Still on the Job, but at Half the Pay

GUEST: Louis Uchitelle
AIR DATE: 01/09/10

I’m Richard Heffner, your host on The Open Mind.

And a few years ago I introduced today’s guest, the distinguished economics journalist Louis Uchitelle, as the lead reporter for the New York Times prize winning 1996 series on “The Downsizing of America”…and as the author of the thoroughly scarifying Alfred A. Knopf volume on The Disposable American, about “Layoffs and Their Consequences” in this, our land of plenty.

Indeed, I said then that as I read The Disposable American, I couldn’t help but think of the movie “Network” and of actor Peter Finch shouting out the window,
“I’m mad as Hell, and I’m not going to take it anymore”. For my guest WAS quite clearly “mad as Hell” that America was being downsized and that American workers – you and I, dear viewer – are more and more considered “disposable”.

And I can’t imagine that he’s any the less disturbed now … as I read his more recent New York Times article, “Still on the Job, but at Half the Pay” … with its quote from an assistant commissioner at the Bureau of Labor Statistics that in our country “the amount of money people are paid has taken a big hit; not just those who have lost their jobs, but those who are still employed.”

Now his story here is about a former airline captain whose company cut its costs by downgrading 130 captains to first officers, automatically cutting the wage of each by roughly 50 percent. Real tough for these hard-working Americans, isn’t it, Lou, this really gets to you.
UCHITELLE: Well, it’s hard because we have an assumption in America that once you do have a job and, and a set amount of pay, that pay will slowly rise and not decline.

You’ll get raises every year, or maybe you won’t get a raise, but it won’t go down in nominal terms. And we are now going through that experience in this country. And I suppose if you want to look on the good side of it, it’s better than getting laid off.

Companies are coming to employees and saying, “Look, we can’t … we don’t want to lay you off, we need you, but we can’t pay you what you were earning. So please take a pay cut.”

In this case it was … they didn’t need so many airline captains and so they downgraded 130 captains to first officer, co-pilot at half the captain’s pay. This particular pilot, Bruce Lawler went from about $70,000, a little over $70,000 down to about $35,000. And that’s very hard.

It’s hard on him, emotionally … his self esteem. It’s hard … he’s now making less than his wife. Not that that’s … that his wife shouldn’t make more as a very skilled school teacher. But it up-ends the nature of their, their relationship and the nature of the family structure, if you will.

Now this family’s coming out quite well, emotionally and in their ways of adjusting to this. But it … I don’t think it should be that wages should go down in this country.

And I guess … and then when I try to figure why it’s happening … I’m sometimes hard pressed to just blame the companies.

Our companies are not the all powerful entities that they were, perhaps, right after World War II and through the sixties. They struggle more against … in this global economy.

I don’t want to exempt them, either. But there is a situation where labor wages, wages of people who are … 90%, 80% to 90% of the workforce are not doing well.

HEFFNER: But how much of this, and I wondered as I read the recent article and I went back and read The Disposable American … how much of this … given all that we read these days about huge salaries at the top …

UCHITELLE: MmmHmm.

HEFFNER: … how much of this is … as necessary as companies may say it is. Is this a matter of increasing the stratification in this country? Is it a matter of excusing and making even more possible the rich getting richer and the poor getting poorer.

UCHITELLE: Well, I don’t know about the … yes, there is more … we deregulated this economy … we came out of, out of a period in the seventies as I tried to point out in that book … when layoffs first occurred, there was a great deal of uproar and protest in the country. And, for … it started, of course, with the rust belt … we said, “Well, blue collar workers maybe they’re not worth as much as they’re being paid … unions have driven up wages too much. And so forth and so on”.

But then, of course, it spread to the white collar … to all of us and slowly … gradually we acquiesced to layoffs. We accept them today as a matter of course.

Even though the damage to self-esteem, human damage, mental health damage to people who have committed themselves to a career and to … and have demonstrated to themselves and to their companies their skills … are suddenly told, in effect … that those skills don’t have value and either, “go away” or “we’re going to cut your wage”. It’s hard to maintain your self-esteem.

So you say to yourself, “self-esteem is a very important thing to have in America. We should not be a people of self-doubt. How do we manage to minimize the layoffs?”

You can’t stop them. We’re … we’re increasingly competing against evermore powerful … economically more powerful other nations. So how do you minimize it?

You try, I think, to find other ways to cut costs. Certainly, the excessive salaries of upper management … they might be more symbolic than a real cause of the, of the wage pressures, but they certainly should not … there should not be that spread at all. People should work for a wage and feel satisfied to do so.

