"A Job for Life": Layoffs Hit Home

Most corporations coped with the debt in two ways: They sold assets, such as factories, offices, and warehouses; or they cut costs through layoffs. U. S. Steel, whose rusting mills desperately needed an infusion of capital, instead spent $5 billion to acquire Marathon Oil of Ohio; that decision meant that nearly 100,000 steelworkers lost their jobs. No firm was immune, nor any worker secure. “A job for life” had long been IBM’s unofficial but endlessly repeated slogan. As late as 1985, it ran an advertisement to reassure employees: “Jobs may come and go—But people shouldn’t.” Yet during the next nine years a crippled IBM eliminated 80,000 jobs and more than a third of its workforce. During the 1980s, the total number of employees who worked for Fortune 500 companies declined by three million; nearly one-third of all positions in middle Management were eliminated. Millions of “organization men” (about one-third of whom now were women) were laid off as the organizations themselves “downsized,” the corporate euphemism for wholesale firings.

Many of the jobs went abroad, where labor costs were lower and unions nonexistent. In 1980 Xerox of America, realizing that it could no longer compete with its more efficient Japanese subsidiary, transferred contracts to Japan and laid off tens of thousands of American workers. In 1984 Nike moved sewing operations to Indonesia, where it could hire female workers for fourteen cents an hour. In 1986 the chassis for the Mustang, long a symbol of American automotive style, was built by Mazda in Hiroshima, Japan.

Towering mountains of private corporate debt nearly were overshadowed by the Everest of public debt held by the federal government itself. Reagan’s insistence on a sharp cut in personal taxes and a substantial increase in military expenditures produced huge—and growing—annual federal deficits. When Reagan took office, the total federal debt was $900 million; eight years later, it exceeded $2.5 trillion. “No one imagined how bad the outcome would be,” explained David Stockman, Reagan’s budget director. “It got away from us.”