ROBERT SIEGEL, host:
Today, the sort of announcement that lets you know you're in a recession. Circuit City announced that by the end of the year, it will close 20 percent of its stores and lay off about 17 percent of its domestic work force. That means as many as 7,300 out of work. On Friday, we'll see the monthly jobs numbers for October, and they're likely to show higher unemployment. And joining us to talk about layoffs right now is Louis Uchitelle, economics reporter for The New York Times and author of the book "The Disposable American: Layoffs and Their Consequences." Welcome to the program.
Mr. LOUIS UCHITELLE (Economics Reporter, The New York Times): Thank you for having me.
SIEGEL: And first, who's laying off workers nowadays?
Mr. UCHITELLE: Well, it's everyone. If you go down the announcement, it's a who's who of corporate America: General Electric, Whirlpool, Pratt and Whitney. You name it. They're either actually laying off people or announcing their intention to cut jobs.
SIEGEL: Now at one time layoffs meant business is slow. The factory can't afford to keep everyone on the payroll. So a certain number of workers are furloughed for a time, but they'll get their jobs back. Today?
Mr. UCHITELLE: And today the furlough system, which was not a bad way of doing things, is gone. In the furlough system, a worker kept his identity - his or her identity. They continued to be on their health insurance. They continued to call themselves employee. And they were pretty sure that in six weeks or even six months, they would be called back. Now people aren't furloughed. They are laid off outright. And if later on workers are needed, new people are hired or the people laid off are hired as if they had never worked at the company before. Your ties are severed with your employer.
SIEGEL: Well, what does the record show about workers who were laid off and their ability either to get back the job they were laid off from or to find another comparable job?
Mr. UCHITELLE: Well, it's an interesting record. We're facing one of the moments of truth in this process right now. Back in the '90s, people were laid off in rather large numbers, but layoff didn't mean unemployment. They could cycle back into jobs fairly easily. The problem was the pay. And the Bureau of Labor Statistics keeps data on this. And they showed then, and still show now, that out of every three people laid off, only one, two years after his or her layoff, was making as much or more in a new job as that person had made in the job lost.
And now I think something is going to change because now we're in what appears to be a major rise in the unemployment rate. If that happens, two years later you're not going to find perhaps one in three people. It'll probably be 20 percent or 15 percent, and the difficulties of getting back into the workforce will be greater.
SIEGEL: When we come across an item in the news like the one I read in the introduction to this interview that Circuit City is going to lay off as many as 7,300 people, do you think that information is being put out there for some benefit of the public at large or is it Wall Street who wants to hear how Circuit City is going to get through a rough quarter? What importance do you attach to that sort of news?
Mr. UCHITELLE: Well, it's a strange announcement. When I first started hearing those announcements more than a decade ago, I took them at face value. And then I began to realize that when a company announces, let's say, a hundred - that they're going to cut a hundred jobs, you don't know until six months later whether they did it through attrition or whether they made the announcement and then changed their mind later on. There is never the announcement that says, by the way, we announced we were going to have a hundred job cuts six months ago. Well, we decided to have only have 50. So...
SIEGEL: Because - well, because the announcement really is for the markets too.
Mr. UCHITELLE: Well, the announcement is for the markets. It's also for the employees who are left. It's a statement that we are a company that's on top of the situation, and we're dealing with it.
SIEGEL: Well, Louis Uchitelle, thank you very much for talking with us today.
Mr. UCHITELLE: Thank you for having me.
SIEGEL: Mr. Uchitelle is an economics reporter for The New York Times and also the author of the book "The Disposable American." Transcript provided by NPR, Copyright NPR.