That ethic changed. We seemed to have gotten into the idea that only … that incentive only comes from pay. I mean I don’t see myself or you or most people doing as well as they can on a job just because they’re expecting a bonus. They get their pay. And they take satisfaction from doing their work well.

Even the most … what we would consider the most menial or meager job requires skill. So we have … I think we should make a very great effort to find other ways to cut costs before we turn to the work force and say, “I’m sorry, we have to cut your wages because we, we’ve … we have no other way to, to, to stop losing money in this company.”

HEFFNER: Well, you know, what fascinated me when I first read The Disposable American … and then reading this most article “Still on the job, but at half the pay”, I was thinking that I think of you as a, as an economist or as an economics reporter or financial reporter … I realize you’re more concerned with the psyche or you’re as much concerned with the psyche.

And I remember when you talked about a meeting psychiatrists and the question came up of how many of them had experienced a patient who had been laid off …

UCHITELLE: MmmmHmm.

HEFFNER: … or who’s job had been eliminated or who’s salary was down. And you were questioning them about the impact upon the emotional life of “the victims”, the workers. How did that come about?

UCHITELLE: Well, I didn’t … when I started out to write that book, I was not thinking in terms of the psyche, I was going to write just a straight economics book … our journey through layoffs.

When I wrote that book it was still three years ago … I finished it … layoffs were a big phenomenon … they continue to be a big phenomenon … we hadn’t lost sight of the fact … even in the early part of this decade that maybe this shouldn’t be the way we live. I think we have by now.

But it was only while I was interviewing people, they would … the interviews would drag on … people wouldn’t let me go. They would go over and over what they did wrong … they probably shouldn’t … if they had only had a slightly different boss … if something had somehow been different … they wouldn’t have been laid off, and I began to realize that they were obsessing over what had happened to them.

You could see and feel the damage … the emotional damage. And I then went to psychiatrists and said, “Look I’m running into this experience. How do I understand it?”

And they said, “Look …”, a number of them … I even made a presentation at a meeting of the American Psychoanalytic Association and in, in … during the meeting there was a show of hands … the question was … “How many of you have found … had to deal with the trauma of layoff in your therapy sessions?”

And the great majority of 30 or 40 analysts in that particular session raised their hands … said “Yes”.

HEFFNER: I bet the same thing could be asked in terms of downsizing …

UCHITELLE: Yes.

HEFFNER: … not firings, but downsizing.

UCHITELLE: Well, it, it’s a personal experience. When someone is told … someone who has committed themselves to a job … not kids who are just jumping between jobs, trying to find a career, but somebody, say, in their late twenties, early thirties and up who have, have really committed themselves, done well, thought well of themselves as a result of their work.

Blue collar workers who identify with the companies they work for … me identifying with The New York Times … you’re suddenly told to go away. And you know the reason, it has nothing to do with you personally, but you can’t shake what it is … you can’t shake the idea that there’s a personal message there.

HEFFNER: But then you’re saying the same thing … it must be the same feeling if you’re told, not that you’re finished, but that you salary is 5%, 10% lower …

UCHITELLE: Yes, absolutely.

HEFFNER: … than it was.

UCHITELLE: That’s a real issue in America. And my concern is that if we continue in this vein we will have many people with damaged psyches … with self-esteem damage … we will not have that same sense of satisfaction as Americans that I think we had in the two or three … in the first two or three decades after World War II.

HEFFNER: Should we say then that “Well, that was then, this is now?” And shrug our shoulders.

UCHITELLE: I don’t think … I do think we have to say “That was then and this is now” (laugh). I don’t think we have to shrug our shoulders. I think obviously we have to go back to … if we have less to share … to dispense, we have to find fairer methods of dispensing … of sharing it. And that means going back to regulation. It probably means … if not legal ceilings on Chief Executive pay than moral restrictions, that is …

HEFFNER: How much are they worth in dollars and cents? Those moral restrictions?

UCHITELLE: Well, at one time in our history Chief Executives didn’t make that much more than their, then the people in the … on the shop floor.

HEFFNER: All right. What happened? What happened?

UCHITELLE: Well, deregulation is, is a factor. I think that a market system is a wonderful, wonderful vibrant way of running an economy, but it has to be regulated. It … you have to recognize that if you just leave … if you free people to do anything they want … there will be distortions, there’ll be excesses. And it’s, and there will be a pursuit of money that even the people pursing the money understand is, is dangerous.

And … so there has to be … and I think we’re moving back in that direction now as a result of this recession.

I hope it goes … I hope it goes further than it’s gone so far.

HEFFNER: What? You don’t mean the recession, you mean the reaction?

UCHITELLE: I mean the reaction to the recession and to the, to the damage. We have a lot of people who are still losing jobs and, and there has been … and the banks, of course, the financial system is clearly to blame as the trigger for what happened.

