For much of his career, Uchitelle has covered the casualties of the transition to the new economy. In 1996, he was the lead writer and reporter for a six-part Times series on “The Downsizing of America,” which reported that more than 43 million jobs had been wiped out in the United States between 1979 and 1995. This spring, his first book, The Disposable American, appeared, expanding on his series, describing how massive layoffs hurt individual workers, their families, their companies and their communities.
The Disposable American is a good book about an important topic. Uchitelle tells the stories of layoffs with sympathy for the victims and outrage at their suffering. He convincingly makes the case that massive layoffs are usually self-defeating and should be undertaken only as a last resort. Butnot everyworkplace abuse can be viewed through the lens of layoffs, as Uchitelle seems to do here. The author offers only a sketchy explanation of how and why modern job-shedding emerged, and he doesn’t explore whenit might be justifiable. Nor does he devote much attention to the aftermath of layoffs: the challenge of creating new jobs that provide good pay, benefits, and opportunities. Because Uchitelle concentrates almost exclusively on protecting existing jobs, he dismisses the idea of preparing workers for new and better jobs, and he displays an inexplicable animus against the Clinton administration whose economic strategy laid a heavy emphasis on job creation, as well as education and re-training. (Full disclosure: I served as a speechwriter for President Clinton from 1992-1994.)
In spite of these shortcomings, The Disposable American is essential reading, especially for its engrossing and enlightening accounts of mass layoffs at several companies. One story is that of Stanley Works, a hardware manufacturer, that once was the largest employer in New Britain, Conn. When competition from low-wage countries first cut into Stanley’s sales in the late 1970s, the company tried to trim its payroll by freezing the hiring of white-collar employees. Stanley’s original management began to lay off blue-collar workers only after long and painful talks with the workers’ union and civic leaders. The company’s chief executive Donald W. Davis is a sympathetic figure, someone with deep roots in New Britain, and was clearly anguished about the layoffs.
But when Stanley failed to make a comeback, the board of directors hired a new chief executive, John M. Trani, a protg of GE’s legendary CEO, Jack Welch. Trani, who wiped out almost a third of Stanley’s workforce, is presented as arrogant, refusing to hobnob with workers or consult with the mayor. Stanley had evolved from respecting certain “social norm[s]” to recognizing only the imperatives of its corporate bottom line–a shift that reflected a fundamental change in corporate America from the late 1970s through the late 1990s.
While Stanley was an old manufacturing concern, United Airlines’s was a modern company that seemed more likely to grow than to die. In 1994, the airline’s Indianapolis maintenance center was the nation’s most efficient facility for repairing midsized narrow-body airliners. Staffed by skilled mechanics, the center did such good work that it began to attract repair business from other airlines. But during two July Fourth weekends in 1999 and 2000, the mechanics refused to work overtime. When their union supported them in a work slowdown, United Airlines began to shut down the center and shift the work to non-union contractors. By 2003, the company closed down the facility. In the new economy, quality does not guarantee jobs, and low costs and tight management control are the ultimate goal.
When the facility closed, most of the workers participated in a counseling and retraining program. But they were still unable to find jobs that offered pay and benefits remotely comparable to what they had earned before. American workers, says Uchitelle, already have more skills than the economy requires, and retraining programs are almost always exercises in futility.
In his third set of stories, Uchitelle follows the careers of several executives who lost their jobs. Here his empathy becomes mawkish. Most of these unemployed executives were treated relatively well; one received her full salary for almost a year while looking for new work; and almost all ended up in jobs that support a middle-class lifestyle. Management positions with six-figure salaries are not lifetime entitlements. When companies hit hard times, middle managers should share the pain.
Layoffs may initially save money and boost stock prices. Butfiring large numbers of employees costs companies much of their institutional memory and storehouse of skills, shatters the morale of the remaining workers, and ultimately leads to lower quality and less efficiency. The psychological consequences of layoffs also take a staggering toll. Workers who are told they no longer contribute anything of value rarely recover their confidence. These working wounded are more anxious and less adventurous in their new jobs, and the entire economy suffers the consequences.
