'The Disposable American,' by Louis Uchitelle - NYT

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http://www.nytimes.com/2006/03/29/books/29geog.html

How Pink Slips Hurt More Than Workers
By THOMAS GEOGHEGAN

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.