The immorality of layoffs

Many of the world's problems can be traced back to how we use words without thinking what they mean or where they come from. Take "active shooter," for example, a dangerous and idiotic euphemism that appears in nearly every periodical in this country: What would a "passive" shooter look like, I wonder? But a much better and, I think, perhaps even more alarming example is "layoff," a word that should be synonymous with fraud and theft but which is in fact accepted as an anodyne business term like "budget" or "salary."

But layoffs in the sense we mean now — when a business decides to terminate the employment of workers in the name of strategic planning, downsizing, smartsizing, optimizing, leveraging syngergies, and goodness knows what other gibberish — are a relatively recent phenomenon. A century ago there was not even a word for such a practice. A "layoff," according to a glossary of business terms published in 1921, was a "Temporary cessation of employment due ordinarily to lack of orders; a layoff does not constitute permanent discharge." A worker in those days might be "laid off" because there was no work for him to do and the company could not engage him for surplus or speculative production without risking insolvency.

In the middle of the 20th century, following the gains made by organized labor, corporations did everything they could to avoid getting rid of workers after hiring them. Unless your business was closing down, there was simply no reason to gut your workforce, even if profits were down a bit. To do so would have been considered not only irresponsible but unethical. It was simply not done, and the response to a company that attempted to increase its earnings for shareholders in such a cutthroat manner would have been comparable to the outrage now generated when a CEO says that he opposes gay marriage.

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As Louis Uchitelle shows in The Disposable American, his brilliant history of the modern layoff, it was not until the 1970s that corporations routinely began to fire employees en masse simply because it allowed them to save on labor costs. This was the culmination of a long process that began in 1919, when the Dodge brothers sued Henry Ford because he surmised, correctly, that since he and his fellow shareholders already had more money than they would ever know what to do with, the best thing they could do with their excess profits was invest them back into the company — increasing wages, providing free education and other opportunities and benefits for employees and their families, and even lowering prices.

Unlike virtually every CEO of a major corporation today, Ford believed that his company was simply a means to an end — specifically the end of providing honorable work and a means of earning a living, which in turn made possible the raising of families and all the virtues of society that depend upon the securing of life's basic necessities. "My ambition," he said, "is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting the greatest share of our profits back in the business." But the Michigan Supreme Court sided with the Dodges, ruling that a corporation's responsibility was only to its shareholders and that Ford's humane policies were an illegal wealth transfer.

Today the layoff swindlers who argue that taking the earnings away from thousands and thousands of families is necessary always promise the same thing: After the painful but unavoidable disruption, a new revivified company will emerge, one that is more sustainable, a state of affairs more beneficial to everyone involved, including somehow, the people who will not be employed by it. American workers have been told this for three decades now. It was always a lie. What we have gotten instead is a system in which shareholders and consultants make more money than ever and the lives of workers become increasingly precarious. Life after one layoff means, at best, finding another job where the whole cycle will begin anew.

Layoffs are immoral. To deprive someone of a wage not because he is failing to earn it or because you can no longer afford to pay it but because you have decided that you would prefer not to pay him is robbery. The fact that it has been a widely accepted and almost universally recommended business practice for more than 30 years tells us one thing: Corporations do not exist to deliver goods and services to people. Nor are they there to provide employment to workers. They are a nihilistic engine for the accumulation of wealth. Just as equine sporting events provide the necessary arithmetic for a numbers racket, so too is the fantasy of the corporation that Does Something an unavoidable component of making it possible for people to profit from an increase in its stock price. These people are playing Pokémon with the nation's wealth.

How can we change this state of affairs? One way, of course, is shame. A CEO who lays off workers and the consultant who earns his living by advising this practice and pimping the results to investors are con artists and should be regarded as such. The instability faced by workers must be brought to bear upon the consultant and shareholding classes. Raise the marginal tax rate to 70 percent. Tax capital gains at a higher rate than income. Ban share buybacks and implement tariffs, quality-control standards, and other measures that make outsourcing unviable. We must do everything possible to encourage worker-owned enterprises.

If he were alive today Henry Ford would be ashamed of but hardly surprised by the fact that General Motors is preparing for the second round of layoffs in roughly as many months. I spoke recently to a person who was present at a meeting where senior GM employees stood crying, utterly incapable of understanding why they and thousands of others would be losing their jobs over nothing. The rest of us should share in this outrage.