Merry Christmas, you're laid off

I'm so confused that I've rewritten this post four times. Maybe you can help me.

Job losses continue...

Two nights a
go, I met one of my best friends, "Sonia", at a neighbourhood bistro for our annual holiday dinner. But it was not an evening of cheer.

She cried, telling me she had to terminate her dedicated, hard-working admin assistant, "Kelly". No reason other than "corporate restructuring". Sonia cannot deliver her department's work without that role, which Kelly had performed brilliantly for six years. Perhaps, Sonia thought, the company might grant her a temporary contract employee in the new year. (Swell, a temp job with no benefits.)

But before herself, she thought of Kelly, who had recently moved her mother-in-law into her family home, at considerable expense.

but we are told to spend...

The Bank of Canada Governor Mark Carney and other economists both here and in the US advise people to spend, both to stimulate the economy and prevent the chance of a deflationary spiral.

In the US, the Associated Press' Philip Elliott reported on December 8 that "President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to 'spend our way out of this recession' until more Americans are back at work."

...even though that's counterintuitive.

With food banks beseeching the public for donations, and anecdotal evidence everywhere (young adults moving back in with parents, colleagues and friends' continuing job loss, new jobs that pay far less and don't provide benefits, university enrollment down), who feels like spending?

Even friends with well-paying, secure jobs are subdued in their consumption, and far more apt to write a cheque to Meals on Wheels than to Prada.

The questions

1. Can we spend ourselves out of this situation? If you're spending, on what?
2. Do you believe that these layoffs are, in all cases, necessary to the survival of organizations?
3. And do you think layoffs should happen on Dec. 16?


Jane W. said…
I don't believe that these layoffs are always vital to the survival of these organizations at all. I've heard several news stories of business owners (often small businesses) reducing or eliminating their salaries so that their staff may stay employed, if only part time.

Last year my husband and the other people "in the front office" all volunteered to go without holiday bonuses so that less well-paid employees could have more.

Where there's a will, there's a way. Too often, the "will" is towards ensuring that executives and board members with six or seven-figure salaries are able to sustain their lifestyles.

Off my soap box now!~
Unknown said…
This comment has been removed by the author.
Unknown said…
Adding, in response to your last question:

December is an awful time to be laid off, but it's the end of lots of accounting periods and holiday layoffs seem to be a new, embittering tradition.

(Then again, I'm Gen-X. We've seen a lot of layoffs and we're already naturally bitter. ::grin::)
Unknown said…
Deleting and re-adding to make more sense:

You have three separate questions going here *in the first question*, so my answers are different:

1) I think *households* need to appraise their finances and do what needs to be done to make sure they're financially stable. In the face of potential income loss, that probably means cutting back.

2) I think *companies* need to do the same appraisal. The default seems to be to then lay people off, but I haven't seen companies be particularly smart about what and who they cut. Also, in some cases they should find spending to be a wiser choice, as they can make capital improvements cheaper, and/or hire people for less money.

3) I think the *government* should spend money like it's going out of style. They have the capacity to borrow heavily to do so (and will pay incredibly low interest on public debt right now), they have the moral responsibility to help their citizens stay employed, they have the political incentive to make voters happy, and they can, again, build needed infrastructure for far cheaper (in materials and manpower) than during boom times.

I would go on, but already fear this is overly political for your blog.

But can "we" spend our way out of this? I see no capacity for households to do so, no moral obligation (sadly) for companies to do so, so I hope government will do so.
Susan B said…
That's so horrible that your friend had to let her valued assistant go, especially at this time of year. I think it's pretty heartless on the part of her company.

We've recently lost some workload that ultimately would have resulted in headcount loss, had we not known that some new projects were coming our way early next year. Our big bosses allowed us to hang on to our experienced people over a slack few months, and we'll be able to reassign them after the first of the year. A few of them knew their jobs were in the balance, so we were very happy to be able to give them the good news this week.

I think what Obama was referring to with the stimulus package is *government* spending to create jobs. Although it does sound counterintuitive, it really is the right thing to do right now. Part of the reason for the deficit is the downturn in employement and business. During the Depression, the public works projects of the New Deal were referred to as "priming the pump."
Duchesse said…
Jane W.: Your husband and his colleagues were kind, that's encouraging to hear. I also look for stories of job sharing or reduced hours rather than layoffs. So much talent and experience leaves when a great employee is laid off.

