Judy Davis had worked for a surgical instruments maker in Cincinnati for three years -- as a contract worker, not an employee -- and when she was laid off five months ago, she burst into tears. But she was not surprised.
"I loved the work and I was devastated," Davis said. Trained in animal science, she had tested the instruments, sometimes on pigs and goats. Her performance reviews were excellent and she strove to become an employee, but she was always aware that she might not reach that goal. "The message implicit in contract work," she said, "is that the company is not doing well enough to elevate you to a job. Layoff looms as a possibility."
PHOTO: NY TIMES
In mid-February, as the economy weakened, Ethicon-Endo Surgery, a division of Johnson & Johnson, dropped Davis, 44, a divorced mother of two daughters who had been earning US$17.50 an hour. Soon thereafter, she joined a job search group at a local church and, at a recent meeting, asked the 50 people present if any had ever been laid off. "Half raised their hands, and I asked them why they were not angry," Davis said. "They said the first time was the most devastating. This is my first time, but to whom do I address anger? If I were a business owner and I was not making a profit, I would lay people off, too."
For the first time since the mid-1990s, US companies are cutting loose many of their employees -- announcing in the first half of this year alone plans to eliminate some 777,362 jobs, compared with 613,960 in all of last year. But the usual protests and anger are largely missing. In the first years of the 21st century, layoffs have a new character. While it used to be traumatic to be laid off even once, some employees can now expect to get a pink slip twice or even three times before they reach 50. Layoffs are being spread more even-handedly than in the past, hitting women as often as men, top executives as well as clerks and production workers, good performers as well as bad. And often, like Davis, the laid-off worker reluctantly agrees with the business decision that put him or her on the street.
Firings and hirings
The firings, for that matter, are often going hand in hand with hirings. As companies lose workers in one department, they are adding people with different skills for another. They are, in effect, continually tailoring their work forces to fit the available work, adjusting quickly to swings in demand for products and services. To do that, companies are making ever greater use of contract workers and temps like Davis.
"Flexibility is the most important ingredient of corporate success today," said Eric Greenberg, director of surveys at the American Management Association. "That involves a certain thickening of the skin on both sides of the equation. Management is more thick-skinned about letting people go, and workers are more thick-skinned about accepting layoffs as a condition of employment."
There is balm to ease the process, though. Many companies are growing more open-handed with severance and are spending more on outplacement services for their departing workers. The outplacement industry is booming. Right Management Consultants, the biggest of the nation's outplacement operations, with 140 offices in the US, signed on 26,400 newly laid-off workers from January through June, more than double the 11,200 in the first half last year.
Self-interest plays a role in these sweetened departure packages. Companies like Motorola and Cisco Systems, for example, are trying to generate good will, even loyalty, among the departing employees -- the goal being to make them amenable to return when demand picks up. Cisco, which is shrinking its staff to 30,500 from 38,000 and paying six months' salary to those who sign severance agreements, is also trying a 21st-century version of the old industrial furlough. In a pilot program, it is paying 70 employees one-third of their salaries while lending them to nonprofit organizations for a year -- in effect, warehousing them until they might be needed. Charles Schwab, Texas Instruments, Accenture and other companies have similar programs to "park" employees until the economy recovers.
When that might be is unpredictable, of course. Announcements of job cuts jumped to record levels in the first and second quarters, and the percentage of the unemployed who left their jobs involuntarily has risen sharply, to 36.3 percent in June from 28 percent in December, the Labor Department says. If this pounding continues, a backlash may develop reminiscent of the mid-1990s, when, for example, a Newsweek cover article pilloried four prominent chief executives who had downsized companies. "It used to be a mark of shame to fire workers en masse," the article declared, reflecting the national angst. "Today Wall Street loves it."
Changing situations
Wall Street still loves layoffs that promise to raise profits by reducing labor costs. But the circumstances have changed. In the mid-1990s, the economy had begun to boom and profits were rising, but the layoffs happened anyway -- prompting Newsweek to speak of "greedheads."
Adding to the popular frustration was a continuing belief in the old social contract, in which companies and their workers remained loyal to each other, through thick and thin. In the US psyche, that belief had not yet foundered. Pat Buchanan came to prominence as a presidential candidate in 1996 partly because he drew votes from workers who had lost their jobs or feared losing them.
This time around, politicians have said barely a word about layoffs. Although there have been some cases of anger, even violence, among people who have been laid off, overt reaction has been minimal. In part, that may be because the unemployment rate is only 4.5 percent, encouraging laid-off workers to think that they can land new jobs fairly quickly. And layoffs seem justified because economic growth has slowed to a crawl, profits have plunged and stock prices have been falling. The use of temporary workers, contract workers, outsourcing and relocation to cheaper labor markets, meanwhile, has evolved into a widely tolerated corporate strategy -- and these practices require layoffs to function. Frequency breeds familiarity.