The Disposable American exhaustively explores the social and economic costs of these massive modern job losses. But itdoesn’t fully explain how today’s massive and permanent layoffs emerged. Even during the heyday of progressive capitalism, roughly from the end of World War II to the late 1970s, companies laid off large numbers of workers when they hit hard times.
Aerospace giant Boeing, for instance, was a generous and almost entirely unionized employer (in a rarity for firms in this country, its engineers and technicians, as well as its blue-collar workers, are unionized), that laid off 50,000 workers when aircraft orders nosedived after World War II. But for the three decades after 1945, most layoffs at American companies were temporary furloughs, not permanent firings. Starting with the flood of imports and the deep recession of the late 1970s and early 1980s, there were steep declines in basic industrieslike steel, cars, consumer appliances, clothing and textiles. Major companies like GM, GE, Caterpillar, and U.S. Steel responded by laying off tens of thousands of workers. Because these companies’ sales orders and profit margins never fully recovered (and many of the workers’ jobs were automated), they never recalled most of their laid-off workers to their former positions.
These permanent layoffs paved the way for other companies, many of which weren’t losing money, to make lasting cuts in their workforces. But Uchitelle doesn’t draw clear distinctions between which mass layoffs are indefensible, which are inevitable, and which are debatable. He indicts the management-by-body-count of corporate cutthroats like Albert “Chainsaw” Dunlap, who hatcheted half of Sunbeam’s 12,000 employees without leading his company to profitability. But he doesn’t respond to the arguments that Jack Welch makes in favor of eliminating a company’s least promising operations and refocusing it towards future growth–the strategy that John Trani implemented at Stanley, where the bloodletting eventually restored the company’s profits and prospects. Nor does Uchitelle describe how, when layoffs are inescapable, a company can conduct them humanely, as Levi Strauss did after it was unable to mass-produce blue jeans profitably in the United States.
Long considered a model employer, Levi Strauss became a model former employer, offering workers three weeks of severance pay for every year of service, as well as up to $6,000 each for education and retraining costs. Uchitelle stresses the role of globalization in displacing millions of American workers. But he doesn’t really address the extent to which technology has also claimed many manufacturing and middle-management jobs.
By reducing all the changes in American work-life to the loss of lifetime jobs, Uchitelle inadvertently distorts developments that are about much more than the end of job security. The story of the United Airlines maintenance center is about something larger than layoffs. The real mystery is why a major company and a mature union escalated a routine dispute–whether to schedule overtime work over holiday weekends. After all, it was in each side’s self-interest not to risk destroying the maintenance center and eliminating the mechanics’ jobs. United Airlines had made a substantial investment in the new facility, and the mechanics worked at high-skill, high-wage jobs with outstanding benefits and union representation–a rarity in the modern economy. But a simple overtime dispute managed to lock both sides into a mutually destructive conflict. The layoffs were merely the collateral damage of a dispute that reflected the collapse of the understandings that had prevailed between labor and management for the quarter century after World War II.
When he turns to national economic problems, Uchitelle devotes little attention to the issues of how many new jobs are being created, what kind of pay, benefits, and career opportunities these new jobs offer, and how to prepare workers for a changing labor market. This oversight is especially important since this book concentrates on the late 1990s, when layoffs and job creation both reached record levels. Indeed, as Clinton economic advisor Gene Sperling points out in his recent book, The Pro-Growth Progressive, a stunning 32.9 million private-sector jobs were destroyed in the U.S. But 35.5 million new ones were created in their place.
Of course, all this churning raises the question of how the newly created jobs compare to the recently eliminated jobs. Uchitelle correctly criticizes the Clinton administration for releasing a study contending that the new jobs paid more, when the most that could credibly be claimed was that the new jobs were in industries that tended to pay more (This is an important distinction. For instance, working in high tech generally pays better than working in building services. But non-union janitors at high-tech companies most likely earn less than unionized janitors in apartment buildings). But, he downplays the fact that, as the economy approached full employment by 1999 and 2000, workers’ wages began to rise and economic inequality began to decline for the first time since the 1960s.
