Louis Uchitelle's The Disposable American: Layoffs and Their Consequences
Levinson, Mark
THE DISPOSABLE AMERICAN appeared in bookstores at the same time that protesters in France were filling the streets objecting to a law that made it easier to lay off young workers. The American...
...A last word...
...Uchitelle gets to know the laid-off workers and their families, who are wounded financially and emotionally...
...His proposals to limit layoffs include changing tax policy so companies are not rewarded for moving factories overseas, establishing global trade rules that protect workers' rights, requiring just cause for layoffs, and increasing the bargaining power of workers...
...I see no examples anywhere in the world of economies that have taken steps in the direction he desires without severe side effects...
...Europe's unacceptably high unemployment is more likely due to austere macroeconomic policies aimed at reducing inflation and to the Central Bank's restrictive monetary policy...
...In the Washington Post, Moises Naim, editor in chief of Foreign Policy magazine, called The Disposable American "a nostalgic, anxious book...
...The headlines tell the story: Wall Street Journal: "The Decline of France...
...Washington Post: "French take to the Streets to Preserve their Economic Fantasy": New York Times: "France's Misguided Protesters...
...Fewer than one in a hundred of the workers who went through the training program found a new job in a different industry with at least the same pay as at United Airlines...
...When they lose their job their lives are shattered...
...Does high unemployment in Europe refute the argument made in The Disposable American...
...Uchitelle presents a portrait of the three chief executive officers who ran Stanley Works, the tool manufacturer, from 1968 through 2003, each more willing than his predecessor to engage in large-scale layoffs...
...Closing such a publicly valuable facility should not be the prerogative of the private sector, not when so much benefit is lost...
...The American press was aghast at the French protests...
...Of those, thirty-three had jobs (in warehouses, retailing, or construction) that paid 50 percent below what they earned at United...
...Of those lucky enough to find work, only 40 percent are making as much as they had in the old job...
...The undercount is important because it "suppresses the alarm that would prompt us to pull back from such damaging behavior...
...Just under half of the nation's workers, whatever their skills, earned less than $13.25 an hour in 2004, or $27,600 a year for a full-time worker...
...the result was a sharp decline in income that they never fully made up...
...The most compelling part of the book is DISSENT / Summer 2006 121 Uchitelle's descriptions of how layoffs affect workers: mechanics, laborers, sales representatives, bankers...
...They are given copies of self-help fairy tales like Spencer Johnson's best-selling Who Moved My Cheese...
...One should be suspicious of economists with tenure who disparage job security for others...
...Economists, business executives, and nearly all of the nation's political leaders, Democrats and Republicans alike, believe that in America's flexible economy there is work, at good pay, for the educated and skilled...
...Uchitelle's reporting confirms Gordon Lafer's conclusion in The Job Training Charade that "training is popular not because it meets a critical need of any constituency, but because it makes minimal demands on those in power and has little effect on reshaping the labor market...
...The fathers in one group all lost their jobs due to a plant closure...
...I decided that it was time for someone else to do it...
...Uchitelle makes a persuasive case that the real number is probably twice that...
...Fire more people so more people can be hired...
...Which brings us to Louis Uchitelle's important and out-of-fashion book...
...Although layoffs cannot be abolished, Uchitelle argues that they don't need to be as numerous as they are now...
...In Western Europe, unions bargained fiercely for job security, and governments enacted "no firing without cause" laws, giving workers individually and collectively quasi property rights in their jobs...
...He is correct to insist that we can have job security, low unemployment, and broadly shared prosperity...
...Children of families with low incomes, however, were devastated by the plant closures: by 1999 their incomes were still 17 percent lower than those of similar children whose fathers didn't lose their jobs...
...The French government's rationale for its new labor law was a flawless example of what passes as economic reasoning these days...
...For example, Uchitelle points out, the maintenance center closed by United Airlines was a state-of-theart facility...
...In a series of papers, Dean Baker, David Howell, John Schmitt, and Andrew Glyn have submitted this argument to rigorous tests and have found it lacks empirical support...
...Out of a hundred laid-off workers then, twentyseven are making their old salary again, or more, and seventy-three are making less, or are not working at all...
...In all the press coverage of the French protests, I didn't see one story that bothered to point out that, according to the Organization for Economic Cooperation and Development, the productivity of French workers is 7.0 percent higher than the productivity of U.S...
...A recent study (The Intergenerational Effects of Worker Displacement, by Philip Oreopoulos, Marianne Page, and Ann Huff Stevens) concludes that if you lose your job, your children have permanently lower incomes too...
...All these articles argued that labor laws and social protections in France are outmoded and must be reformed...
...Children of families with above average incomes did fine...
...What France needed, according to these stories, was fewer labor protections and less job security...
...The opposite seems to be true: the oversupply of 122 DISSENT / Summer 2006 skilled workers is forcing people into jobs beneath their skills and driving down the pay of jobs equal to their skills...
