionized companies to share profits directly through wages, profit sharing or generous benefits. The hegemony of the US economy in the post World War II period helped propel job stability and unprecedented growth in living standards.
This all changed in the mid to late 1970s – when recessions and inflations shocked this status quo. Once economic forces began a process of permanent layoffs in industries like steel that were impacted by global competition, they quickly became acceptable in the name of competitiveness. Uchitelle singles out GE’s Jack Welch as the first business leader to make layoffs into a normative business good. Welch bought and sold business like RCA, NBC and Thomson to acquire pockets of demand – and shedding workers throughout GE during the process. This process was duplicated and multiplied in a deregulated economy. In short,
Rather than to try and outstrip competitors in innovation, a costly and risky process, we gave up in product after product. We stopped making subway cars in the United States and various types of high-tech machinery [flat screen monitors or computer components]…American’s entrepreneurial energy focused not on production but on the financial maneuvering and the chasing of profits through acquisition.
Welch’s ideology is nearly hegemomic in business and politcal circle. It is generally accepted that layoffs and downsizing are necessary for economic growth and the general welfare of society. Lay-offs are seen as almost a minor consequence with the idea was that laid off workers could be retooled and re-employed with the help of retraining and outplacement assistance.
Uchitelle’s major contribution is to document that the impact of layoffs far exceeds the statistics reported by the Labor Department. Rather the lay off is experienced as a tremendous negative judgement on an individual’s self-worth – one that produces lasting marks on marriages, mental and even physical health. Many of the Americans tracked by Uchitelle’s story (mostly above-average earners in blue collar and white collar jobs) are traumatized enough take jobs that are significantly below their skill level if they believe they’ll reduce their risk of another stinging lay-off.
The psychological costs of layoffs are exacerbated by the prevailing view that the only solution to the problem of inevitable layoffs is personal reinvention. Uchitelle witnesses laid off mechanics who are given the book “Who Moved My Cheese,” which sells the idea that economic success is within every individual’s reach if they have the right education, training and motivation to seek the jobs of the future. The fact is that such mechanics were already highly-trained, mid-career workers and earning high wages. Even the most successful of the workers tracked by Uchitelle (an individual who went and got an MBA and eventually became a manager at Pratt & Whitney) were unable to recapture their prior earnings. This is even more true among those workers who have been forced into early retirement as businesses functions like human resources have been outsourced.
Uchitelle’s skepticism of training comes not so much from the quality of individual training programs themselves but rather what he sees as the false political compromise offered by Clintonomics. By emphasize the benefits of free trade and hailing the growth of the late 1990s and minimizing the impact of layoffs, political support for retraining programs and policies to reduce layoffs was undercut.
While I don’t disagree with Uchitelle, I have more confidence than he that retraining and other employment security programs can be more than just “burial insurance.” I believe model embedded in Trade Adjustment Assistance – 2 years of unemployment benefits & retraining tuition, plus protection of health care benefits while you retrain – but universalized to all dislocated workers could substantially minimize the current damage inflicted by layoffs.
But in the end, I read Uchitelle as not anti-training, but rather pro-outrage. We need to stop shying away from talking of the ills of layoffs – instead of deriding such a practice as bad news carping. A first step is to pressure the government to start counting underemployment properly to include pressured early retirements and contracted workers. Uchitelle asks us to call for political and moral pressure on corporations engaging in the layoffs – to either follow through on investments that could have made a department or facility competitive, rather than take the easy route of outsourcing. He calls for targeted government regulation to preserve good jobs when that can be done. And, finally to give Uchitelle credit, he embraces an increased commitment to funding for education and retraining – but not as a magic bullet, but rather as a necessary corrective for the layoffs that cannot be prevented.
Can progressives embrace the message suggested by this book? “Government is going to do everything we can to preserve your job—and if we can’t, we’ll offer you enough income support and retraining to get back as close to your old job as you can.” It’s certainly superior message that “layoffs are unavoidable, the economy is producing enough good jobs and all we have to do is just retrain you for them.” To regular working folks in many hard hit towns across the US, I think that seems like BS.
By no means does putting job protection on the progressive agenda mean that we can prevent most layoffs. Globalization is a process that can’t be reversed and autarky – shutting off our market to foreign goods – is neither practicable or advisable. But, it does mean we can’t put the question of worker’s jobs front and center into the debate about which trade deals to approve. And, progressives can more broadly think about what kinds of public investment promote the competitiveness of companies with good jobs at risk of layoffs; policies to promote employee ownership of teetering firms; or government regulation with job protection in mind. I know I have not explored these areas much -- and I think they have been generally neglected by progressives and our think tanks. I have my ideas for the reasons for this - but I think it is a blind spot.
Here are some places to start
Center for Labor & Community Research http://www.clcr.org/publications/index.php
Ohio Center for Employee Ownership www.kent.edu/oeoc
With several decades of reporting experience, Uchitelle (a New York Times reporter) has witnessed a seismic shift in labor markets. Beginning around the World War I period and continuing through the mid-1970s, the modus operandi at major U.S. companies was to promote job security and long tenure. Private pensions and other benefits that tied workers to their employers were implemented initially in the name of efficiency with the idea that long tenured workers would develop the necessary skills over a career to work. Post Depression, there was tremendous normative and political pressure on even non-unionized companies to share profits directly through wages, profit sharing or generous benefits. The hegemony of the US economy in the post World War II period helped propel job stability and unprecedented growth in living standards.
