“The Disposable American”
Thursday, October 12th, 2006Louis Uchitelle’s 2006 book “The Disposable American: Layoffs and Their Consequences” is a fairly easy read, primary because he focuses on the story aspects of layoffs. Depending on the reader, that could prove to be frustrating since he doesn’t really discuss the alternatives to layoffs until the last chapter. His ultimate theme seems to be that the balance of negotiating power between workers and companies is resting too firmly with companies.
What are some of the costs of layoffs?
- Psychological stress and depression of both the laid-off workers and the workers that kept their jobs during a company’s layoff (this is perhaps the consequence that he focuses on in the book)
- Cost of lawsuits to companies (i.e. wrongful dismissal suits)
- Rising absenteeism among remaining discontented workers
- Lower productivity of workers due to lower commitment and motivation (”Why should I work so hard if my company has little commitment to me?”)
What are some of the author’s proposed alternatives or solutions to layoffs?
- Federal legislation to eliminate competition between municipalities to entice companies to locate within a particular city or state; in effect, this would be like enforced collective bargaining between local governments
- Stronger employee coalitions and unions
- Better data collection, including changes to the Bureau of Labor Statistics survey methods (with updated and more nuanced questions and with an annual survey as opposed to a biennial survey) and legislated public reporting of layoffs (and the related statistics of retirements, buoffs, temp work, and contract work) by companies
- Higher tax rates for high-income households to finance the expanded government programs related to the layoff reduction and management efforts
- Elimination of stock options and other short-term incentives to discourage layoffs as short-term profit or stock price boosters (he doesn’t clarify this point, but I feel compelled to note that layoffs, when they are done, should have a company’s long-term health in mind)
- Minimum severance packages as mandated by Congress
- Federally subsidized wages (”wage insurance”) for those taking jobs at lower pay after losing their jobs
- Elimination of “employment at will” clauses in legislation and employment agreements (I’m not positive that the author would agree with my summary of his view on “employment at will,” but I think that’s what he was saying)
Some of his “solutions” he recognizes as treating the symptoms only. For instance, his proposed reporting requirements on layoffs would serve to embarrass companies that are overly aggressive and harsh with respect to their layoffs.
He doesn’t say that layoffs are completely preventable. I’m sure he would have lost his credibility had he said so. Instead, he proposes that governments (primarily the federal government) should take a much more active role and that we need to focus on restoring a “communal society” in which we look out for each other.
The author tends to remain objective, though I’m sure that he hopes to pull on some heart strings with the stories that he relates. The book is well footnoted, though the footnotes are not referenced in the main text. You’ve have to proactively flip to the back of the book if you are looking for more background or a citation on a particular piece of text.
All in all, it is a good read with some good background on the history and underlying principles in the debates.
Don’t want to read the book? Check some recent podcasts by the News Hour, including an interview with Louis Uchitelle and an interview with Jeffrey Brown and Tom Friedman, authors of “Take This Job and Ship It” and “The World is Flat,” respectively.