A Worker’s Perspective On Mass Layoffs

A note on increased global competition, weakened unions and massive mergers

Dat T. Nguyen
Jul 13, 2019 · 5 min read
Photo by dylan nolte on Unsplash

Recently, Quartz posted an article, “The short but destructive history of mass layoffs”, writing that mass layoffs are a recent phenomenon and that the media tend to focus on the struggles of the employers rather than those of the fired workers, who are often treated like lepers to be removed from sight.

the layoffs are often discussed more as an indicator of a company’s struggles and strategic turns than as a life-changing disaster for huge numbers of human beings.

This is the case because the mainstream media are often corporations themselves that report layoffs to inform investors and the business community. Newspapers like The New York Times and The Wall Street Journal have no accountability to workers unless the worker dissatisfaction affects the bottom line.

But one could imagine a newspaper for and by workers. A newspaper that takes the interests of the workers as a priority. A newspaper that organizes workers to resist mass layoffs. Such idea, of course, is considered militant by our political and business leaders. But when a company’s corporate managers convene to discuss mass firings, the same behavior is deemed as responsible response to investors and shareholders.

The workers themselves generally found that the stigma attached to layoffs was so great, and the experience of being let go was so fundamentally demoralizing, that they had little will to organize or otherwise push back against their plight.

There is no doubt that getting fired for any reasons would be devastating to one’s self-confidence. But the real reason for American workers failing to organize is that most of them would not know how. Most Americans are educated to become obedient workers and leave politics at home. They are afraid to do anything that would challenge the arbitrary authority of the bosses. In the short story “Orientation,” a stinging satire on American work culture, author Daniel Orozco demonstrates the absurdity of professionalism of the workplace, showing that workers would follow irrational and stupid rules just to remain employed.

Once upon a time, labor unions were the answer for educating workers on their rights and power. But in America there is not a labor union for white-collar workers. Often times, legacy unions have become the representatives of the moneyed bosses. And the American government has long sided with corporations, passing and enforcing anti-worker laws such as “employment at will” and making it harder for workers to carry out class action lawsuits. Therefore, to pin the futility of the workers to resist mass layoffs on the workers themselves is misguided.

Mass layoffs are in fact a fairly recent phenomenon, emerging for the first time in the late 1970s. In the span of just a few decades, Americans came to accept frequent, large-scale layoffs as the price they have to pay in a dynamic global economy, a mindset that impacts blue-collar and white- collar workers alike.

What is the global perspective of mass layoffs? After the postwar economic boom of the 1950s and 60s, the American economy began its decline as Europe and Asia recovered from the destruction of the Second World War. In the 1970s, despite China was supporting American enemy, Vietnam, the US and China agreed to hammer out a plan that would see increased trade and investment between the geopolitical rivals. Because of the economic imperative of globalization, the two countries decided to forgo any ideological differences. As China opened her labor market, hundreds of millions of Chinese workers were willing to work for a fraction of the American worker’s salary. This, of course, contributed to the hollowing out of the American middle class and made mass layoffs possible. Technology as a factor of deindustrialization came later.

According to the Quartz article, from the 1890s to the 1970s, “mass layoffs were rare.” That was the case because the industrial revolution in the United States had begun in the late nineteenth century and expanded rapidly in the subsequent decades. American manufacturers needed workers. Furthermore, two world wars decimated the supply of workers, forcing them to trade their factory clothes and hammers for military boots and rifles. But by the 1970s, there was suddenly a surplus of workers in developed countries and increased competition. Japanese auto companies began to compete vigorously with Detroit automakers. Then, the rise of feminism further put more workers in the labor market. Airbus was a European effort. The consortium was formed in 1970 to compete directly with Boeing in the commercial aircraft market.

The phenomenon of mass layoffs since the 1970s is perhaps due to the fact that corporations have been merging and consolidating at record levels. In 1997, the WSJ reported “Merger Records Shatter as Firms Capitalize on Favorable Climate.” Last year, the Financial Times reported “Global M&A activity hits new high.” The recent decision of the Federal Reserve to lower interest rates, making it cheaper for banks and corporations to borrow money, is likely to increase mergers and acquisition. Corporations would rather merge than compete and lose profits. Mass layoffs are massive because the employers firing their workers are massive corporate behemoths.

When I was working for a large multinational technology company with over 70,000 employees worldwide, I witnessed its corporate strategy was based on labor arbitrage and acquisition. Often these acquisitions would capture technology and/or market share, but create redundant departments and workers, a situation that often would lead to mass layoffs. In 2011, I, along with the group I was working for, was laid off because our employer wanted to offshore the group’s function to India, where it would be cheaper to hire local tech workers.

The reality of our times is that employers in the US simply do not need workers as much as they did before 1970s. And this is due to increased global competition and weakened labor unions and massive mergers. The post-industrial phenomenon of mass layoffs is better understood with a global framework and an understanding of the economic imperative of capitalism.

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