Gwen: Thanks, a "political" response is welcome! In Canada our govt is spending but at the same time rolling u a huge deficit which will likely mean increased taxes, and reduced services.

Pseu: Realize he means government spending but individuals (once they get all those jobs that will be created) need to spend too- buy those cars, or that bailout money was futile.

Your company's redeployment approach is very wise and one I wish many more would adopt.
The grinch is rearing his ugly head in the Corporate world. How devastating. I am a firm believer that everything happens for a reason so there must be a better job on the horizon.
Your friend is in a very delicate spot having to deliver the news at this time of year.
I wonder if she spoke up on her assistants behalf and suggested they both take a small pay cut or take more days off, sort of job sharing scenario if that would appease the company and show them just how vital she is in the whole scheme of might be a wake up call.
Belle de Ville said…
Thank you for taking on this extremely important subject in your blog.
Times are indeed very tight for the majority of people whose jobs are at risk especially while they are dealing with fact that the value of their assets have decreased while the cost of living has gone up, an the job market has disappeared over the last 24 months.

I actually believe that many corporations relish a time of economic uncertainty because they are looking for an excuse to lay people off. It's a fast and dirty way to boost numbers, particularly productivity. Workers and their families are at risk for the sake of corporate accounting, especially due to the fact that public companies revolve around short term quarterly or yearly numbers.

As for government spending, well anyone who thinks that it is a panacea needs to study economics and look at the real data, not the BS government data.

The stimulus bailout was a total bust. Not only did it not increase employment, it increased unemployment. Meanwhile, all kinds of silly entities got government funding. I'm not making this up, the information is available on the net.

And let's not forget that without the Government bailout of AIG, the mighty Goldman Sachs would have gone the way of Lehman. But instead, the US backed AIG, and Goldman Sachs has accrued some 15 billion dollars for bonus and other payout...which it won't pay in cash due to newly created taxes on bonus compensation. Instead, top executives will get shares which is just another form of compensation.

Oh, and did I mention that the executives at Goldman Sach also got H1N1 vaccines, as part of the "first responders" program, while the vaccine wasn't made available for people in need.

But I digress.

Everyone who reads BHB knows that I am infuriated by outrageous executive compensation, greed and goverment waste and corruption.

Finally, I just want to say that the increase in Government spending during the Great Depression, actually extended the length and depth of the Depression by 9 years. We have been in a recession, but if Government spending continues at this rate we will go into a Depression.

Sorry to be the bearer of bad news but I take this stuff very seriously. The success of my business depends on a healthy economy.
Duchesse said…
Belle: Thank you for your detailed comments; your last sentence says it all. BTW I enjoyed "Fool's Gold" about JP Morgan, one of the better Wall Street exposés.
Unknown said…
I strongly disagree with Belle de Ville that:

a) the bailout was a bust;
b) government spending during the Depression lengthened it;
c) current additional government spending would be detrimental to the economy.

We could certainly cite authorities at each other all day, but it would be a shame to drag our esteemed host into such an argument.

I will happily agree, though, that Goldman Sachs has received remarkably kind treatment, and that many financial executives deserve firing and public embarrassment rather than huge bonuses.
Susan B said…
that Goldman Sachs has received remarkably kind treatment, and that many financial executives deserve firing and public embarrassment rather than huge bonuses.

No argument here!
Duchesse said…
Gwen: People are bound to disagree due to politics and perspective, about many current strategies. On my wish list for hristmas is the new book "Dancing n the Dark: A Cultural History of the Great Depression"by Moris Dickstein. A long review in Nov. Harpers was fascinating.
Unknown said…
Duchesse: That sounds interesting indeed. Eighty years later, I think of the era in terms of glamorous film stars and mirrored furniture, and then have to remind myself of the Grapes of Wrath, or even of my grandparents' stories of their white-knuckled grip on middle-class security.

A book I ran across completely by accident several years ago might be of interest to you as well: The wretched of Canada: Letters to R. B. Bennett, 1930-1935; (The Social history of Canada), by L.M. Grayson.

