The myths and the hard facts on layoffs
sptimes.com
By ROBERT TRIGAUX, Times Business Columnist
Published March 20, 2006
How odd it feels to explore the world of layoffs when the Tampa Bay area boasts one of its lowest unemployment rates - 3.2 percent in January.
Truth is, layoffs remain a merciless trend even when jobs are being created here, across Florida and the country.
Tampa phone service provider Trinsic this month said it would lay off 118, or a fifth, of its workers, while St. Petersburg's Essilor of America is dropping 84 jobs. Cuts unveiled this month at ABC Distributing in South Florida will hit more than 1,000 workers. Struggling General Motors plans 30,000 layoffs, and the recently announced AT&T-BellSouth merger will prompt many job trims to help pay for deal.
We all want to focus on the positive - new jobs - even as layoffs have grown relentlessly as a standard business practice. So much so that we often fail to register just how many people's lives, self esteem and financial security are getting turned upside down.
Mission accomplished? Doing a heckuva job? On the job front, some beg to differ.
One of those contrarians is journalist Louis Uchitelle. The 26-year veteran of the New York Times is not only a keen observer of the U.S. economy but one of the better storytellers in business journalism. He's written a book due this month unapologetically called The Disposable American. In it, Uchitelle warns that while some layoffs are inevitable in a global economy, wholesale job cuts have become far too routine, too ingrained as a model for American business and a threat to the nation's public health.
Uchitelle suggests America has fallen under the spell of three myths:
- That layoffs always offer the promise of better jobs and more job security in the future.
- That those laid off must save themselves, because they would not have lost their jobs had they proven their value to the employer.
- That layoffs are measurable purely in dollars and cents.
Layoffs, or rather the year-after-year job slashings that punctuate the U.S. economy, are far more damaging. Not just to those losing a livelihood, but to the larger American economy.
"These myths blind us to these realities, particularly the mythical promise that in the end, when the new equilibrium finally arrives, the layoffs will cease or greatly diminish, and America will flourish at the high end of innovation and production, which is its rightful and inevitable perch in the new economy.
"While waiting for this Nirvana, the country has deteriorated," states Uchitelle.
Republican or Democrat, it doesn't matter, the author argues. The country's leaders long ago surrendered to the notion that layoffs are a proper, Darwinian function of the free market.
Big mistake, Uchitelle says. "I set out to tell the story of our acquiescence and in doing so ran into a festering national crisis."
It's easy to pigeonhole The Disposable American with the rush of sympathetic books that examine the strapped American worker. But Disposable has some rich stories and lessons for all - including the Tampa Bay audience.
First up: Crummy jobs. Tampa Bay's unemployment rate may be low, but many of the jobs here do not pay much. We're not alone, the author reminds us.
Seven of the 10 occupations expected to grow the fastest from 2002 through 2012, the U.S. Labor Department says, pay less than $13.25 an hour - just enough for a family of four to stay out of poverty. The occupations include retail salespeople, customer service reps, food service workers, cashiers, janitors, nurse's aides and hospital orderlies.
Uchitelle notes that hourly wage - $13.25 - is important. More than 45 percent of the nation's workers, whatever their skills, earned less than $13.25 an hour in 2004. That's $27,600 a year for a full-time worker.
(Keep in mind that $26.46 is the average cost that an employer must pay for one hour of a worker's time in this country. Of that sum, the worker's paycheck, before taxes, is $18.59, or 70 percent of the amount, while $7.87 goes for benefits. Back out public jobs in government and the like, and the average hourly cost drops to $24.71, made up of $17.51 in wages and $7.20 in benefits.)
Second up: Uchitelle's tale of New Yorker Virginia Gibbs. She rose to become a six-figure employee relations manager at Citibank just as the giant banking firm began moving its back-office and customer call centers from pricey New York to cheaper cities. Like Tampa.
The bank had a formula of sorts. It expected about a third of its back-office employees to agree to move out of New York and move to places like Buffalo and South Dakota. That worked fine until Citibank opened an operation in sunny Tampa. That's when nearly 50 percent of the 350 employees whose jobs migrated from New York to Tampa raised their hands to go.
So a bunch of New York veterans moved, with New York salaries, to Tampa. Over time, Citibank added workers from Tampa, at lower pay scales. It was a culture clash.
Uchitelle quotes Gibbs: "Two wage scales, two cultures, two everything, which becomes problematic over time."
When Travelers Group bought Citicorp in the late 1990s to form Citigroup, Gibbs, too, fell prey to layoffs.
Finally, the New York Times reporter describes Lykes Brothers, Tampa's once-proud but now-faded family business and its pursuit of easy money in Ohio's steel industry. Decades ago, Lykes bought Youngstown Sheet & Tube. While Lykes enjoyed the cash flow, it reinvested little in the steel company. Like most of the U.S. steel industry, the company and its many jobs eventually faded away.
Layoffs are not going away, the author concludes. But maybe they don't have to be as numerous as they are now.
Alas, Uchitelle must clamber up a steep political slope when he asks if the country can come together as a community to help each other - at least enough to stem some of the tide of layoffs.
Has he not listened to our elected leadership? We are in an era of "personal ownership" and accountability. Lost your job? Retrain and find another. Social Security will not last? Create personal retirement accounts. Fixed-payment pensions are history? Just stock up more on those 401(k)s. Health insurance too expensive? Well, just stay healthy.
Band together, this author urges, and "job security will gradually return to the United States - not to the degree that once existed, but more than we have today."
An admirable notion, but very likely a disposable call to arms. Layoffs, frequent and large, are part of our economic fabric. |
