How Layoffs Became A Routine Fact of Life

Doctors once bled patients to restore balance to the four humors. Corporations bleed employees to boost the stock price. It makes about as much sense.

This is a spring-lancet. In the 18th and 19th centuries doctors used this instrument to bleed patients with the aim of restoring balance to the four humors (black bile, yellow bile, blood, phlegm). In 1841 an American surgeon named Joseph E. Snodgrass published in The Baltimore Phoenix and Budget an ode titled “To My Spring-Lancet.” Here’s how it begins:

Years have passed since first we met,
Pliant and ever-faithful-slave!
Nobly thou standest by me yet,
Watchful as ever and as brave.

O, were the power of language thine.
To tell all thou hast seen and done,
Methinks the curious would incline.
Their ears to dwell thy tales upon!

I love thee, bloodstain’d, faithful friend!
As warrior loves his sword or shield;
For how on thee did I depend
When foes of Life were in the field!

Those blood spots on thy visage, tell
That thou, thro horrid scenes, hast past.
O, thou hast served me long and well;
And I shall love thee to the Last!

Today corporations pursue their own kind of bloodletting by periodically laying off workers. Their odes, alas, are seldom rendered in verse. Here is Alphabet (Google) chief executive Sundar Pichal justifying this month’s layoff of about 1000 workers:

We’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review. They cut across Alphabet, product areas, functions, levels and regions.

Humors, “product areas and functions,” what’s the difference? The blood runs just as red.

Before the 1970s layoffs were considered a sign that a corporation was in serous trouble. But layoffs got routinized through deindustrialization, deregulation, and the Fed’s post-1982 conviction that an unemployment rate below about 6 percent was prohibitively inflationary. The taboo against layoffs wore off and layoffs became routine. Take a look at this chart:

It documents the past 23 years of layoffs. Have you ever seen a more boring graph? Every month, 2 million people get laid off. There’s some fluctuation, but only a little; it’s never 3 million and it’s never 1 million. The pattern was interrupted briefly during the two months in 2020 when the Covid pandemic made the economy go haywire. Otherwise, every month two million souls “walk Spanish,” to borrow a pitiless phrase from Joshua Ferris’s 2007 novel, Then We Came To the End that describes the carrying of one’s belongings in a cardboard box down office corridors past averted eyes. Except I guess now with everybody working remotely you get fired on Zoom and there’s no box of belongings to collect. Lately Gen Z-ers have been exacting revenge by recording their layoffs on TikTok (which itself laid off about 60 employees last month).

An unspoken principle of Rubinomics, the economic doctrine that governed the Clinton years, was that layoffs were the price you paid for low unemployment. I have never seen any economist make a case for this proposition. In fact, unemployment was lower than it is today in the late 1960s, when the old taboo against layoffs still had force. Tech companies were the last holdouts. For a long time they avoided layoffs because their workers were judged to be valuable assets. But in the last couple of years they’ve shedded such sentimental notions and joined the herd. They, too, now lay off workers at regular intervals for no obvious reason. That’s the topic of my latest New Republic piece. You can read it here.