Lay-Offs Should be Good News

I would like to preface this post by pointing out that I very much sympathize with those who must endure the stress, uncertainty and general hardship that unemployment brings upon people and families that must live through it. The purpose of this post is not meant to suggest that the human costs of job loss are negligible or unimportant, but instead to encourage deeper thought on the too often forgotten pluses of job cuts. If we wish to live in an efficient and fair society then we must seek means to maximize the pros and diminish the cons of eliminating jobs. 


It was some fairly big news this week when Microsoft announced that it would be moving to cut up to 18 000 jobs from the company. At about 15% of its total workforce, this represents a significant cut for Microsoft, and will be the biggest in the history of the company.

Although it should be noted that the majority of the cuts at Microsoft will be to those employees which came over after Microsoft purchased Nokia last year, it is also important to point out that Microsoft is not the only high tech company making cuts, with HP planning to cut as much as 50 000 jobs in the next several years. These kinds of large scale lay-offs are actually not that uncommon within the rapidly changing world of technology (the single largest layoff of all time was made by IBM in 1993).

I have a simple reaction whenever I hear about businesses big or small making job cuts: that’s great news. 

Job cuts are an essential part of a functioning capitalist economy. They are what allow companies to reduce their costs and react to market conditions. If people are not buying enough of your products for you to keep paying your employees and making a profit, then it is time for you to reduce costs, increase efficiency, and change your tactics. If that means laying off workers, then so be it.

It is fascinating to me that these kinds of lay offs evoke such negative reactions from people on all sides of the political spectrum. We react to large lay-offs almost like they are some kind of natural disaster. Those on the liberal side bemoan the loss of income for those workers who will be let go, while those with a more conservative bent might worry that such job cuts are a sign of distress within the company and could have effects on the wider economy.

If we all take one step back and look at the big picture, it is actually quite obvious how perverted that sort of thinking is.

Imagine if you lived in a household where you just got your first dishwasher. Like magic you can maintain a clean and efficient household and the amount of work that needs to be put into the washing of dishes is decreased by something like 80%. Do you get sad or angry at the fact that you will no longer be needed for dishwashing? Of course not. You are happy, because you no longer need to face the drudgerous task of dishwashing any longer. You are free to do something else you enjoy more.

Reacting negatively to job cuts, is like falling into depression because you got a dishwasher.

So what is the difference between the household that needs less work done, and the company that no longer needs you as a worker? The key difference is that your material survival is contingent on the income that you make from your job, whereas you do the dishes for free (unless you are a dishwasher, in which case ignore this argument).

We are alarmed by job cuts because those workers depend on that income so that they can feed their families. Laws requiring fair severance and employment insurance were a major social victory of the 20th century, and have gone a long way to easing the stress of unemployment and the job search. But these systems are still limited in scope and do not guarantee the long term outlook for workers entering an increasingly difficult job market.

It is not the job of businesses to supply their workers with an income. It is our collective responsibility as a society to find a means of maintaining a fair and functional system. We must find a means to provide all people, even those who cannot find gainful employment, the means to support themselves, and more importantly to in turn support the economy as consumers.

If instead of living in a world dominated by sink or swim capitalism, we lived in a world with a universal basic income imagine how different job cuts might look. By guaranteeing that everyone will always be able to meet their basic needs for a dignified life, a basic income will allow us to truly embrace and celebrate the efficiency gains that can be realized by minimizing human labor.

A basic income frees the economy to do what it is best at, increase efficiency.

If the techno-economists are right, and there really is a tsunami of automation coming for your job, then we are going to hear more about job cuts in the coming years. Inexorably, automation will push more and more workers out of the job market, and unless we figure out how to make those job cuts a good thing, they are going to be a really, really bad thing.


2 thoughts on “Lay-Offs Should be Good News

  1. Yes. I agree that we should be moving to gradually reduce the length of the typical work week. Perhaps massive lay-offs create pressure for that to happen, although they leave most people working long hours, and many people unemployed. It’s not clear what approach would work best to actually spread the work more evenly. We need more creative thought about that. I have described some of my ideas in this article:

  2. As you stated, lay-offs would be less of a problem if we had a strong safety net. However, we don’t, nor is there political appetite to create one.
    Also, a fundamental problem with companies is treating people like widgets. People are not widgets. Everyone brings something unique to the table that adds to the collective intelligence of the organization. When I see a company doing massive layoffs, I don’t think creative destruction. What I think is lack of imagination 🙂

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