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(K. Lloyd Billingsley is the editorial director of the Pacific Research Institute.)


The Acton Institute

(The Acton Institute works to promote a free and virtuous society characterized by individual liberty and sustained by religious principles. Its goal is to help build prosperity and progress on a foundation of religious liberty, economic freedom, and personal moral responsibility.)

GRAND RAPIDS, Mich. — Ethics and layoffs

by the Rev. Robert A. Sirico, Acton president

With Friday's employment numbers, it is clear that the nationwide unemployment rate is rising a bit, and approaching 6.0 percent. It is about this point in the business cycle when we start hearing calls for government to step in and stop the leakage from the labor markets.

The main concern is moral. Truly, though 6.0 percent is not high by historical standards or European standards, there is a miniature moral drama behind every layoff, one that goes to the heart of the ethical dimension of business life.

Since the economic contraction began, more than 2.5 million people have lost jobs, according to private-sector outplacement data from Challenger, Gray, & Christmas. Though stable in the most recent month, the number of layoffs in the last year and a half is up by 54 percent over the previous year a half. So far in 2003, job cuts average 118,598 per month.

This is, of course, what one expects in a period of contraction following the remarkable economic boom of the 1990s. A correction is inevitable. In cold economic terms, labor is like physical capital in that it must shift from sector to sector to find its most highly valued use. An economy that doesn't allow such shifts locks in unproductive ventures and can quickly stagnant.

But the data does not reveal the whole story. Inside the numbers are 2.5 million private dramas of personal doubt, confusion, and upheaval. For many, to be laid off is to experience a life-changing event, to come to the end of one road and face a difficult decision concerning the next to take. It is especially difficult in times when job opportunities are not expanding but rather shrinking on the margin (again, an inevitable feature of an economy struggling to recover).

In my private counseling, I've often dealt with people whose concerns for their own economic security and that of their family dwarf any other issues in their life. Fathers who face a future without a paycheck ask fundamental questions about their own self worth, while mothers who are laid off find themselves concerned about clothes, food, and even shelter for their children. Single men and women worry about downshifts in their social status and their prospects for their future. There is often a tendency to rethink one's entire life.

Is it right that such momentous decisions concerning job security should be left to the vicissitudes of the commercial marketplace? The Europeans I speak to find this prospect appalling. In Germany, France, Spain, Italy, and other European Union countries, the state imposes every manner of restriction on the right of employers to let workers go or to fire them outright.

To cut someone off the payroll is viewed is an appalling act of cruelty, an act of exploitation from which the state must protect the working class. Many interest groups in the United States, particularly labor unions, would like to see more such laws in this country.

The same is true of unemployment benefits. In most EU countries, unemployment benefits can last up to two and even five years, and equal 60 percent to 90 percent of the net earning during the previous year of employment. Along with these benefits come taxes to support them and a Byzantine bureaucracy that is necessary to navigate, which requires an investment of time and energy equal to or surpassing that associated with job applications.

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