It's a small subset of letters to the PM from people all over Canada, usually asking not for policy help but for specific things they needed (as he was personally quite wealthy), with a note of what, if anything, he responded with. It's not a cheery book, but it's fascinating to get an idea of Canadian life in those times.
Lorrie said…
This is a very timely post.

Surely there are alternative measures to layoffs. Both my daughter and my son have been working a 4-day week because of slow downs in their companies. Thankfully my son is now working 5 days again. But the company owners, (small, independent companies) want to retain their staff.

My husband lost his job in May. It was sudden, it was brutal, and we don't think it had much to do with economics. However, we've been able to continue our lifestyle, cutting back somewhat, but not desperate because we are not in debt.

Those who have huge mortgage payments, car payments and credit card debt need to STOP spending and pay off debt. Encouraging indebted people to keep spending to keep the economy going will surely catch up with us sooner or later. It's unconscionable for the government to pressure people to keep the economy going.

And yes, December is a terrible time to layoff people.
Duchesse said…
Gwen: Remember reading a review of "The Wretched of Canada", very moving. It goes on my list, thank you.

Lorrie: The reduced hours strategy seems infinitely better for both employer and employee than layoffs. Your husband's situation is tough; my out of work friends and colleagues are taking far longer in this recession to land the next job.

I don't trust articles that quote high end stores saying "People are spending again" (Harry Rosen in Toronto comes to mind.) I think it's moose poop, the Canadian version of BS.
Jean said…
1. Can we spend ourselves out of this situation? If you're spending, on what?
Spending will stimulate the economy...more credit will bite us in the...derrière! That said, major spending in our household right now. Ensuite bathroom renovations, new windows for the house, next fall its a new furnace and A/C..where does it stop. Yes, on credit, but it also increases the home value. As for the trip to Punta Cana this winter, the new racing bicycle and other toys and frivolous things, CASH, all paid CASH. If we can't pay it, we ain't gettin it.

2. Do you believe that these layoffs are, in all cases, necessary to the survival of organizations?
NO, a friend of mine in Germany was telling me that the company he works for has reduced work week and/or salaries. Unions are not to crazy on that idea but its better than not working I guess.

3. And do you think layoffs should happen on Dec. 16?
There is never a good time for lay-offs. Speaking from experience (a long time ago) a Dec. lay-off is like salt in the wound. My co-workers wife just got laid off, sales for a pharmaceutical company. After 3 different companies in the last 5 years (where she left for better pasture when rumors of lay-offs started), she didn't see this one coming. It's funny though, for some reasons, companies that she previously worked for who had laid-off........are now interviewing?????

Love your blog Kat......
Jean, the in-law
Duchesse said…
Jean: 1. the cash rule is so smart. I will use the Evil Card (for air miles) but go immediately and pay it off.
2. IMO this is wise, why walk all that experience?
3. What a drag. Yes, they are reaping their shortsighted approach. And how much loyalty will those new people have.

Thanks for reading, in-law!
M said…
Reading your post makes me want to go directly to your website and buy something! Your assessment of our current economic situation is absolutely correct.

While government has it's place (national defense,courts system), it is in fact, a consumer of wealth, not a creator. Only the private sector can create jobs. The so-called stimulus did not work as evidenced by our current 10.2% unemployment rate. It was full of pork spending that had no relation to the slowing the recession and more to do with favors for political allies.

As for the banks meltdown, there is plenty of blame to go around, but I wonder why we not talking more about Fannie Mae and Freddie Mac (Chris Dodd and Barney Frank) and their edicts that every American should own a home resulting in far too many people borrowing money for homes they couldn't afford.
Not laid off per se (I don't have a real job) but a couple of arts organisations and production companies I work for had produciton cuts, and an international development organisation I also work for lost its CIDA funding outright as the current government doesn't like them. Times are tough.

And I'm over 50.
No, they are definitely not necessary always, often they are used to get rid of 'dead wood' but sometimes it's just about that months budget I'm sure! Why don't those high paying CEOs give up a little of their salary and keep lots more people in jobs?

Never should it happen just before Christmas.
Frugal Scholar said…
I am naive about macroeconomics or even micro, but it seems to my left-leaning self, that the big guys are being taken care of, while the little guys are suffering. I also think that the little guys (poor people buying pricey houses with sub-prime loans; students taking out loans for ever-increasing higher ed costs) supported the big guys during the "boom" years.
M said…
An added note because I know you are an avid reader and enjoy learning...