...Surely lack of skill and education does not hold down the wages of nearly half the work force...
...MARK LEVINSON is research associate at the Economic Policy Institute and the book review editor of Dissent...
...The majority of the 185 had jobs (repairing heating and air-conditioning units, auto repair, computer maintenance, or as freight train conductors) paying between 30 percent and 50 percent less than their previous earnings...
...But decent jobs don't materialize...
...in short, the kind of "flexible" labor markets favored by corporations in the United States...
...Yet this did not lead to a happy labor market...
...In the early stages of reporting for this book," Uchitelle writes, "I did not think that I would be drawn so persistently into the psychiatric aspect of layoffs...
...He looks at us," a worker with thirty years seniority said of Trani, "and says, What are we doing in America...
...Uchitelle, an economics correspondent for the New York Times, is a relentless reporter, driven to understand how layoffs, which were once seen as a sign of corporate failure and a violation of acceptable business behavior, gradually became standard management practice...
...He also believes that the government should play a more active role in managing the economy in the public interest...
...We are back where we began...
...Uchitelle is there when laid-off machinists from United Airlines are steered into training...
...Two years after a layoff one-third of the workers are still unemployed...
...But the effects weren't evenly distributed...
...The more startling result is that two decades later, the grown children of the two groups of families had substantially different incomes, too...
...T]he city and the state put up most of financing to build and equip the maintenance center and were its principal owners leasing the facility back to United...
...Why do we accept as inevitable the huge number of layoffs...
...In the interests of safety—and not as industrial policy—the federal government could have required the airlines to overhaul their aircraft at five or six designated maintenance centers, the very best in the country...
...The policies that Uchitelle favors, according to Naim, "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...
...In fact, there is very little evidence to demonstrate a link between labor market protections and higher unemployment.** Some of the countries with the strongest labor market protections (Ireland and Austria, for example) enjoy very low unemployment rates...
...Why is the standard of living of millions of workers declining in the world's wealthiest economy...
...DISSENT / Summer 2006 123...
...The problem that training does not address is that the demand for jobs is considerably greater than the supply...
...The message is that change is good, and each person is responsible for his or her own job security...
...The policy for improving the employment and earnings of low-income workers is, therefore, training...
...I could not...
...The long-term damage of losing a job may be even greater than Uchitelle claims...
...And in the New York Times Book Review, Brad Delong, a Berkeley economist, economics blogger, and former Clinton administration Treasury official, agreed with Uchitelle that mass layoffs are a serious national problem but did not accept his proposals about what to do about them...
...There were alternatives to this surrender...
...The rest are making less, often much less...
...It is to Uchitelle's credit that he refuses to be cowed by the poverty of conventional economic thinking...
...Richard Ayers, the second CEO, quit in his prime at age fifty-five: "I disliked the difficult decisions you had to make in terms of their impact on people and I knew there was more of that coming...
...Conservative estimates are that layoffs have affected at least thirty million full-time workers in the last two decades...
...If you make it easier for employers to fire people, they will be more likely to hire people, thus reducing France's appalling unemployment rate of 9.6 percent...
...These are painful portraits of dashed hopes, self-doubt, depression, marital stress...
...Out of fashion because these questions are not part of the political debate in the United States...
...For all the power of Uchitelle's book, the question remains: are there really alternatives to mass layoffs...
...That is roughly the income that a family of four must have in many parts of the country to maintain a standard of living just above the poverty line...
...Of the more than 800 mechanics who went through the program, only 185 were working a year later...
...Both happened to the aircraft mechanics laid of by United Airlines...
...They understood that what corporations call flexibility —the right to fire workers at will—is what workers experience as disposability...
...Why have the Democrats abandoned their historic commitment to full employment and tight labor markets...
...Uchitelle stresses the importance of a full-employment economic policy, implemented not through a temporary Keynesian stimulus to end a recession or revive a weak economy but through constant outlays to satisfy public needs and create a tight labor market...
...They are training for jobs that do not exist...
...THE SAME PATTERN, although not as extreme, shows up in the national statistics...
...The protesters, not burdened with advanced degrees in economics, couldn't find the logic in the government's proposal...
...A study of sixty thousand families in Canada compared two groups of families in 1982...
...Only fifteen of the reemployed had regained their United wage level, and eight of them achieved this by becoming aircraft mechanics again...
...The CEO who "did it" was John Trani, a Jack Welch protégé from General Electric, the company that "invented the modern American layoff...
...The Disposable American tells all sides of the layoff tale...
...Why do the most vulnerable bear the burden of economic change...
...The workers quickly realize it is a cruel joke...
...The two had similar incomes and worked in similar industries, and only children of similar age (twelve to fourteen) were included in the study...
...Important because Uchitelle asks crucial questions about today's economy...
Vol. 53 • July 2006 • No. 3
