What I Learned Being on Both Ends of Layoffs

It will never feel normal to me

I WILL NEVER forget my first experience with mass layoffs.

It was the late 1990s when I served as a Vice President at American Online, then a dominant player in the tech industry. An edict came down from on high for all managers to cut 10 percent from their teams.

When I explained to my boss that there were no under-performers on my already overburdened and exhausted team, I was informed that there is always dead weight, so just pick the lowest performing person among my high-performing team to fire.

This was shocking to me not just because of the inhumanity but also because AOL was making record profits, and its constantly rising stock was enriching executives to obscene levels. I was surrounded by people who owned private planes, and one top executive was buying a sports team.

Why did we need to fire people?

As I quickly learned, we did this for the same reason we did everything: to please Wall Street.

I was forced to choose someone to sacrifice.

That person ended up being my assistant. While we were promised the layoffs would be handled efficiently and compassionately, they were not. Before my assistant was informed by the designated person (it would take too long to explain why that was not me), she heard from a friend in another department that forty people had been invited to a meeting where they were informed as a group they were being let go.

Panic swept through AOL’s campus as more reports of such incidents were reported.

Employees were furiously logging in and out of the internal system to see if they had been locked out, as a few people had been told right after this happened that they were being let go. I heard a wail from my assistant, and then she was in my office crying hysterically, saying she couldn’t get into the internal system.

A few minutes later, a woman on my team rushed into my office, sobbing that she needed the day off because her husband, who also worked for the “AOL family,” had been laid off with a group of coworkers during one of the surprise meetings.

Go home, I said after trying to console her.

I still feel sick all these years later, remembering this.

I FELT THAT same nauseous feeling this week when I read yet another story about layoffs in the United States: 400 American employees of the multinational parent company of Jeep and Dodge were laid off via a mass Zoom after being told to work remotely for the day.

It’s not just that so many Americans have their lives upended when grossly overcompensated executives of thriving businesses fire them. The inhumane manner in which the news is often delivered says much about society. Google, for example, laid off 12,000 employees via email in 2023.

It’s also important to remember that when there are mass layoffs, workers are not losing their livilihoods because of poor job performance. Their jobs are being axed because Wall Street loves it when companies “do more with less,” also known as piling more work on fewer people. They call this an “efficiency.” (Mark Zuckerberg declared 2023 the “year of efficiency” and then fired tens of thousands of his workers).

If you think that a rising stock market helps all Americans, I have bad news: Ninety-three percent of stocks are owned by the wealthiest 10% of Americans. Worse, every time one of these monstrously overpaid CEOs throws a sacrifice to the Wall Street gods, they and all their executives get even richer since most of their compensation comes through stock options.

I’VE BEEN on the other end of layoffs, as well. When CNN was taken over by Warner Bros. Discovery, they engaged in mass layoffs described as “streamlining” that followed no rhyme or reason. I somehow survived the first round of cuts, but a year later was informed that due to “cost cutting” my services were no longer needed after seven years of serving as an on-air political analyst. CNN, to their credit, did this in a one on one conversation, though it’s kind of sad that it’s noteworthy to handle a layoff with decency.

It was as stark reminder that no matter how hard you work for a company, or how loyal you are to them, it will make no difference when the new owner or CEO shows up to slice and dice the business. (It’s worth noting that prior to Warner Bros. Discovery taking over and pushing out CEO Jeff Zucker, CNN was a nice place to work and it felt unusually stable for an American company).

The fact that I found the gift in the challenge of losing my job is lucky and is not the experience everyone has. Also, did I really have another choice? That so many Americans figure out how to survive amidst the economic precarity of working for American companies obsessed with eternal stock growth does not excuse the way these companies behave.

I NEVER KNEW where AOL came up with what seemed to me an arbitrary idea to cut 10 percent of staff no matter their performance. It turns out it was the brainchild of Jack Welch, a hero of 1980s American style capitalism.

The former CEO of General Electric was nicknamed “Neutron Jack,” a reference to the neutron bomb, which purportedly kills people while leaving buildings standing. Inside the company, his process was called “rank and yank”:

[Welch] had a practice of ranking employees and automatically firing the bottom 10 percent every year; in Welch's first few years of leadership he fired more than 100,000 people in a series of mass layoffs and factory closures.

Up until this point, people who had a job at a company like GE or IBM basically figured that they had a job for life. But [Welch] explicitly said that this notion was going to be a thing of the past under his watch.

Thanks, Jack.

If you think Jack Welch was disdained for this kind of behavior, you would be wrong. He was featured prominently and approvingly on covers of magazines and hailed as the greatest CEO of his era.

What’s important to note in this story is the fact that before Jack Welch and his ilk took over, there was a period in the modern era when life-long employment was the norm for many Americans.

What happened?

Robert Reich

explains that when we moved away from “stakeholder capitalism” to “shareholder capitalism,” we went from “the nation’s economic gains—once distributed broadly to the working and middle class—[being] siphoned to the top.”

Discussing the mass layoffs by tech companies in 2023, Mark Zandi, chief economist at Moody’s Analytics, told the Washington Post:

“[This] is the way the American capitalist system works. It’s ruthless when it gets down to striving for profitability and creating wealth. It redirects resources very rapidly from one place to another.”

This wasn’t meant to be critical, but rather just a statement of fact.

We are often told that this is just how it is because “free market” and “invisible hand” and other bizarre mumbo jumbo that has been made up to justify enriching a tiny part of the population while the rest of society suffers.

I recently interviewed New Yorker economics writer Nick Romeo, who makes the point that the claims used to explain away amoral behavior in the name of “economics” are actually philosophical and even metaphysical claims that can’t be substantiated. (I’ll be posting the interview in a few weeks). As we know, there are actually capitalist countries where workers are treated with humanity.

It doesn’t have to be this way.

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