All this government spending is a Keynesian approach to economics. Watch this youtube video to learn about why it doesn't work

Also, you may be interested in picking up a couple of books The Road to Serfdom by F. A. Hayek, which is a classic. He was the winner of the 1991 Presidential Medal of Freedom and 1994 Nobel Memorial Prize in Economics.

Lastly, Basic Economics by Thomas Sowell, A Citizens Guide to the Economy. He earned his Ph.D from University of Chicago and has 30 years of experience teaching economics at colleges such as Cornell and UCLA. He also has a website

I'm glad you posted this topic. It has certainly stirred some thoughtful debate and that is always good.
Belle de Ville said…
Lisa,thank you for jumping on the bandwagon.
And thank you Duchesse for allowing us to discus this serious subject on you blog.

I had the privilege of studying under Thomas Sowell, one of the finest economists since Adam Smith.
His books are definitely required reading.
And everyone...and I do mean EVERYONE should read Hayek's "The Road To Serfdom".
Also, "The Forgotten Man" by Amity Shales about the Great Depression.
Her website is

And, I will definitely read "Fools Gold" and "Dancing in the Dark" much to debate, so little time.
Susan B said…
Another economic viewpoint from Paul Krugman, last year's winner of the Nobel Prize for Economics:
Duchesse said…
Lisa, Belle, Pseu and all: I could not ask for am more-appreciated gift than your enthusiasm for the big issues as well as the lighter topics on this blog.

As someone who had to be dragged through economics in grad school, the various models and assumptions are sometimes challenging to me- yet essential to understanding and making decisions.

I cannot get this Harper's Index (November) fact out of my head: "Chance that a (laid off) worker will ever regain his or her income level: 1 in 4."
Toby Wollin said…
I, too, will grab the soapbox for my two cents: If senior management would drag their heads out of the trough for a couple of moments, they might realize that reducing their own bonuses, payouts, or benefits would probably keep people on the payroll. Laying off people at the middle and bottom of the ladder does not save nearly as much money as getting rid of a few at the top - but management does tend to protect their own (as evidenced by the behavior of the banks, financial organizations and insurance companies. You can't ask people to spend what they do not have. If corporations continue to lay off people and not hire new people, there is even less incentive for people to spend. What has been done for the financial industry over the past year was done with the stated purpose that they would lend money to businesses so that jobs would be created. Guess what - the rate of lending this year is even worse than it was in 2008 - it really does appear that the industry used that excuse to get the money they WANTED -- and they did not come through on the commitments that they made to the government to get the money. Now many of them want to pay back the bailout because it comes with controls over what senior management can get paid. Senior management does not want to have any controls on how much swill gets put into the trough, so they are lining up to pay the money back now. They did not lend the money to business to make jobs and not only were no new jobs made, but millions of people have been laid off. They had use of the money for over a year and made money on that..and have plans now to pay themselves very handsome bonuses indeed. And now when there are efforts to control how much money they can pay themselves - they want to pay it all back. As a US taxpayer with an unemployed (and perhaps at this point unemployable) college graduate son, I'd like to propose that every family in the US gets their share of the bank money - I think we can find good uses for it.
Duchesse said…
Toby: We are told we are pulling out of the recession, which was not as deep here in Canada, but the several dozen people I know who were laid off are not re-employed at similar new jobs; most are working part time or as contract employees. What will your son do?
Belle de Ville said…
Ok...I just can't stay off of this topic because it is very close to my heart...and my business...yes that thing that puts a roof over my head.
In connection with Toby's comment about her college graduate son in need of job, let me just say that one of my assistants has double undergraduate degrees from Berkeley in Economics and Rhetoric or Logic or something like that. She also has a LAW degree from UCLA and passed the California Bar Exam on her first try. She is a LAWYER who is working as my assistant because she can not find a job in a law firm in city as large as Los Angeles.

I know 50 something year old executives that have been laid off, have lost their homes and who will never, ever get jobs with equivalent salaries.

I'm glad that my daughter still has a couple more years of college because maybe by the time that she graduates, the economy will have changed and she will be able to get a job.

