Tuesday, March 28

How Pink Slips Hurt More Than Workers

How Pink Slips Hurt More Than Workers

Is the layoff the great American wound? In Louis Uchitelle's account, it seems a wound in triplicate. It hollows out companies so they can't compete. It hollows out the country by removing middle-class jobs. It hollows out the middle-class employees who are laid off and then too often drop permanently to a demeaning, low-wage way of life. To Mr. Uchitelle, who reports on economics for The New York Times, corporate America's addiction to the layoff has gone past the point of economic rationality. In this fascinating book he tries to tell the history of the United States in our time as the unchecked rise of layoffs.

"The Disposable American" is a history in which odd characters like Pat Buchanan, the former chief executives Jack Welch and Albert J. Dunlap (known as Chainsaw Al), the economist Alfred Kahn and others loom large — but so do Jimmy Carter, Bill Clinton and Robert E. Rubin, former secretary of the treasury. But Mr. Uchitelle is just as interested in ordinary people and in the way that layoffs keep tormenting those who have been let go. As he writes, "I did not think in the early stages of the reporting for this book that I would be drawn so persistently into the psychiatric aspect of layoffs."

The layoff, Mr. Uchitelle argues, has transformed the nation. At least 30 million full-time American employees have gotten pink slips since the Labor Department belatedly started to count them in 1984. But add in the early retirees, the "quits" who saw the layoffs coming, and the number is much higher — a whole ghost nation trekking into what for most will be lower-wage work. This is the Dust Bowl in our Golden Bowl, and to Mr. Uchitelle, layoffs in one way are worse than the unemployment of the 1930's. At least then, most of the jobless came back to better-paid, more secure jobs. Those laid off in our time almost never will.

Mr. Uchitelle effectively wrecks the claim that all this downsizing makes the country more productive, more competitive, more flexible. He is willing to admit that downsizing can be necessary. "The global economy is not to be denied," he writes. But to lay off is now like a business school tic, whether it makes any sense or not. With fewer employees, many companies begin to crumble. Innovation also suffers. "Rather than try to outstrip foreign competitors in innovation, a costly and risky process, we gave up in product after product," Mr. Uchitelle writes. As he points out, many of the business stars now are companies, like Southwest Airlines, that have refused to downsize at all. A growing number of economists argue that layoffs cause more problems than they solve.

The heart of Mr. Uchitelle's book is his detailed, wide-ranging reporting. He is present, taking notes, while airline mechanics are being counseled into job training that will take them into lower-wage work. If they were not so painful, these moments would have a certain droll comedy. One mechanic ends up running a water taxi for tourists. Another goes into maintenance. Others find jobs "throwing boxes" at Federal Express. As one of the ex-mechanics tells Mr. Uchitelle years later: "It is hard to look in your son's eyes and explain to him that you are making $12 an hour and know his high school friends are making that much on the side."

In one of his shrewder moves, Mr. Uchitelle goes right into the enemy camp, as it were, and looks in on a reunion of Harvard graduates, the class of '68. But even Harvard grads are among the wounded now — some have received pink slips. Mr. Uchitelle makes a strong case that the whole middle class is at risk. During the Clinton era, 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. But Mr. Uchitelle takes apart this argument. 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 nettles Mr. Uchitelle that even the center-left politicians have said so little about this trend — or have done so little to stop layoffs. In fact, layoffs rose faster in the first half of the 1990's than they did in the first half of the 80's. Mr. Uchitelle particularly blames Mr. Clinton. One of his chapters is titled "A Green Light From Clinton." Mr. Uchitelle writes: "As much as anyone, he disconnected the Democratic party from its past, specifically its New Deal concern for job security and full employment." Indeed, it is Mr. Uchitelle's point that it took government action to bring about the reign of layoffs.

He is also clear that this began long before the Clinton presidency. Mr. Uchitelle puts special emphasis on the deregulation of many industries, the dilution of the Humphrey-Hawkins Full Employment Act of 1978 and what he regards as other political wrong turns. Still, in a brief concluding chapter, it is unclear whether Mr. Uchitelle sees any good solutions now — including a solution that he attributes to this reviewer.

In this retelling of American history, Mr. Uchitelle is baffled by the collapse of any serious resistance to these mass layoffs. Even the protestors who began to sound off in the 90's generally believed that companies did have to downsize or die. It bothers Mr. Uchitelle that the mechanics and others he covers in this book and gets to know personally often blame themselves. "Whenever I insisted that layoffs were a phenomenon in America beyond their control, they agreed perfunctorily and then went right back to describing ... why it was somehow their fault or their particular bad luck."

Many readers know Mr. Uchitelle as a business journalist with an acute analytic bent. That is in this book, but there is a surprising passion as well. He urges — demands — that Americans speak up: not to give empty speeches about how more of us should go to college, or "skill up," but to stop the layoffs from ravaging us all.

Thomas Geoghegan is a labor lawyer and author.