The Layoff Lie
I’ve previously suggested that there has to be a better way to deal with our current economic crisis or any economic crisis than resorting to the mass layoffs going on now and predicted to continue going on well into 2009. (Click here and here.) One way is to ask employees (including executives) to take a cut in pay. A recent editorial in the New York Times also offers this suggestion.
Since the early 1980′s, the mass layoff has been the remedy of choice for dealing with economic crises. Today, it’s the knee-jerk remedy. No thought seems to be given to anything else. By taking this approach, we ensure that the crisis becomes worse. This time, we’ve ensured a deep recession.
The contrary (and countervailing) point of view is that the layoff is the quickest solution. It’s not only quick; it’s about the only remedy that’s measurable in dollars and cents. That’s a lie. The layoff has long-term consequences, and it’s impossible to measure in any meaningful way.
In 2006, Times business reporter Louis Uchitelle wrote The Disposable American: Layoffs and Their Consequences, detailing how layoffs had become standard management practice instead of a sign of corporate failure over a period of two decades. According to Uchitelle’s rationale, most displaced workers can never regain what they’ve lost in terms of compensation and benefits; the negative impact on the overworked and fearful employees left behind offsets any dollars and cents savings; and the long-term damage to employers’ reputations outweighs any type of short-term benefits and has unraveled American job security. Much more has been written about the layoff lie — obviously to no avail.
I find many HR professionals who agree with the point of view expressed in this post, but what can they do? The layoff decision comes from on high. HR is the implementer.
I know this is asking a lot, maybe too much. Instead of going along with the decision, push back. Make sure HR is at the table when the decision is made. Make sure that all other alternatives are considered before the layoff trigger is pulled. Make sure that everyone understands that layoffs always result in a lot of employment litigation and union organizing. Try to convince executives that the mass layoff as a solution to an economic crisis is a lie.
Like I said, I know that’s asking a lot. It’s asking HR to possibly risk their own jobs. But HR does stand for human resources, and human resources should be treated like human beings.
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About Chris Parker
Chris Parker's practice focuses on the representation and counseling of companies in matters pertaining to the workplace and the protection of their intellectual property and trade secrets. In addition to serving as an advocate for clients, Mr. Parker is also trained as a mediator and frequently serves as a third-party neutral.
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Jimmy Daniel provides counseling to businesses of all sizes related to the employment relationship. He assists in the drafting of employment agreements, policies, and handbooks, as well as provides guidance related to compliance with federal, state, and local legislation such as the Fair Labor Standards Act and the Family and Medical Leave Act.
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While serving in an Of Counsel relationship with the firm, Mr. Bridgesmith also serves as the Executive Director at the Institute for Conflict Resolution at Lipscomb University and as an officer and principal in Strategic Resolutions Group, LLC. In these roles, Mr. Bridgesmith brings over 30 years of legal experience in dispute resolution and innovative workplace strategies to clients, students and business entities alike.
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We will be letting some employees go in January. Fortunately (?) these are non-performers who needed to be gone a long time ago. No one is safe and yes, it is going to kill morale once these employees are given the boot. I am broaching going part time after January 1. This is an attempt to save my position should there be more layoffs. We just don’t have many other positions that can go part time…
What about an across the board reduction in pay? If you combined that with making some jobs part time, would that prevent or reduce layoffs?
After years of minimal pay raises, many workers are barely making ends meet on their current salaries, and a pay cut would be as big a disaster as being laid off.
I’d rather lose my job and be given lump sum severance and be eligible for COBRA and to collect unemployment (which would be enough to cover COBRA, but not rent), than be asked to take a 8% pay cut.
The problem with making some positions part time is twofold — the work still needs to get done, and many companies do not provide full benefits to part time workers.
Dave,
Thanks for weighing in. Your points certainly have merit.
I think I would still opt for something other than mass layoffs. Way too late to even think about it in a meaningful way, however.
Layoffs have already deepened a severe recession, and apparently, there are more to come.
John
I work in the (professional) services industry, at a privately owned company, and a layoff would not necessarily result in a severance package. My state is postponing tax returns and delaying their OWN payables, so could I really rely on unemployment benefits? Hmmm…
Today, our owner announced an across-the-board 10% pay reduction, and the implementation of voluntary (for now) work furloughs. He was candid and succinct, and at the one-to-one follow-up, offered transparency of the financial assessment. AND, equally important, was the stated economic criteria for reinstating current rates and benefits.
I’m okay with the pay reduction. It’ll be hard – I’ll not lie – but I believe that this is the lesser of many evils, and while it may not fully staunch the bleeding, I do believe it’s better (for the company AND for the employees) than the tourniquet method.
Nancy,
Thanks for sharing this. Hang in there.
John
I am a local government manager in a TN city where sales tax revenues are the major source of revenue. Sales tax revenue has been down an average of 5% for the past four months and is anticipated to remain at current decreased levels or even lower for the foreseeable future. Due to the fact that local governments provide essential services such as electric, water, sewer, law enforcement and fire protection, layoffs are the absolute last option. In the meantime though, if the economy continues to decline, pay reductions may be the first best option for public employers. I am wondering if pay reductions for public employees can create discriminatory situations if not done in a proper manner.
You should definitely get legal advice when doing pay reductions just like you should get it when layoffs are done. It is certainly possible to do pay cuts without discriminatory intent or impact. Your point is a good one, however, and that’s why legal advice is necessary.