A brief history of engineered job insecurity in America.
Mass layoffs at some of the world’s biggest, most successful tech companies have been sweeping headlines in the past year, with the industry slashing more than 170,000 jobs, according to the tech layoff tracker Layoffs.fyi. Meta (which includes Facebook and Instagram) laid off 11,000 workers in November 2022, and another 10,000 beginning this week; Amazon eliminated 18,000 roles in 2022 and announced 9,000 more cuts were ahead in 2023. Twitter, which was acquired and taken private by Elon Musk last year, has shed more than half of its workforce in the past year.
But it’s not just tech: retail giant Walmart has been laying off thousands of workers across the US, and waves of layoffs have also continued to impact the media industry, including the shutdown of BuzzFeed News announced this week.
These represent just a sliver of a far more devastating picture for American workers: More than 17 million workers were laid off or discharged — that’s the official term for “fired” — in 2022, according to the Bureau of Labor Statistics. The numbers throughout the 1990s and 2000s show a consistent pattern: We live in an age of mass layoffs.
Workers often eventually find their way to the next job, but the people who experience losing a job suffer a significant psychological toll. One 2012 study found that losing your job could raise the risk of a heart attack. Even those who keep their jobs during layoffs deal with survivor’s guilt, or the constant anxiety that they might be next. According to one 2019 study conducted by HR tech platform CareerArc, 40 percent of respondents said they had been laid off or terminated at least once.
Mass layoffs haven’t always been so commonplace, says Louis Hyman, a historian of work and business at Cornell University and the author of Temp: How American Work, American Business, and the American Dream Became Temporary. Vox spoke with Hyman about the history of mass layoffs and how decades of regular upheaval in corporate America have changed how Americans think about work and job security.
The interview below has been edited for length and clarity.
Are mass layoffs … normal?
Mass layoffs have been normal for a very long time — the idea that you would have job security is sort of a 20th-century invention. Normally, layoffs are tied to two things: a sudden reversal in a particular business, like some rival has a new kind of product that puts them out of business or there’s some sort of business challenge, or the business cycle.
I think what’s sort of weird about this moment right now is that it’s really been determined by this Covid shock to the system. Are we in a recession? Are we in a moment of prosperity? What is this? Where does Covid meet the business cycle? And I think nobody really knows what’s going on.
Some companies have taken inflation as an opportunity to push prices higher than they absolutely have to. When corporations want to downsize, do economic downturns also provide a nice opportunity to do so?
Absolutely. Sometimes they need to do it, sometimes they want to do it — who knows what vice president just got promoted and wants to unwind the empire of his or her rival and fire that whole team? It’s an opportunity to reimagine strategy and get coverage by the media.
You said job security was a 20th-century invention. When exactly did it become a thing?
After World War II — it was in the context of just phenomenal economic growth. The basis for any kind of job security is that you’re needed, right? Somebody needs you. Demand was just going through the roof after World War II. You had industrial unions really coming into their own after WWII; they negotiated, in 1950, something called the Treaty of Detroit, between General Motors and United Auto Workers. It’s not really a political treaty, it’s a contract, but that’s how important people thought of it as. It was the basis for a new economic order where you’d only negotiate [the bargaining contract] every five years, you wouldn’t have strikes, and in return, you wouldn’t have layoffs.
And then once the economy becomes more volatile in the 1970s, you see a return to layoffs, a decline in that kind of stability; first in the 1970s for industrial workers, and then basically the recession of 1990 for office workers — that’s when we first see the term “downsizing” and all kinds of corporate restructuring.
In the tech sector, Hewlett-Packard, which was sort of a quintessential Silicon Valley firm, tried to shelter their workers as much as possible from layoffs, and then they turned that policy around in the 1980s. They substituted, as much as possible, regular workers with temp workers so that in a time of recession, they can just fire all the temps. That’s why temporary worker numbers are such an important leading indicator for the coming of layoffs.
Before the post-war era — let’s say in the 19th century — what did a “layoff” look like?
They would not care. Very famously, Jay Gould, who was this big railroad magnate, said, “I can hire one-half of the working class to kill the other half.” That was their idea of labor relations. Whenever they wanted to, they would just fire people or they would just lower their wages. You start to see these big worker movements in the late 19th century that began to organize around things like railroads. The first big national strike was in 1877. They used the telegraph to organize themselves, sort of like we would use Twitter today to organize a protest. They shut down all the railroads and then cut the wires.
So there was no expectation of job security; you only have this idea of layoffs being a thing in the 20th century. You have an idea, especially after the 1930s, that the business cycle can be managed by Keynesian interventions, by the Federal Reserve and such. There’s a belief that the government can abate this.
When American jobs became more stable in the post-war era, why was that? Was it just the economic boom? Was there also a different philosophy toward work and jobs?