The growing practice of hiring in one department while paring back in another also makes layoffs less of a target for protest. Thirty-six percent of the 1,441 companies surveyed by the American Management Association in its most recent poll, conducted last year, engaged in simultaneous "job creation and job elimination," up from 31 percent in 1996.
Layoffs, in sum, are becoming part of the landscape in good times and in bad, as companies strive to create what amounts to a just-in-time work force.
"The new paradigm is a widespread recognition that there are big cost savings if you do not have to carry workers and can get rid of them quickly when there is not enough for them to do," said Peter Capelli, a management professor and co-director of the Center for Human Resources at the Wharton School of the University of Pennsylvania. "That is one side of the equation. On the other side, there was the growing realization in the boom years of the late 1990s that even in tight labor markets, you can get workers quickly enough."
What makes this work-force flexibility possible is the rise of temporary and contract workers. A soon-to-be released survey of more than 3,000 companies conducted by Capelli with the Census Bureau found that on a typical day these companies -- a cross-section of Corporate America -- used temps and contract workers to meet 12 percent of their manpower needs. On peak days, their use reached 20 percent.
Until the 1970s, temps and contract workers hardly existed, yet they now account for nearly 5 percent of the nation's work force, a pliable buffer that is currently being squeezed.
As US companies negotiate this new employment terrain, they are trying to make employee departures less of a surprise. "In the last several years, there has been a movement toward greater sharing of a company's ups and downs," said Michael Burniston, a principal at William M. Mercer Inc, a management consulting firm. "Managers now issue corporate performance scorecards, and in-house briefings for employees are more frequent. That raises awareness and in a strange way prepares employees for what might happen to them."
They also find themselves increasingly encouraged to operate as "free agents," a popular phrase among consultants. "Employees are developing the view that their only job security in the future must be based on their ability and their competence," Howard said, "and not on keeping a job at some particular company."
The free-agent message, often ridiculed in the 1990s, appears to be gaining acceptance. The Clinton White House endorsed the concept and pushed companies to spend more on worker training, so that people could develop skills to pursue a career, moving from job to job if necessary.
The Bush administration has a similar approach. Rather than emphasizing job security, it argues that in a strong economy people will more easily segue in and out of jobs.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Wednesday said that a new chip manufacturing technology called “A16” is to enter production in the second half of 2026, setting up a showdown with longtime rival Intel over who can make the fastest chips. TSMC, the world’s biggest contract manufacturer of advanced computing chips and a key supplier to Nvidia and Apple, announced the news at a conference in Santa Clara, California, where TSMC executives said that makers of artificial intelligence (AI) chips will likely be the first adopters of the technology rather than a smartphone maker. Analysts said that the technologies announced on
NO RECIPROCITY: Taipei has called for cross-strait group travel to resume fully, but Beijing is only allowing people from its Fujian Province to travel to Matsu, the MAC said The Mainland Affairs Council (MAC) yesterday criticized an announcement by the Chinese Ministry of Culture and Tourism that it would lift a travel ban to Taiwan only for residents of China’s Fujian Province, saying that the policy does not meet the principles of reciprocity and openness. Chinese Deputy Minister of Culture and Tourism Rao Quan (饒權) yesterday morning told a delegation of Chinese Nationalist Party (KMT) lawmakers in a meeting in Beijing that the ministry would first allow Fujian residents to visit Lienchiang County (Matsu), adding that they would be able to travel to Taiwan proper directly once express ferry
CALL FOR DIALOGUE: The president-elect urged Beijing to engage with Taiwan’s ‘democratically elected and legitimate government’ to promote peace President-elect William Lai (賴清德) yesterday named the new heads of security and cross-strait affairs to take office after his inauguration on May 20, including National Security Council (NSC) Secretary-General Wellington Koo (顧立雄) to be the new defense minister and former Taichung mayor Lin Chia-lung (林佳龍) as minister of foreign affairs. While Koo is to head the Ministry of National Defense and presidential aide Lin is to take over as minister of foreign affairs, Tsai Ming-yen (蔡明彥) would be retained as the nation’s intelligence chief, continuing to serve as director-general of the National Security Bureau, Lai told a news conference in Taipei. Koo,
MANAGING DIFFERENCES: In a meeting days after the US president signed a massive foreign aid bill, Antony Blinken raised concerns with the Chinese president about Taiwan US Secretary of State Antony Blinken yesterday met with Chinese President Xi Jinping (習近平) and senior Chinese officials, stressing the importance of “responsibly managing” the differences between the US and China as the two sides butt heads over a number of contentious bilateral, regional and global issues, including Taiwan and the South China Sea. Talks between the two sides have increased over the past few months, even as differences have grown. Blinken said he raised concerns with Xi about Taiwan and the South China Sea, along with China’s support for Russia and its invasion of Ukraine, as well as other issues