Tales of the free market's forgotten losers

France seethes over a plan to allow layoffs, but Americans have quietly accepted them for years

Review Labor


The Disposable American: Layoffs and their Consequences

Louis Uchitelle

Alfred A. Knopf / 304 pages / $25.95

Few Americans have noticed, but France has been convulsed with demonstrations against a new law allowing employers to lay off young workers.

At least a million protesters filled streets from Paris to Marseille in recent days, according to news organizations. Politicians trying to add flexibility to France's labor laws talked tough and then backed down, diluting what was already a fairly minor change.

At issue was a measure giving employers up to two years to easily dismiss workers hired at age 25 or younger.

It would have been a baby step toward the broad layoff authority enjoyed and employed by American corporations for more than two decades.

Americans, however, have accepted this authority with barely a whimper. People complain about layoffs, and many victims are devastated, but there has been nothing like the manifest outrage of France.

Louis Uchitelle's new book, The Disposable American: Layoffs and Their Consequences, probably won't provoke riots, but it should give a renewed visibility to what Alan Greenspan calls this country's "flexible labor markets."

Uchitelle, a New York Times reporter who helped write that newspaper's famous "Downsizing of America" series a decade ago, does a good job with two areas: the personal stories of the laid-off and the societal changes that made U.S. layoffs as common as the national anthem.

Globalization and technology have brought many benefits to humankind. But even fervent free-marketers concede that these forces have also created losers - people whose jobs have disappeared and who are forced to get by on unemployment relief or less-rewarding work.

The losers in free markets are too little chronicled, and Uchitelle fills the gap.

Much of The Disposable American reports on ex-employees at United Airlines, Procter & Gamble and other companies as they try to negotiate life and the labor force after the layoff.

Uchitelle does what reporters for the periodical press rarely can: He follows ex-employees for months or years, noting occasional recoveries and small triumphs but painting an overall picture of uncertainty, loss of confidence and despair.

After their state-of-the-art jet maintenance center in Indianapolis is closed, United mechanics endure outplacement seminars with peppy facilitators and then dabble and fail as entrepreneurs, take lower-paying mechanic's positions if they're lucky and drift into unrewarding service jobs if they're not.

Even layoff victims who emerge financially secure, with fat early-retirement packages and pensions, are scarred. They talk about diminished self-worth and the fear of exposing themselves again to rejection.

"In the cataloguing of damage that results from layoffs, incapacitating emotional illness almost never appears on the lists that economists, politicians, sociologists, union leaders, business school professors, management consultants and journalists compile," Uchitelle writes.

The bean counters can't even keep track of the layoffs themselves. The Census Bureau probably badly undercounts layoffs by not including voluntary buyouts, early retirements and expiration of contract jobs.

How did we get here? Time after time since World War II, Congress has considered and rejected or diluted strong measures requiring full employment.

The Employment Act of 1946 was supposed to require government intervention with stimulus and public-works projects when unemployment got too high. But the requirement got watered down.

The Humphrey-Hawkins Act of 1978 is best recalled for its requirement that the Federal Reserve chairman regularly testify before Congress. But measures enjoining the government to create "last-resort" jobs for the poor were removed from the original Humphrey-Hawkins legislation, Uchitelle says.

He also blames former President Bill Clinton for forsaking the Democratic Party's working-class base and failing to do more to improve American job security.

As global competitors increasingly hurt the profits of U.S. corporations, managers became more willing to shed workers or move jobs south or overseas. Abetting the acceptance was the bogus notion that education and retraining would allow most displaced workers to find fulfilling new employment niches.

The result is the diminishment of the American dream and the collapse of the unwritten social contract that said companies would reward faithful, diligent service with lifetime employment.

Describing the problem, however, is much easier than prescribing the solution.

Uchitelle offers some appealing palliatives: raising the minimum wage; requiring a minimum severance package; making corporations publish "truth-in-layoffs" reports; compelling call-center operators to identify the country they're working from (to shame centers into staying stateside); and banning the interstate economic incentives war that prompts employers to pull up stakes for tax discounts.

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