The Day We Embraced Layoffs

by Outside-In® Team Member, Kelly Hocutt

August 5, 1981. That’s the date it became official.

It’s rare that we can point to an exact date when a business theory of idea becomes an accepted practice. But in the case of mass layoffs, we can. August 5, 1981, was the day President Ronald Reagan fired more than 11,000 air traffic controllers.

Demanding more pay and a shorter workweek, PATCO, the air traffic controllers’ union at the time, was embroilded in a vicious labor dispute with the Federal Aviation Administration. When the talks broke down, PATCO threatened to go on srike, ostensibly shutting down airports and causing the cancellation of thousands of flights during one of the busiest travel periods of the year.

Such a strike is illegal, according to the sometimes controversial Taft-Hartley Act of 1947. The act essentially prohibits any labor strike to cause unfair harm to those not involved in the dispute or to do any damage to any commerce that would negatively affect the general welfare. This is the reason police and emergency room nurses are forbidden to strike. The damage such a strike would cause is believed to outweigh any grievances over unfair pay or hours.

Without an acceptable deal and, worse, without the ability to find common ground, on August 3, PATCO’s members refused to go to work. Given the strike’s impact on the country, President Reagan got personally involved ordering the air traffic controllers back to work. Meanwhile, contingency plans were put into place, with supervisors (who were not members of the union), a small group of controllers who had chosen not to strike and military air traffic controllers enlisted to cover the losses. Though not a perfect solution, these temporary workers were able to keep the majority of flights going. The effect of the strikes was not as severe as expected, and so, on August 5, 1981, President Reagan fired 11,359 air traffic congrollers, nearly every controller working for the FAA at the time. And it didn’t stop there.

Reagan banned every one of the strikers from ever working for the FAA again for the rest of their lives, a ban that remained in effect until President Clinton lifted it in 1993. Many of the air traffic controllers who were fired that day were war veterans (which is where they learned the trade) or civil servants who had worked hard to earn their middle-class incomes. Because of the ban and the fact that their skills were hardly transferable to other industries (there’s not a huge demand for air traffic controllers outside of the FAA), many of them found themselves in poverty.

This is not a story about whether Reagan should or should not have fired the air traffic controllers. This is not a story about labor disputes and the right of unions to stand up to management. This is a story of something quite diabolical. This is a story about the long-term repercussions when a leader sets a new tone about what is acceptable or unacceptable behavior inside an organization.

In an attempt to alleviate one short-term strain on our country, President Reagan inadvertently created a new, longer-lasting one. By firing all the air traffic controllers, he sent a message to business leaders across the nation. He unwittingly blessed the swift and even aggressove decision to use mass layoffs to guard against a short-term economic disruption. Though I am certain Reagan never intended it as such, some eager CEOs interpreted his actions as permission for them to do the same. There was now a precedent for protecting commerce before protecting people. And so, for the first time ever, the social conventions that had restrained many a CEO from doing something that many may have wished they could in the past were instantly gone.

With the tacit approval from on high, the practice of laying off people in mass numbers to balance the books started to happen with greater frequency. Layoffs had existed before the eighties, but usually as a last reosrt and not an early opiton. We were now entering a time in which even meritocracy mattered less. How hard someone worked or how much they sacrificed or contributed to the company no longer necessarily translated into job stability. Now anyone could be laid off simply to help balance the books for that year. Careers ended to make numbers work. Protecting the money, as economic theory, replaced protecting the people. Under such conditions, how can we ever feel safe at work? How can we ever feel committed to the jobs we have if the leaders of our companies aren’t committed to us?