J.J. Goldberg

New Studies Show: Layoffs Kill. What Are We Doing About It? Nothing

By J.J. Goldberg

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There was a whopper of a scandal on the front page of the New York Times last Wednesday (February 26). It was the sort of story that makes everybody sit up, that changes the national discourse. Think of the Pentagon Papers or Bill Clinton’s Oval Office indiscretions. When misbehavior on a grand scale is brought to the public’s attention the way this Times story was, people usually demand an accounting. Except that this time they haven’t. It’s disappeared with a big yawn.

Perhaps it was the bland headline the Times gave it: “For Workers at Closing Plant, Ordeal Included Heart Attacks.”

Translation: Layoffs kill.

It should have been obvious, when you think about it. It’s no secret that losing your job, especially if you’re a family breadwinner, commonly leads to anxiety, stress, fear for the future, humiliation and loss of self-esteem. It often leads—especially these days—to long-term unemployment, loss of family income, decline in nutrition, loss of home and health coverage. And if you think about, that combination is a recipe for sleeplessness, unhealthy lethargy, cardiac problems and, in the worst case—though hardly a rarity—heart attacks and even suicide.

The trouble is, we don’t think about it.

How big a problem are we talking about? Here’s what the Times said:

A growing body of research suggests that layoffs can have profound health consequences. One 2006 study by a group of epidemiologists at Yale found that layoffs more than doubled the risk of heart attack and stroke among older workers. Another paper, published last year by Kate W. Strully, a sociology professor at the State University of New York at Albany, found that a person who lost a job had an 83 percent greater chance of developing a stress-related health problem, like diabetes, arthritis or psychiatric issues.

In perhaps the most sobering finding, a study published last year found that layoffs can affect life expectancy. The paper, by Till von Wachter, a Columbia University economist, and Daniel G. Sullivan, director of research at the Federal Reserve Bank of Chicago, examined death records and earnings data in Pennsylvania during the recession of the early 1980s and concluded that death rates among high-seniority male workers jumped by 50 percent to 100 percent in the year after a job loss, depending on the worker’s age. Even 20 years later, deaths were 10 percent to 15 percent higher. That meant a worker who lost his job at age 40 had his life expectancy cut by a year to a year and half.

What’s surprising is that it took so long for people to conduct and report the studies cited in the Times story. Our society doesn’t permit businesses to take actions that will predictably lead to preventable deaths among their employees, customers or nearby residents. We have dozens of federal, state and local government agencies that monitor and enforce public and workplace safety, from environmental protection to consumer product safety to building codes, restaurant inspections and the Occupational Safety Health Administration. There are rare exceptions, notably tobacco, but at least the public has mobilized to discourage tobacco use and sue the manufacturers.

Laying off workers, on the other hand, is considered praiseworthy. It’s sound business judgment. We have soothing pseudonyms for it, like reducing labor costs and workforce mobility, to dull the harsh reality of the practice.

Yes, there are rules limiting a business’s right to fire workers. You can’t fire someone because of their color, gender, religion and a few other categories.

But as long as you can show you did it for your own economic benefit, to boost your profits and guarantee shareholder value—or for no reason at all—you’re fine.

Right now many of our alert readers are looking at this and thinking, there goes Goldberg again, running off the rails. What would the economy look like, you’re asking, if we started tying management’s hands on something as basic as hiring and firing? Answer: It would look like the economies of western Europe and much of the industrialized world. Yes, I know these economies aren’t as successful as America’s. They have slower growth, less innovation among other ills. On the other hand, they leave far fewer of their citizens hungry, destitute and homeless. Isn’t that what an economy is supposed to be for—to feed, clothe and house people? If it succeeds at growth and profits but leaves large numbers hungry and homeless, how can it be called successful?

But forget European morality. Let’s stick to solid American values. We don’t let businesses make decisions that lead to predictable and preventable deaths. We outlaw them if we can, and if not we regulate them to minimize the public hazard and save lives. Except for layoffs.

So here’s my question: Why is this legal?


Permalink | | Share | Email | Print | Filed under: unemployment, business regulation, business ethics, Layoffs



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