This all changed in the mid to late 1970s – when recessions and inflations shocked this status quo. Once economic forces began a process of permanent layoffs in industries like steel that were impacted by global competition, they quickly became acceptable in the name of competitiveness. Uchitelle singles out GE’s Jack Welch as the first business leader to make layoffs into a normative business good. Welch bought and sold business like RCA, NBC and Thomson to acquire pockets of demand – and shedding workers throughout GE during the process. This process was duplicated and multiplied in a deregulated economy. In short,
Rather than to try and outstrip competitors in innovation, a costly and risky process, we gave up in product after product. We stopped making subway cars in the United States and various types of high-tech machinery [flat screen monitors or computer components]…American’s entrepreneurial energy focused not on production but on the financial maneuvering and the chasing of profits through acquisition.
Welch’s ideology is nearly hegemomic in business and politcal circle. It is generally accepted that layoffs and downsizing are necessary for economic growth and the general welfare of society. Lay-offs are seen as almost a minor consequence with the idea was that laid off workers could be retooled and re-employed with the help of retraining and outplacement assistance.
Uchitelle’s major contribution is to document that the impact of layoffs far exceeds the statistics reported by the Labor Department. Rather the lay off is experienced as a tremendous negative judgement on an individual’s self-worth – one that produces lasting marks on marriages, mental and even physical health. Many of the Americans tracked by Uchitelle’s story (mostly above-average earners in blue collar and white collar jobs) are traumatized enough take jobs that are significantly below their skill level if they believe they’ll reduce their risk of another stinging lay-off.
The psychological costs of layoffs are exacerbated by the prevailing view that the only solution to the problem of inevitable layoffs is personal reinvention. Uchitelle witnesses laid off mechanics who are given the book “Who Moved My Cheese,” which sells the idea that economic success is within every individual’s reach if they have the right education, training and motivation to seek the jobs of the future. The fact is that such mechanics were already highly-trained, mid-career workers and earning high wages. Even the most successful of the workers tracked by Uchitelle (an individual who went and got an MBA and eventually became a manager at Pratt & Whitney) were unable to recapture their prior earnings. This is even more true among those workers who have been forced into early retirement as businesses functions like human resources have been outsourced.
Uchitelle’s skepticism of training comes not so much from the quality of individual training programs themselves but rather what he sees as the false political compromise offered by Clintonomics. By emphasize the benefits of free trade and hailing the growth of the late 1990s and minimizing the impact of layoffs, political support for retraining programs and policies to reduce layoffs was undercut.
While I don’t disagree with Uchitelle, I have more confidence than he that retraining and other employment security programs can be more than just “burial insurance.” I believe model embedded in Trade Adjustment Assistance – 2 years of unemployment benefits & retraining tuition, plus protection of health care benefits while you retrain – but universalized to all dislocated workers could substantially minimize the current damage inflicted by layoffs.
But in the end, I read Uchitelle as not anti-training, but rather pro-outrage. We need to stop shying away from talking of the ills of layoffs – instead of deriding such a practice as bad news carping. A first step is to pressure the government to start counting underemployment properly to include pressured early retirements and contracted workers. Uchitelle asks us to call for political and moral pressure on corporations engaging in the layoffs – to either follow through on investments that could have made a department or facility competitive, rather than take the easy route of outsourcing. He calls for targeted government regulation to preserve good jobs when that can be done. And, finally to give Uchitelle credit, he embraces an increased commitment to funding for education and retraining – but not as a magic bullet, but rather as a necessary corrective for the layoffs that cannot be prevented.
Can progressives embrace the message suggested by this book? “Government is going to do everything we can to preserve your job—and if we can’t, we’ll offer you enough income support and retraining to get back as close to your old job as you can.” It’s certainly superior message that “layoffs are unavoidable, the economy is producing enough good jobs and all we have to do is just retrain you for them.” To regular working folks in many hard hit towns across the US, I think that seems like BS.
By no means does putting job protection on the progressive agenda mean that we can prevent most layoffs. Globalization is a process that can’t be reversed and autarky – shutting off our market to foreign goods – is neither practicable or advisable. But, it does mean we can’t put the question of worker’s jobs front and center into the debate about which trade deals to approve. And, progressives can more broadly think about what kinds of public investment promote the competitiveness of companies with good jobs at risk of layoffs; policies to promote employee ownership of teetering firms; or government regulation with job protection in mind. I know I have not explored these areas much -- and I think they have been generally neglected by progressives and our think tanks. I have my ideas for the reasons for this - but I think it is a blind spot.
Here are some places to start
Center for Labor & Community Research http://www.clcr.org/publications/index.php
Ohio Center for Employee Ownership www.kent.edu/oeoc
posted by Andrew Stettner at 11:34 AM
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