And as for government spending, really how much debt do to China we want to saddle our children and grandchildren with?
Anonymous said…
I understand that lay-offs will occur- but morally? On Dec 16th?No.
I am searching for words to elaborate why I say this, to acknowledge the argument on both sides, knowing its not a black-and-white one- but I keep coming back to my gut feeling. No. Maureen PS I live in Ireland where our economy is running to stand still.
M said…
Just one more response to Tobi on this important topic if you will bear with me...

Small business in America is responsible for the majority of new jobs created every year not the behemoths like Citibank and AIG. However,
many of those small businesses are not hiring now because of fear and uncertainty about what lies ahead...(that same kind of anxiety you're feeling over your son's future.) This administration's constant call for new taxes and regulations has us in a holding pattern . It's very hard to make predictions about how your going to grow your business when you don't know what all the costs are. Caution is the rule of the day.

In times like this when there is so much government intervention and apparent disdain for the private sector many small businesses are just treading water just trying to stay open.

While I agree that the actions of some of the CEO's at these bailed out companies is appalling, as I said earlier, there's plenty of contempt to go around. You might want to direct some portion of your anger on to the people who voted to give them the TARP money in the first place and to look at how the unused portion is going to be used.

I guess we all need to remind ourselves that nothing lasts forever and that this is a constantly changing environment we're in. This recession won't last forever.

I wish you the best and hope you have a restful and happy holiday with your family and that your son will be able to find employment soon.
M said…
Toby....sorry, I spelled your name wrong in the earlier post.
Anonymous said…
Wow. What a wonderful variety of opinions - all politely and respectfully exchanged - we find here!

I am against my government spending us into heavier debt; like Belle, I shudder at the thought of getting even further in debt to China (or, for that matter, any other country). I also believe that government spending rarely leads to what is really needed: strong businesses that can give long-term jobs to skilled workers.

That being said, I am - thankfully! - in a relatively strong financial position so am spending more than I did during boom-times. Back then, watching everyone around me spend like drunken kennedys made me clutch my purse tightly shut. Now, there are sales to take advantage of, charities to be supported, a new car that cost several thousands dollars less than if I'd bought it in 2006.
kristophine said…
It's no secret that as a Psych grad student I tend to see everything in terms of individual behavior, and this is no exception. We talk about "corporations" as though they're people, and it's true that they behave like immortal, short-sighted, conscience-less people, but this is created by the system of incentives for every individual within a corporation.

Personally, I think that the system of huge benefits for unverifiable results (who's to say the CEO didn't just get lucky?) is not optimal. There is an enormous personal incentive for people at the top to give themselves bonuses and large salaries without much regard to the health of the company. It's like letting Congress give themselves raises, or like letting a five-year-old control the cookie jar. Yeah, there'll be puking later, but right now, they feel great. It's possible to restructure and reallocate resources in ways that minimize the human cost, but there is no large incentive to the people who could do that to do it.

And it's problematic to argue about the wisdom of governmental policies, given that it's fundamentally untestable. There can be a lot of discussion, but any hard and fast conclusion is impossible. I like science, and social policy is never experimental, because there's never a matched control group.

And layoffs right before Christmas are just cold. It's not like the holiday suicide rate isn't already elevated. Cripes.
Duchesse said…
Anonymous @ 3:16 Though Joe Kennedy made his initial fortune by pulling now-illegal stock brokering moves, the family contributed a number of public servants. That's better than the hedge fund/bank fat cats can say so far.

Belle: Amazing story. Law school enrollment here is booming as young people figure they should invest more since a liberal arts BA is not getting them good jobs.

kristophine: If a corporation's board is doing its jobs, there are clear metrics for executive performance, the "Balanced Scorecard". I am irked that CEOs take a lot of heat (not from you especially) when it is the boards who should be scrutinized.

I saw "The Corporation" as I suspect you did, too. But the basic conceit, while clever, does not pertain exclusively to corporations. We personify all kinds of things: "The report says", for example. We all know it is people who run companies (whether incorporated or not). A skilled and responsible board does not shirk accountability and requires it of its executives.
crunchycon said…
I'm late to the party, but thanks to "Belle de Ville" for recommending "The Forgotten Man." I was just about the recommend it, and my thanks to the rest of the group for their titles. Off to check the library's online catalog (one of the great luxuries in my life)!

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