Lay Off Layoffs

Maui Time | August 6, 2009
You've seen how TV covers the immediate aftermath of a disaster. A tornado or earthquake or whatever has just ripped through a community. Rubble and bodies lie scattered. Asked to comment, stunned survivors weep and confirm the obvious—they've lost everything.

Then the reporter's wrap-up: "Now, the rebuilding begins. Back to you, Bob."

The impulse to clean up and move on after taking a hit is universal. But the underlying assumption—that everything will eventually be OK again—is uniquely American. Taking office four months into the economic collapse, President Obama played to our belief that gumption cures everything, saying in his inaugural address: "Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America."

They don't roll that way in Yugoslavia, where Serbs still seethe over a battle fought in 1389. Nor in the Middle East, where displaced Palestinians hold on to deeds and house keys for homes they lost 60 years ago. People nurse resentments. They long for revenge.

Here in the United States, the overall unemployment rate is over 20 percent and rising. Corporations collected trillions of dollars in government bailouts, while ordinary workers got nothing. Millions of people are losing their homes to foreclosure, yet the president has yet to lift a finger to help them. Meanwhile, companies like Goldman Sachs are paying their officers obscene bonuses. How come there's no social unrest? Where's the outrage?

As the little girl in the "Addams Family" movie said: "Wait." In the meantime, Americans' tolerance for getting fired and becoming homeless owes everything to that trope: "Now, the rebuilding begins."

Lost your job? Hit and cut-and-paste your résumé until your index finger turns sore. Lost your house to foreclosure? Your brother-in-law's couch will see you through. And those CEOs who profited from your misery? Admit it—you're jealous. You'd do the same if you were in their position.

But there's a rub. A big rub. After a layoff, the rebuilding doesn't begin.

"On average, most workers do not recover their old annual earnings" after being laid off, Till von Wachter, a Columbia University economist, tells The New York Times.

Wachter studied the income histories of workers who lost their jobs a quarter-century ago, during the Reagan recession of 1981-1985. The results were startling. "Even 15 to 20 years later, most on average had not returned to their old wage levels," he found.

The former layoff victims now earn 15 to 20 percent less than comparable workers who had not gotten canned. "One of the main reasons for the [lower pay], according to economists, is that workers who endure a layoff are more likely to be laid off again," reports the Times.

"What tends to happen is the worker has to start over with a new employer, sometimes in a new industry," explains UC Davis economics professor Ann Huff Stevens. "You're at the bottom of the totem pole again."

Many of the people Wachter studied "had been forced to drastically change their lifestyles to cope with lower incomes. Several have struggled with long bouts of unemployment. Some were laid off several times. Many have been forced to lean heavily on spouses' incomes."

Layoff victims followed the rules. But it didn't do any good. During the 1980s and 1990s the rich got richer, the poor got poorer, and the middle class withered away. Now, among industrialized nations, only Russia has a smaller middle class and higher poverty rate than the United States.

Maybe the rest of the world has it right. If Americans began holding grudges against the corporate chiefs and politicians who exploit their labor and rip them off, they wouldn't have to silently absorb losing their jobs so some rich executive can give himself another raise.

There is a better way: ban layoffs.

Outlawing layoffs would mean getting rid of the brutal concept of "at will" employment. In the U.S., employers can hire and fire you whenever they feel like it. There are limited exceptions. It's illegal to fire you because of your race or because you refused a sexual advance, for example. But you have to hire a lawyer and go to court to enforce that law. In general, employers hold all the cards.

In France, on the other hand, almost every worker receives a written employment contract. Almost all French employment contracts are for an indefinite term. You can keep your job as long as you-—not your boss—feel like it.

Firing an employee in France is hard. "Dismissals are subject to stringent, and often bureaucratic, procedural statutory constraints," says the Parisian law firm Triplet & Associés. "Redundancies, or layoffs on economic grounds, are subject to separate and complex procedural and substantive constraints particularly in the case of multiple dismissals…It is extremely easy and at virtually no cost for an employee to start litigation against his (ex) employer before separate Labor Courts…It is rare that the plaintiff be other than an employee and just as rare that claims be dismissed with no award whatsoever being made against the employer."

French workers don't have to dig out of nearly as many layoffs. When they do, they're entitled to generous severance packages.

Don't these pro-worker protections allow slackers to keep their jobs? Don't they hurt the economy? Nope. According to the Organization for Economic Cooperation and Development, hourly productivity is higher in France than in the United States.

It's time to eliminate the barbaric wage slavery of "at will" employment. Only then can the rebuilding—of the American middle class—truly begin.

(Ted Rall, President of the Association of American Editorial Cartoonists, is author of the books "To Afghanistan and Back" and "Silk Road to Ruin.")


Maui Time

Maui Time Weekly provides insightful analysis and in depth reporting. We believe some issues are so important they require thoughtful consideration. We are not a “paper of record”—a daily journal of government meetings, ribbon-cuttings and corporate announcements. We decide what’s...
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