Catastrophic Unemployment Effects

Unemployment has catastrophic effects. And society seldom accounts for this price.

More than 150,000 tech professionals lost their employment in 2022, and an additional 23,000 have been laid off since the beginning of 2023, according to one estimate.

These persons are not alone. Since 1996, when the Bureau of Labor Statistics began tracking mass layoffs, over 30 million American employees have been affected.

Throughout the 1970s and 1980s, manufacturing employees were among the first to be put off in large numbers as the Rust Belt deteriorated. Then, during the 1990s, white-collar workers realized that their pristine workplaces were not immune to such disasters.

We have come to regard mass layoffs (50 or more employees losing their employment at a single company within five weeks) as an inescapable consequence of conducting business in a highly competitive global economy. Americans are encouraged to believe that a successful company must be merciless in reducing labor expenses or risk joining a long line of companies that failed because they reacted too slowly.

Yet, mass layoffs are not limited to for-profit enterprises attempting to maximize capital returns while surviving. Businesses, including nonprofit organizations, have routinely adopted these fiscal tactics.

Oberlin College in Ohio, for instance, laid off 113 unionized food service and cleaning workers during the outbreak (around 50 were fortunate to find employment with one of the subcontractors). This modest, non-profit college, the first in the United States to accept women in 1833 and African-American students in 1835, decided to decrease costs by laying off workers with decades of service and replacing them with subcontractors.

The number of Oberlin employees who lost their employment is minor compared to the tens of thousands laid off by huge digital businesses like Amazon. Still, the effect is akin to what has occurred to millions of Americans, sometimes unconnected to economic downturns.

There is always an explanation. Since the market is competitive, costs must be cut. Colleges must cap tuition hikes to recruit students. Budgets must be balanced, "structural deficits" addressed, and endowments protected.

Yet, this decision-making style disregards the suffering caused to workers and the effects on their communities. In the instance of Oberlin, the surrounding area already had a 25 percent poverty rate.

Recent research published in Harvard Business Review indicates that the damage is always severe.

Medical study has revealed that unemployment's traumatic effects induce sickness. According to one survey, being laid off rated sixth on the list of the most stressful life experiences, higher than divorce, abrupt and severe hearing or vision impairment, or the loss of a close friend.

According to specialists, the average time required to recover from the psychological trauma of job loss is two years.

In the first 15 to 18 months following a layoff, healthy employees without underlying conditions are 83% more likely to develop a new health condition, with cardiovascular conditions, such as hypertension and heart disease, and arthritis being the most prominent difficulties. Unemployment can increase the risk of suicide by 1.3 to 3 times. According to the Harvard Business Review, relocated workers are twice as likely to acquire depression, four times as likely to abuse substances, and six times as likely to conduct violent crimes, such as partner and child violence.

Throughout the remainder of their careers, these employees may incur a loss of income. Studies indicate that quitting a job may diminish long-term profits by 20% to 40%.

Even the Department of Labor agrees that "being laid off is one of the most stressful situations a person may undergo."

Does constructing a wealthy society require inflicting such anguish and misery on millions of working individuals?

Several highly developed nations have taken different paths. Siemens Energy, which employs more than 90,000 people worldwide, scrapped its proposal to lay off 3,000 employees in Germany as part of a global reduction of 7,800 positions, including 1,700 in the United States. Instead, after negotiations with IG Metall, the business agreed to cut its German staff only through buyouts and natural attrition. Nobody would be required to leave, and no German facility would be shut down. In the interim, Siemens will terminate these 1,700 employees as planned in the United States.

Why is nothing present?

Our collective memory is restricted. Before the deregulatory movement of the last four decades, mass layoffs were not considered an essential corporate strategy. As Newsweek wrote in 1996, "Once upon a time, firing many employees was a show of shame. It suggested that you had mishandled your business endeavors. The more the number of employees laid off by a company today, the more Wall Street appreciates it and the higher its stock price."

After more than 25 years, the failure to account for the long-term societal destruction of mass layoffs is not even questioned. As a nation, we have not yet determined that protecting the health and safety of our working population should be a significant priority — at least as vital as short-term corporate profit growth.

Les Leopold is the executive director of the Labor Institute in New York. His book is "Runaway Inequality: An Activist's Guide to Economic Justice."

Suppose you or someone you know has been affected by mass layoffs and could benefit from additional support or guidance. In that case, I recommend getting in touch with an advisor for professional assistance. They can provide personalized advice and resources to help navigate this difficult time. Remember, you don't have to go through this alone.

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