These people in pursuit of a great deal of money … well, they secure it … I don’t want to get into the whole chain of events … but they securitized … they issued mortgages that shouldn’t have been issued to people who couldn’t afford them.

They then securitized the mortgages, put them together as bonds, high yielding bonds because the interest rates were high. Then they turned around and bought the bonds themselves … they should have known better … I mean, I don’t … but they did, and then when the housing market prices started down and the bonds started … and, and default payments mounted … and defaults mounted, they paid a terrible price for what they had done.

And the government had to step in. Well, the government stepped in … there is always, in a market system, a role for government. A constructive role.

Not socialism … ban that word. But government involvement in the functions of a market.

I’m dong some work now that has to do with public investment … mega-projects. We don’t have any anymore, right now. And yet they’re a great source of strength for the economy.

HEFFNER: Why don’t we have them? Why … when we were talking about bolstering the economy … why did we not go back to what we did in the New Deal days?

UCHITELLE: Well … that’s a good question. I … I’m puzzled over it. We spent a generation from the seventies until now deciding that government was inefficient, the private sector was more efficient, leave things to the private sector, leave investment to the private sector. And the private sector has invested … I mean the network of receivers and transmitters that are, that we need to have cell phone service all over the country exists as a private sector function.

But we don’t have a … the last big, major project, that is the last addition to our infrastructure that added economic growth was the “Big Dig” in, in Boston. The subway system in Washington twenty years ago. The BART subway system in San Francisco. The series of international airports that were built across the country … all with federal money.

HEFFNER: Eisenhower’s roads.

UCHITELLE: Eisen … above all … Eisenhower’s … we can go all the way back to the Erie Canal … the transcontinental railroad … Eisenhower’s roads … the Hoover Dam, which brought inexpensive electricity to California, among other, among other things. All these made the country grow and prosper, generating jobs and, above all, economic output. The two together … the public investment giving a boost to the … a long term boost to the private sector.

Now, why haven’t we gone back to that? Well, Obama, I think, is moving a bit in that direction. His “stimulus” bill, which is not that, nevertheless has in it some provisions … down payments for high speed railroads and the computerized healthcare records, all of which are public works, if you will. And they enhance economic activity.

Why … if you want to go down the list of what went wrong with … during the seventies … during the late … from the late seventies until this terrible recession … one of the pieces of damage is that we have slowly segued out of public investment, new public investment. And we’ve argued that “shovel ready” stimulus spending is enough … just enough to get us to the next upturn in the business cycle.

HEFFNER: That’s not your point of view.

UCHITELLE: My point of view is that public investment is something that should be going on all the time. High speed rail being the most obvious example. The health care computer system that’s a necessary example. There’s all sorts of water treatment projects that are possible.

Public … we should always be looking for ways to improve the infrastructure of our country, either with public financing or a mixture of public and private on the assumption or the long experience that that invariably leads to more economic growth.

Now there are exceptions. We make a big deal out of bridges to nowhere … wasted money. No question that there’s …

HEFFNER: But that’s not what you’re talking about.

UCHITELLE: No.

HEFFNER: You’re talking about contributing something …

UCHITELLE: Yeah.

HEFFNER: … to the nation.

UCHITELLE: Right. And even the, even the, the … I mean when they built the inter … the transcontinental railroad from San Francisco, connecting up with Omaha … that was a wonderful thing for the country. But the building itself was full of scandal and wasted money. And boondoggles and subsidies that were twice as … twice what was needed to build the railroad.

However, once the railroad was done, the boost to the country over, over a century, if you will. Or over many, many years far outweighed the wasted money.

HEFFNER: But you know I have to come back to the question that I ask and, in a sense you shrug your shoulders and say, “Well, I don’t know” when I ask what happened to that when … a moment ago you said, in talking about the being “project ready” …

UCHITELLE: MmmHmm.

HEFFNER: … being ready to …

UCHITELLE: … being “shovel ready” … yeah …

HEFFNER: … no, I didn’t mean the shovel ready …

UCHITELLE: Yeah.

HEFFNER: … I mean our being ready and willing, as we are able to indulge in great works …

UCHITELLE: Yes.

HEFFNER: … in great public works. You said, “well, I don’t mean socialism”.

UCHITELLE: No, well because that’s the charge that always comes up, and …

HEFFNER: But …

UCHITELLE: … and it’s a …

HEFFNER: … but you haven’t bought into that argument …

UCHITELLE: No. No.

HEFFNER: … that it’s socialism.

UCHITELLE: No. Neither had … no one did … it became … look, there are people who oppose this. They oppose too much government. I mean there’s a, there’s a debate … an endless debate, it’s been going on for many decades.

