The tragedy of layoffs

by Russ Roberts on April 10, 2006

in Work

This piece from the Washington Post is about the challenges of layoffs in America. A child of a Ford worker lived through the layoffs at Ford in 1980:

The layoff announcement threw our family, and the families of 1,500
other workers, into turmoil. Families went from planning vacations and
seeking college educations to planning cutbacks and seeking low-paying
but available work.

At the time it must have seemed very difficult:

The greatest sacrifice was made by my parents. My father was a
lawyer who had left day-to-day legal work to get a higher-paying job at
Ford in the go-go ’60s. With news of the plant closing, he made
twice-weekly trips to Birmingham to take legal refresher courses,
sleeping on the couch of my best friend from high school, who was
attending the University of Alabama at Birmingham. My dad, in his
fifties at the time, took classes with twentysomethings from wealthy
suburbs. At age 53, he passed the Alabama bar exam, the oldest person
in the state to do so that year.

My mother, who had left a career
in a bank to be a stay-at-home mom, went back to school to get her
teaching certificate, and then taught Spanish and special education in
the Alabama public schools. At an age when most couples were
contemplating sunny retirement, my parents soldiered on.

Our
story was far from unique. The American spirit is powerful, and we saw
dozens of inspiring stories from our fellow laid-off Ford families. But
when you move from the statistical forest to the individual trees, you
can see that each successive year was lived with more stress, fewer
dreams and altered futures.

Yet the author, by working, was still able to attend Stanford. His younger brother, by joining ROTC, got to Stanford, too. The story is meant to chronicle the tragedy of layoffs. But in fact, it shows that for this family at least, the end of the story turned out much better than they most have thought at the time.

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{ 12 comments }

doinkicarus April 10, 2006 at 10:45 am

Anecdotal evidence like this is a great counterpunch to many arguments – but it's a long way from convincing people who haven't been successful, or who have been directly impacted by the layoffs. The problem is a question of "fairness," and each individual is inclined only to evaluate fairness on an individual level.

Don't get me wrong – I'm sold on the idea of trade. But many aren't, because they don't think it's "fair," or just. And stories like this are discounted as "the exception to the rule."

John Pertz April 10, 2006 at 11:04 am

Well considering the fact that the alternative is a quasi-facist policy of government mandating the purchase of goods and services from inefficient firms, I will rest safely knowing that the open market is better in the long run for that very reason.

John Dewey April 10, 2006 at 11:38 am

What's disturbing to me is that today's workers seem unwilling to take responsibility for their own economic security. I guess I can't blame them totally. Government keeps granting them more and more unemployment funds and providing bigger safety nets.

At the airline where I'm employed, some workers continued to buy new homes, cars, and electronic playthings even after the layoffs had started. That's probably OK for those few families who have emergency funds. But I don't think many did. They just seemed to feel that somehow they'd be taken care of.

Quite frankly, I got a little tired of hearing the sad stories. I now believe that families who suffer after layoffs do so because heads of households refused to take care of their primary responsibilities.

John Pertz April 10, 2006 at 12:19 pm

I guess if I could make just one more comment it would be that in a social context where power can only be accumulated through the volition of others than everyone that operates within this framework is going to face uncertainty. Ultimately what determines the outcomes is chosing and understanding why people make choices is not an exact science. Therefore, workers and owners both face enormous amounts of uncertainty and in fact I would argue that owners have it the worst because when they get fired they lose not only their future income but the capital that they initialy risked.

happyjuggler0 April 10, 2006 at 1:41 pm

The problem isn't the layoffs. The problem is that the workers are paid vastly more than they would make if their employers were smart enough to pay market wages.

Then when they get laid off they can't possibly make the same amount of money. Except of course for those who were insane enough to be a lawyer who became a UAW member because it paid better.

I don't feel sorry for either the union members who made their own bed, nor the shareholders who allowed their company to be raped by the union.

There's a huge amount of "foreign" auto manufacturers making their cars in the US but manage to not lay off their workers. How can they manage this? They aren't union. Doh!

John Pertz April 10, 2006 at 1:46 pm

The real victim in this tragedy are the U.S consumers who for years were forced to by products from these mediocure and inefficient firms. Thats the real victim and because this loss is spread out over a large group we ignore it and instead focus on the acute individuals who for years were raping consumers in an attempt to make above market wages.

John Dewey April 10, 2006 at 2:27 pm

John Pertz,

I agree the consumers were the victims, but should we blame the overpaid union workers? I always believed union leaders were tasked with getting as much as they could for their members. It was management's responsibility to hold the line, even if that meant sacrificing short term profits in order to curb union power. Management didn't do its job.

John Pertz April 10, 2006 at 2:36 pm

They should all be held acountable because they all have blood on their hands regardless of whether or not they are workers, union leaders, managers, or C.E.O's. They all shared equaly in a massive defrauding of the American consumer. It was only when the American consumer became free to chose did their power begin to fade.

Bob White April 10, 2006 at 7:14 pm

This is not tragedy. Victims of a totalitarian state (e.g. N. Korea) starving to death — that is a tragedy. Terminal disease — that is a tragedy.

This is an example of a rational decision (to work for a large, prosperous firm) that didn't pan out as well as expected. As they say in the stock market, "past performance is no guarantee of future return".

RP April 10, 2006 at 7:25 pm

> I always believed union leaders were tasked > with getting as much as they could for their > members.

Like anything, it can be taken too far; the common counter example is burning your furniture to stay warm…

Minu May 20, 2006 at 10:36 am

The fundamental thing to remember here is that businesses are not for charity. Even though they do have a humane angle to most of their decisions, they are to a large extent answerable to their shareholders and their promoters. Thus it makes ecomomic sense to them to outsource the processes within them that are draining funds and aren't within the area of their their core-competencies. In this process the common man takes a beating and his job eventually goes to a more cost effective region. Profit v/s Person. Growth v/s Charity. Competetion v/s Countrymen. Success v/s sympathy. A logical reasoning about these issues would lead to the answers without much ado. For any other comments regarding this please mail me

minu May 20, 2006 at 12:29 pm

The fundamental thing to remember here is that businesses are not for charity. Even though they do have a humane angle to most of their decisions, they are to a large extent answerable to their shareholders and their promoters. Thus it makes ecomomic sense to them to outsource the processes within them that are draining funds and aren't within the area of their their core-competencies. In this process the common man takes a beating and his job eventually goes to a more cost effective region. Profit v/s Person. Growth v/s Charity. Competetion v/s Countrymen. Success v/s sympathy. A logical reasoning about these issues would lead to the answers without much ado. For any other comments regarding this please mail me: author.banglored at YAHOO.COM

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