In fact, Uchitelle’s criticisms of the Clinton administration seem over the top. He writes that corporate layoffs received “a green light from Clinton,” but he doesn’t quite explain how a president could have given layoffs a red or even yellow light (short of using the “bully pulpit” of the presidency and the incentives of awarding federal contracts to responsible employers, both of which Clinton sporadically tried to do). He claims thatthe president “abandoned a campaign promise to stop corporations from hiring permanent replacements for workers on strike.” But, a few pages later, he acknowledges thatClintonissued an executive order forbidding federal contractors from permanently replacing striking workers–about all a president can do without congressional approval. He faults Clinton for supposedly ignoring the recommendations of a federal commission that he had appointed in an effort to broker a deal between corporate and union leaders to reform the nation’s labor laws. But by the time that the commission released its report, the Republicans had won majorities in both the U.S. House and Senate; Clinton wisely refused to encourage a Congress controlled by Newt Gingrich to rewrite the National Labor Relations Act. Uchitelle believes both issues were about layoffs. But striker replacement was really about restoring the balance of bargaining power between workers and their employers. And labor-law reform was about restoring workers’ right to organize unions. Remarkably, Uchitelle offers relatively little criticism of the current Bush administration, which has presided over an era of huge job losses and little job creation–and, unlike its predecessor, unashamedly favors corporate interests over workers’ rights.
Uchitelle does offer a grab-bag of recommendations for reducing layoffs. Unfortunately, many ofthem–like raising the minimum wage–are worthwhile ideas that have little to do with making existing jobs more secure. He criticizes Clinton for failing to support several proposals from Labor Secretary Robert Reich that would have required companies to improve their training programs for all employees. But he doesn’tincludethose ideas in his own recommendations, and tends to be scornful of these training programs.
Uchitelle’s skepticism about these programs is understandable–education and training have been oversold as panaceas for layoffs and wage stagnation. Many counseling and retraining efforts do, in fact, amount to little more than support groups for jobless workers. But what is the alternative? Now that most jobs can be off-shored and most industries are vulnerable to imports, how can we create and preserve good jobs in this country?
America can’t compete by paying our workers less than our less-advanced competitors, so we have to do the important things better than even our most advanced competitors. We need to be the economy that invents things first, brings them to the world’s markets soonest, offers the highest quality, does the best job customizing products and services, and does it all affordably, if not at the “China price.” As Clinton and Reich used to say, that means investing in our communities’ communications networks and transportation facilities, and lifting the burden of exorbitant health-care costs from the economy. And, yes, it also means educating, training, and retraining American workers.
For this training to be useful, employers, employees, and other institutions–from government agencies to labor unions and community colleges–need to work together in new ways. Unions need to organize in growing industries like high-tech and offer training programs for an increasingly mobile workforce along the lines of the apprenticeship programs in the building trades and career ladder programs in health care and public employment. In an example of this strategy, the Communications Workers of America is bargaining with telecommunications companies to make sure that union members in lower-paid jobs can apply for newly created jobs that require higher skills and offer higher wages; at the same time, the union is working with the companies to create training programs to prepare union members for these new and desirable jobs.
Companies and unions should take the lead in these efforts because they know what jobs already exist and are likely to emerge, implicitly answering the commonplace question, “training for what?” But government agencies and community colleges can help finance these efforts and conduct some of the actual teaching. These ongoing efforts would prepare currently employed workers for real job opportunities.
These skill-development programs won’t emerge until we restore some understandings in American workplaces. The old social contract provided lifetime jobs for workers who were loyal to their companies. The new bargain needs to offer new opportunities in return for new skills. Only then will workers have any reason to believe they’re indispensable, not disposable.
David Kusnet was chief speechwriter for former president Bill Clinton from 1992 through 1994. He was on the staff of the American Federation of State, County and Municipal Employees (AFSCME) from 1974 through 1984 and has been an adviser to labor organizations since 1995. He is writing a book about workplace conflicts in today’s America Love the Work Hate the Job for the publisher John A. Wiley and Sons.