One side says, “We free enterprise, free us, we’ll give you endless prosperity. The markets itself are self-regulating”. That was Alan Greenspan’s constant theme.

And the other side, which says, “No, there’s a role for government. Not only as a regulator”, that we’re learning now. But as an adjunct to economic invest … to, to investment.

HEFFNER: You see it as a continuing role, don’t you?

UCHITELLE: Yes, it’s a continuing … it started back in the early 1800s with the Erie Canal and the endless infrastructure that we have in this country that has always accompanied economic growth.

HEFFNER: Of course, it’s easy to “con” people out of that understanding because we don’t study our history anymore.

UCHITELLE: Well, I, I … you know, we don’t. I, I don’t know why we don’t get this straight. I think in time we will get it straight … particularly if this recession doesn’t lift easily. And we’re not yet … there is an upturn, but there is still the job loss … more slowly than before. But it drags on and on and on. And the levels of job loss are very high relative to normal times and that’s … and there is no hiring going on.

All that begins to create, I hope, a public pressure for help from the government. And that help can, can show up in public works. Obviously during Roosevelt’s day it was not just public works, it was people on a public payroll .. the famous WPA and so forth were … and we built most of our post offices that we have today during Roosevelt’s era. We had some, you know, a great deal of our best art work was done by artists, sculptors …

HEFFNER: And theater.

UCHITELLE: And theater. All of it on the government tab, if you will.

HEFFNER: Do you think … do you see any signs that we are getting to that? And I don’t mean that we ought to … we must … of course we shall … do you see real signs?

UCHITELLE: No, I don’t yet. I mean I think we’re all hopeful that somehow this recession will turn out … bad as it is … it won’t … is short and lifting. I think that’s the way we’re looking at it now. And I hope that’s true.

HEFFNER: What do you think?

UCHITELLE: I worry that it might not be true because we have so much unused capacity … labor and just floor space … stores that are empty … factories that are not operating to full capacity … about 70% of capacity … well below the normal rates of usage in this country.

All of which puts a damper on new investment and hiring. So we’re far from home … we’re still in the storm.

HEFFNER: The, the role that … the diminishing role of unions …

UCHITELLE: Yeah.

HEFFNER: … over the past 20 years and more … has that played much of a role in this matter of … I mean when you start to talk about layoffs and cutbacks and people’s salaries being cut … what’s happened to the union movement?

UCHITELLE: Well, the unions have … I would say that the unions have at least made sure that people get decent severance pay. They have not stopped the layoffs. When they first started up in the early eighties, there was some reaction from unions, some attempt to stop it. We had that incident in Chicago … if I remember correctly, last year … it was a window making company where the … there was a “sit in” … they were going to close that and go elsewhere. I might have some of my facts a little skewed on this.

But the basic point was that there was a “sit in” and that “sit in”, which is in a sense a union action …

HEFFNER: MmmHmm.

UCHITELLE: … saved the factory. Now I think very often the best union actions, or the most powerful union actions are the ones that start at grass roots and don’t necessarily have the support of the leadership … or the leadership is brought into it. The union movement is, is a very … you know, is very involved in politics and it’s a wonderful thing as far as organizing workers, but it’s not engaged … so far as I can see … in stopping these layoffs.

HEFFNER: The Victor Reuthers …

UCHITELLE: The Walter Reuthers … yeah …

HEFFNER: The Walter Reuthers …

UCHITELLE: Yeah.

HEFFNER: … they’re not there.

UCHITELLE: Well, I don’t … I think …

HEFFNER: Or is that unfair?

UCHITELLE: That’s over … that’s, that’s oversimplifying. If the spirit was there, the Walter Reuthers would, would appear in some form or another.

I, I mean … I don’t want to undercut … I don’t want to overstate this. When there are layoffs you’re better off if you’re a union person laid off because there’s a contract that governs severance and circumstances. If you’re not in the union you can get laid off from one day to the … the lay off is a lot rougher. So in that sense … so, so it’s not black and white.

What, what isn’t happening is outright resistance or challenge or something that says …”is this necessary?” … well maybe it is, but can we go over other ways to cut the costs? Should we put human, you know, should we preserve the dignity of people who are working or their self-esteem … never mind dignity … self-esteem … and as much as we can. That’s, that’s a simple thing.

HEFFNER: Lou, you and I both know it’s not very simple.

UCHITELLE: No.

HEFFNER: But let’s hope that by the next time you’re at this table we have better news to talk about. Meanwhile, thanks so much for joining me today on The Open Mind.

UCHITELLE: Thank you for having me.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. Meanwhile, as an old friend used to say, “Good night and good luck.”

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.

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