'Downsizing' Our Middle Class

Posted: March 11, 1993

Usually, when we think of fads, we think of something like pet rocks or coonskin hats, things that ultimately don't matter.

There are fads that do matter.

Like ruining the lives of working people, a fad of recent years.

If you were a CEO who wasn't "downsizing," "outsourcing," ''restructuring" or any of the other euphemisms for laying off workers, all the other big shots would shout "nyah, nyah" at you.

It could be uncomfortable to go the the Rich Guys Club and feel an outcast

because you kept together a happy, productive workforce. Mass murderers were big in all the finest executive suites.

So, since 1987, something like six million Americans lost decent jobs and were essentially told to go flip a burger. The rate is worse this year. The legacy of the Reagan Era won't be the feeding time for the rich; it will be the decimation of the middle class.

But Bernard Baumohl in Newsweek reports this week that all this misery may have had little positive effect. Certainly some companies needed to reduce their workforces, but the fad chopped away at muscle and bone as well as fat.

Some of the findings:

* Laying off workers did not generally produce an increase in stock prices. A study of 14 firms that had major staff cuts during the 1980s showed them lagging behind the market by 70 percent over the past three years. Even the dumbest stock analyst can tell that layoffs can conceal much more serious problems - like incompetent leadership.

* Firms like Compaq, Campbell Soup and General Electric continue to slash away despite high profitability.

* Of 500 firms that cut jobs since 1987, more than 75 percent reported that employee morale had collapsed. Two-thirds saw no increase in efficiency and fewer than half even saw an improvement in profits.

Could it be that most of this misery was unnecessary? Could it be that companies like Sears and IBM, admittedly in deep trouble, have missed the point? Employees are dropping like cavalry charging machine guns, but the companies may have missed a chance of survival by not being able to change direction in a changing market.

Now a company with a very few, heavily overworked workers hasn't capacity to change direction or even keep up doing the same old thing.

And could it be that most of it was merely not-very-bright CEOs attempting to justify their own inflated salaries by showing how tough they are? Better they should have showed how smart they are.


When SEPTA General Manager Louis Gambaccini appeared before City Council last week, there was an implied threat in what he had to say.

He warned that SEPTA would need a fare increase or service cuts or both unless it gets more money, starting with at least $3.4 million.

Coming from the general manager of a transit system with the highest fares in the nation, a man who gave transit workers generous terms in their last contract with no clue as to how the tab would get paid, Gambaccini's tone could use toning down.

Some riders are staying off the system because they don't feel safe. Daily News staffer Sheila Simmons reported yesterday that some 50 parents of Central High School students who use the Broad Street line are renting a private bus to transport their children. Parents say 14 kids have been attacked on the subway since November, primarily by student thugs from other schools.

SEPTA Deputy Police Chief Richard Evans said, "Any time you have different kids from different areas or groups confined in the same space, you're going to have some type of rivalry."

Shouldn't that make it easy to figure out when to have more cops in the stations? Nobody's keeping it secret when school begins and ends, after all.

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