Americans continue to lose their homes and their jobs at an alarming rate. The Bureau of Labor Statistics reported 1,330 mass layoffs in the third quarter, costing more than 218,000 workers their jobs. In all of 2008 — more than 250,000 workers lost their jobs in just the financial sector alone, and economy-wide the loss has been close to 2 million. Many economists are projecting this downturn to be the worst since the Great Depression, though a few months remain before we can know for sure if that is true. In intensity, at least, if not in duration, this one is a doozy.
These job losses are painful. We all are affected. Some of them are quite literally unavoidable. In the third quarter, for example, more than 50,000 of the job losses occurred in conjunction with permanent worksite closures. What’s more, oftentimes job cuts that are not strictly necessary economically are important to restoring a company to financial health. That said, it doesn’t take great sophistication to realize the multiplier effect of the now millions of people out of work curtailing their spending.
We have a paradox: Individual firms feel that cutting staff is essential to their recovery efforts; but multiplied across the economy, the layoffs are a drag on business as consumers consume less.
There is scant little that we as individuals can do to affect the whole economy or government policy, but perhaps we can make a difference with the people that we work with day to day, particularly those whom we employ.
A rare and inspirational story is that of textile company Malden Mills, which burned down in a fire in December 1995. New England textile mills were in decline anyway at that time and the simplest and least troublesome thing for owner Aaron Feuerstein to do was take the $25 million insurance settlement and retire or invest in something else. But Feuerstein knew that the absence of his firm would leave 3,000 employees out of work and devastate the already teetering economies of Lawrence and Methuen, Mass. Instead, he rebuilt the factory and spent millions keeping his employees on the payroll with full benefits.
It should be noted that many years later the company faced insolvency, but survived in part because of the leniency of creditors returning the kindness that Feuerstein had shown his workers. Today the successor firm, Polartec, is thriving keeping U.S. soldiers warm in the Afghan winter.
The point is that a mass layoff is a statistic, but an individual layoff is someone you know and care about and sometimes can really do something for. Many financial advisors employ some staff, even if just a single office assistant. Today’s straitened circumstances may provide a rare opportunity to help dependent people on whom you yourself have always relied.