Myth Two

Layoffs make American business more productive.

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Little evidence supports this widely accepted myth. While downsizing has proved very effective for a few organizations like General Electric and Xerox, layoffs haven’t helped most companies realize any increase in overall productivity.

In a survey by the AMA, whose member organizations employ one-quarter of the country’s workforce, 62.8 percent of human resource managers reporting layoffs said that worker productivity either had stayed the same or had decreased after a layoff.

One study, whose authors included two governors of the Federal Reserve Board, found that manufacturing firms that upsized during the 1980s contributed about as much to the economy’s overall productivity as those that downsized. The study also found that increases in productivity were due to differences between companies and not due to internal changes in the same company over time (i.e., downsizing).

Consider what happens after a layoff. The loss of accumulated job knowledge is like an organizational lobotomy. It leaves a sluggish, bumbling organization that must relearn even the most basic functions. Compounding the problem, the company’s top performers often jump ship. They have other job options and they exercise them. And why shouldn’t they? If the ax fell once, it could fall again.

One way layoffs supposedly make business more competitive is by replacing obsolete workers with advanced technologies. But technology hasn’t leveraged manpower or eliminated many jobs. Only 19.7 percent of the downsized companies in the AMA survey for 1994-95 said that automation contributed to the layoff. In the four previous years, that number averaged 11.3 percent.

The related claim, that workers are laid off because they don’t have the technological skills to compete, is equally suspect. Most jobs don’t require high skill. Neal H. Rosenthal, the co-author of one Bureau of Labor Statistics study, points out, “You can’t forget that 40 percent of our jobs still can be learned in less than a month and are generally low-paying.”

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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