Jason Cooper is, professionally, an Online Community Coordinator for kaboom.org. Personally, he is a Detroit to DC transplant, and all around B.M.F. He secretly wants to be an internet celebrity.
We are encouraged by this week’s cover story, “The Case Against Layoffs;” a taste:
There are a number of myths that have taken hold to justify managers’ urge to downsize. Many of them aren’t true. For instance, contrary to popular belief, companies that announce layoffs do not enjoy higher stock prices than peers—either immediately or over time. A study of 141 layoff announcements between 1979 and 1997 found negative stock returns to companies announcing layoffs, with larger and permanent layoffs leading to greater negative effects. An examination of 1,445 downsizing announcements between 1990 and 1998 also reported that downsizing had a negative effect on stock-market returns, and the negative effects were larger the greater the extent of the downsizing. Yet another study comparing 300 layoff announcements in the United States and 73 in Japan found that in both countries, there were negative abnormal shareholder returns following the announcement.
Layoffs don’t increase individual company productivity, either. A study of productivity changes between 1977 and 1987 in more than 140,000 U.S. companies using Census of Manufacturers data found that companies that enjoyed the greatest increases in productivity were just as likely to have added workers as they were to have downsized. The study concluded that the growth in productivity during the 1980s could not be attributed to firms becoming “lean and mean.” Wharton professor Peter Cappelli found that labor costs per employee decreased under downsizing, but sales per employee fell, too.
Another myth: layoffs increase profits. Even after statistically controlling for prior profitability, a study of 122 companies found that downsizing reduced subsequent profitability and that the negative consequences of downsizing were particularly evident in R&D-intensive industries and in companies that experienced growth in sales. Cascio’s study of firms in the S&P 500 found that companies that downsized remained less profitable than those that did not. An American Management Association survey that assessed companies’ own perceptions of layoff effects found that only about half reported that downsizing increased operating profits, while just a third reported a positive effect on worker productivity.
Layoffs don’t even reliably cut costs. That’s because when a layoff is announced, several things happen. First, people head for the door—and it is often the best people (who haven’t been laid off) who are the most capable of finding alternative work. Second, companies often lose people they didn’t want to lose. I had a friend who worked in senior management for a large insurance company. When the company decided to downsize in the face of growing competition in financial services, he took the package—only to be told by the CEO that the company really didn’t want to lose him. So, he was “rehired” even as he retained his severance. A few years later, the same thing happened again. One survey by the American Management Association (AMA) revealed that about one third of the companies that had laid people off subsequently rehired some of them as contractors because they still needed their skills.
We would add, though, that layoffs often do work, at least for the short-term interests of a company’s upper management; that’s why CEOs do them. If, for instance, the difference between a CEO making his bonus or not is cutting a few million in salary costs before the end of the fiscal year, you can bet he’s going to do it—even if the company rehires for those same jobs next year.
Good to know that some people are still willing to lend in these tough economic times and they aren’t crazy at all.
God told me to post this, as well.
All the CEO’s did leave. I do not know if these are the old, or the new white guys in charge.
I’m a little surprised the people of Detroit haven’t formed an angry mob with pitchforks, torches, and gats to run these guys out of town (or worse).
So this happened.
After months of complaints by European dairy farmers angry over low prices, protesters in Brussels on Monday poured milk onto the streets, hurled eggs and other missiles, and started fires that filled the air with black smoke.
Okay, smarter-than-me-friends. What do we think of this?
U.S. Banker’s Magazine, Aug. 25, 1924
“Capital must protect itself in every possible manner by combination and legislation. Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible.
When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers.
This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world. By dividing the voters through the political party system, we can get them to expend their energies in fighting over questions of no importance.
Thus by discreet action we can secure for ourselves what has been so well planned and so successfully accomplished.”
Amazing visualization of the impact GM has on the Michigan, the United States, and the world.
Keep up the brave face Detroit. You’ll make it through. You’ll likely earn thousands of dollars less a year, lose the majority of your medical benefits, and have to work at Wal-Mart, but hey, the global economy cannot be abated.
I don’t even know what that means. I’m just angry about it.
What’s worse than the bad economy? Advertising about the bad economy. Fucking shameless.
I wish someone would tell this to House Republicans:
Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not… fuck with us.
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And all that’s at stake are the lives and well being of thousands of American workers and families. So if Tom can sleep at night with that, more power to him. Well, he can also go fuck himself. This is why I couldn’t make it past the introductory chapters of The World is Flat.
Don’t expect me cheer and pump my fist in the air when the auto industry flames out. Don’t expect me to be happy about the wave of progress that will sweep the nation when plants, machine shops, trucking companies, dealerships, and the thousands of businesses that survive in between.
That said, do we really think the few dozen billion being dropped on Detroit does turn out to be a historical follie, well I MEAN COME ON! Its a few billion! The banking industry shit is in the hundreds of billions. Lets put it in perspective babies.
Thomas Friedman (via bullshit)
Shannon and I have 6 parental units between us. Two still have jobs (one union, the other not), one is retired, and three have been laid off, in some cases, multiple times in just the past few months.
That said, I want to thank everyone who supports the crumbling of the car industry for this great lesson learned. Moving into my thirties with the potential burden of having to help and support my parents, well, now I know better.
I imagine all of the Detroit businesses that are directly and indirectly supported by the auto industry (and those employed by the auto industry) are thankful for the wisdom gained in this difficult time.
I’m pretty bitter.