All those things were happening. There was just a tremendous demand for US workers — part of that was that immigration was gone. America basically closed the doors in 1921; there wasn’t really immigration again to the US, in large numbers, until 1965. There’s a restriction on the supply of workers. There’s an incredible technological boom in the post-war [era], much more so than today. You have things like aerospace being invented as an industry, electronics being invented as an industry, the entire Southwest is being built, and all suburbia is being built.
And then on top of that, you have a new kind of belief system about capitalism in the context of the Cold War. We want to say, look, the free enterprise system is better than the communists. We have labor peace, we have the Treaty of Detroit. General Motors doesn’t care — it’s making money hand over fist. Why not just let them keep going on strike as long as they’re doing their jobs?
Your book Temp focuses on the rise of the “gig economy” and why work feels so precarious today. Does that term just apply to new tech companies like Uber, or is it something older?
It’s something much older. In some ways it’s the normal way humans work, not just in the US, but around the world. Informal labor markets define most of the work in the Global South, and certainly look a lot like what work looked like before the rise of the corporation in the 20th century in the US.
The gig economy, as it came into being in the ’70s, ’80s, and ’90s, is in the context of a society where there was an expectation of labor rights. The way in which we created labor rights post-war was for a very particular kind of worker — a full-time worker who had steady employment at a particular job. He was a man, he was white, a citizen, native-born, and married. As many of those assumptions begin to break down about who an American is, we also see the meaning of that job begins to go away. Marriage begins to collapse, women start to work, millions of new Americans come. The obligations [corporations] feel to their workforce is quite different. It’s not incidental to the shifting nature of the American population — that racism and sexism guide expectations of who matters and who doesn’t from a corporate and policy point of view.
Jack Welch, the former CEO of General Electric, had a famous strategy of firing the worst-performing 10 percent of employees every year. That’s essentially stack ranking, something that tech companies like Google use today, right?
He’s the guy, Neutron Jack. He kills everybody but leaves the equipment. “We’ve got to make sure that we cut loose the fat. We’ve got to get lean and mean.” This is the kind of language that would never have been possible, not talked about, in the 1950s or ’60s. In the 1960s, there was a sense of, actually, you want your workers to feel safe. Because if they’re safe, they’re not afraid, and they’ll actually be more inventive. They’ll do better work, they’ll be loyal to you, they will not always be looking out the door for something else.
But this sort of downsizing strategy wasn’t invented by Welch, and it didn’t become popular overnight. How did books like In Search of Excellence — written by former McKinsey people — or other influences move the needle on how corporations should be managed?
Books like In Search of Excellence popularized these kinds of ideas — you don’t really need all these workers, you should be able to buy what you need from the market, you don’t need to have these big corporations, you can get by without job security. One of the partners at McKinsey who writes In Search of Excellence is the guy who’s behind the shifting culture at Hewlett-Packard. He supports a new shifting of the guard from [HP co-founders Bill] Hewlett and [David] Packard to a guy who has just an MBA; he’s not really an engineering guy. They begin to implement all the buzzy words like “kaizen” and “lean manufacturing” that were all the rage in the 1980s and begin to systematically break down Hewlett-Packard, and destroy its culture and its promise to its workers.
Future Shock is basically the most important book written in the last 30 years of the 20th century, if you want to understand the world we live in. [The author] Alvin Toffler basically invents the idea of project management and talks about a future where there’s no stability and no security. It’s a blueprint for work under neoliberalism, and it’s everywhere — it’s a bestseller. There’s lots of these popularizers that bring ideas about workplace insecurity into a kind of connection with rethinking what the corporation is after the 1970s.
Don’t companies rate morale, and having a sense of job security, as important for their employees? Don’t they think that’s essential for quality and productivity?
Certainly in Silicon Valley culture, that kind of morale is very important. Try to keep people happy, keep it fun. But in general, no. In general, I think that we’ve gotten away from this idea that people deserve not to be afraid, full stop. I think that’s not just a question of work, it’s a question of politics and democracy.
What’s the way forward from this environment where people feel that their work is so disposable? How do we get back to that golden post-war era of job security — but even better than before?
Exactly, because you want security, but it shouldn’t come at the cost of doing the work that machines should do. You don’t want to have people turning a wrench or working a cash register. If that’s the only way to have financial security, clearly we’re thinking about the problem incorrectly. I think the first step is really to have an extended national conversation on what our shared goals are: to not be afraid, to have workplace security and financial security.
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By: Whizy Kim
Title: When did mass layoffs become so normal?
Sourced From: www.vox.com/money/23691406/layoffs-history-job-insecurity-corporate-downsizing-q-a
Published Date: Fri, 21 Apr 2023 11:30:00 +0000
