Layoffs Show the Once-Sacred Employer-Worker Pact Is Gone

In the last six months, several thousand Orange County aerospace workers have faced the sting of corporate layoffs. Boeing Co.’s June announcement that it would eliminate 11% of its Orange County work force served as the latest reminder that the 1990s downsizing movement continues into the new millennium.

While the newest round of cuts generated front-page headlines in local papers, there was little editorial and almost no political outrage about the human pain that will result. Since the late 1990s, media coverage generally has ignored the plight of workers and focused instead on industry health, the politics behind layoffs, and firms’ long-term strategies.

Media response was very different a few years ago when “downsizing” burst into national consciousness and journalists focused on the human tragedies behind layoffs.

The new, less-personal emphasis is symptomatic of a fundamental shift unfolding among middle-class Americans: a growing sense of resignation that the once-sacred contract between corporate employers and employees has been shattered. America’s corporate ranks are growing accustomed to the notion that no job is safe, that everyone is expendable.

The downsizing movement represents a major watershed in American social and economic history--an unraveling of a 75-year-old contract between big business and employees that promised secure futures in return for loyal service.

For those who have faced the transition directly, it’s been a bitter pill. William Myers from Yorba Linda, for instance, joined Southern California Edison in 1971, after his father, also an Edison employee, counseled him that the company would provide a secure life. Myers’ forced “retirement” along with thousands of others during company retrenchment in the 1990s painfully broke that contract.

The link between big business and the middle class emerged between the 1890s and the 1920s, as growing firms cultivated vast ranks of salaried workers. Executives confronted a difficult challenge because the young white men they sought for salaried posts viewed corporate employment with disdain. The idea of working in a complex hierarchy for a firm they would never own conflicted with individualistic ambitions. Being a man meant having one’s own business, trade or profession. As a result, many companies before the Depression faced annual turnover rates as high as 40%.

Executives responded by developing corporate cultures based on the one thing big business could provide that other careers could not: security. Leading firms began offering a variety of fringe benefits like health insurance, pensions, and paid vacations, and they established promotions systems that gave workers a chance to climb the ladder.

By the Depression, job security, promotions and fringe benefits were established features of corporate employment for white men in the United States. While the Depression forced layoffs and scaled back benefits, the contract remained intact. Some companies even strengthened white-collar benefits, believing that loyal and dedicated employees were more important than ever.

In postwar America, corporate employment came to signify middle-class security, and its fruits were increasingly available to women and persons of color. When Myers’ father urged him to accept a white-collar position in 1971, he spoke on behalf of a generation for whom job security, promotions, and fringe benefits were established features of corporate employment.

Americans began to feel the pinch of corporate belt-tightening during the nation’s economic crises in the 1970s, but it was not until the 1990s that wholesale layoffs of salaried staff became standard practice. Rather than being characterized as unfortunate actions, layoffs are now increasingly labeled wise and “efficient” measures, moves rewarded by stockholders.

While still tragic to those who receive the pink slips, news of massive downsizing today produces less outrage. The potential for layoffs has become a fixture of corporate life, and job insecurity is increasingly a component of middle-class culture. “Cradle-to-grave security” is no longer an unwritten clause in the job descriptions of corporate America.