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From the October 5, 2001 print edition

Layoffs may not be good business

Just a few months ago almost everyone around here was saying that what the Capital Region needed most for its economy was more workers. There were more jobs than workers to fill them. We were even hearing about companies that could bring good jobs that were afraid to locate around here because there were just not enough workers.

Making the situation worse were census figures showing that upstate New York had a negative population growth rate. Albany's population fell below the 100,000 mark last year for the first time since the very early 20th century. Schenectady lost nearly 6 percent from 1990 to 2000, and Troy 9.4 percent. Upstate declined; the only population growth was downstate. At the same time, economic development groups were decrying the fact that so many college graduates were leaving the Capital Region every June for jobs in other parts of the country.

Suddenly, the economy is hemorrhaging jobs at a rate not seen since the early '90s when rightsizing and downsizing were the corporate themes. Consumer confidence was weakening before the terrorists flew into the World Trade Center towers. Now it is the lowest ever. These are definitely challenging times.

While the panicked airline industry has been shedding scores of thousands of jobs, it is significant that Southwest Airlines, the unorthodox company that has expressed such conviction to corporate culture, has resisted laying off employees.

Jim Ullery, who operates 360 Solutions, a human resources consulting office in Colonie, says that companies, especially those around here, may be paying some real long-term costs if they seek short-term relief by laying off their workers.

"We wake up one day and see national firms and local firms laying off thousands of people," Ullery said. "We have to ask, weren't these people doing something the week before, weren't we investing in these people the week before?

Laying people off can have a detrimental effect not only to the people who are laid off, Ullery said, but also to the people who remain with the company. The ones who stay get what Ullery calls "survivor syndrome," where their focus becomes to protect their position rather than work for the greater good of the company.

Companies like Southwest Airlines that resist layoffs have a stronger sense of community and build a sense of purpose and strong sense of loyalty among their workers. It is surely no accident that Southwest capitalizes the word Employee in its corporate communications.

But the wave of layoffs could have significant long-term consequences around upstate New York because our cities have been losing population while places like Austin, Seattle, San Jose and Miami have been booming. When people lose their jobs, they may not be here when our companies need them back. I remember talking with several upstate New Yorkers in the early '90s who had left their hometowns because their was no career opportunity for them.

"The most recent people who came to work are the ones that tend to be laid off, tend to be recent college graduates," Ullery said. "Fifteen, 20 years ago there was a surplus of people in the demographic of that age group. The baby boom has passed us by, and if we lay off the young people, the implications are that one decade or two decades ago these labor pools would be available to pull back in. Today they are not there. There are fewer employees available by virtue that the baby boom has passed us by; so if we fail to make the investment in the young people, we have really cooked our goose. If we go forward a couple of quarters and the economy heats up again, where are these businesses going to go to find people?"

When older workers lose their jobs, they have a tough time getting back into the work force and tend to make lifestyle decisions to drop out of the labor market, Ullery said.

Layoffs disrupt the sense of community or corporate culture a company has developed over the years, and that has a value that needs to be factored into the decision.

"If you're going to lay off people, you're choosing to throw away the investment you have made to this point. There's just not large enough field of people to employ right now with the demographic of young people being that much less than it was years ago."

And Ullery warns that the companies that begin rehiring first will get the best people.

MIKE HENDRICKS is editor of The Business Review. He can be reached at 437-9855 or mhendricks@bizjournals.com.