Forgotten? U.S economic history: the firing ('layoffs') of middle managers in the 1980s and 1990s

[Benjamin Frank]

I don't have any modern articles on this or any empirical data just some hypothesis, but I got into this discussion on another board as to explain why so many people at the time thought the recession of the early 1990s was so severe when it was actually fairly mild (of course, for a person who gets 'laid off' it's not mild) of about a 0.7% decline in GDP over 8 months in 1990 and 1991.

I pointed out that one of the reasons it might have been regarded as much worse, was that it wasn't just an economic recession (and a jobless recovery) but an economic restructuring (which might explain the jobless recovery) at the same time.

The main loss of jobs was two fold brought about by the personal computer revolution brought to offices that brought word processing, spreadsheets and, at the time anyway, databases that resulted in losses of jobs for 'lower skilled' typists and also enormous cuts in layers of mid level management.

Here are a couple primers on mid level management, essentially managers of managers: https://www.city-data.com/forum/work-employment/851645-can-anyone-explain-what-era-middle.html

and
Dan Lacey, publisher of a Cleveland newsletter on workplace trends, said Right Associates' statistics supported the idea that the layoffs were not a result of the recession. "The recession has technically ended, but corporate staff cuts are continuing," Lacey said.

An explosion of middle management that began in the 1950s was a "four-decade experiment" that had failed, Lacey said. "Bureaucracy begat bureaucracy," and middle management is "just excess baggage." Even during the booming 1980s, middle managers were being eliminated, he said.

In his newsletter, Lacey reports that as many as 1,600 professionals -- many of them middle managers -- have been laid off each business day since the start of 1992.
https://www.washingtonpost.com/archive/business/1992/05/03/odd-jobs/85776ff5-11d4-421b-9678-3f21e564ae94/

A few hypothesis on this:
1.I think this explains why there are still so many 'blue collar' workers in the U.S despite the large increase in technical professionals (engineers, I.T, health care providers.) Essentially these modern professionals 'replaced' the older middle management professionals.

2.Unlike with the modern professionals who many people here for good and ill agree are the backbone of the modern Democratic Party, many of whom are socially liberal but fiscally moderate and pro business (I.E according to some here, 'neoliberals') these middle management types were the backbone of the Republican Party in the 1980s - the Yuppies (Young Urban Professionals, although I think Young Suburban Professionals was probably more accurate.)

3.To contradict myself somewhat, as I said, I don't have any empirical data on this, one of the other things that went along with all this delayering of large corporations was 'outsourcing' which did not just mean sending jobs overseas, but also meant hiring small businesses to operate non core business services like payroll and hiring. So, to some degree anyway, the manager shifted from being in mid managament at a large corporation to being the manager of a small business. The obvious differences though, except when the small business is part of a large chain, is that small business management has no real upward mobility, and it generally pays less than corporate management (and with less perks and security like pensions.)

So, as much as it can be hard to have sympathy for mid level management 'Yuppies' I think these mass 'layoffs' did contribtue to the 'hollowing out' of the middle class.

4.To end on a more humorous note, this is from a Seattle based T.V show that was popular in the 1980s called 'Almost Live' that demonstrates how most people regarded middle managers, a recurring sketch titled "The Ineffectual Middle Management Suck-Ups."

In this sketch they try to deal with a terrorist threat to blow up the building, and, yes, that is Bill Nye.

(One of those guys also wrote the movie 'Nebraska')

[President Punxsutawney Phil]

My grandfather worked as middle management and got laid off during this time. He has never worked a paid job again.

[Agonized-Statism]

Computerization and post-Cold War demilitarization were major shakeups to the economy, no doubt. Hence the "New Economy" everyone was talking about during the Dot Com Bubble.

[Indy Texas]

Beginning in the 1980s, a lot of "legacy" corporations had to deal with activist investors and leveraged buyouts and other things demanding they figure out a way to increase profits to return to shareholders. Costs had to be cut somewhere and getting rid of a lot of relatively well-paid people whose jobs were not a "core" function of the business were the easiest way to do that without significantly impeding operations.

You've got a guy without a college degree who went to work for the company as a "clerk" in the 1950s pushing paper around and eventually worked his way up to middle management. Turns out a younger guy who knows how to use PCs and spreadsheets can do twice as much work as him, for less compensation (because he's younger/less experienced, and won't be participating in the defined benefit pension scheme that management recently eliminated).

So that guy, now in his 50s, gets canned. He's in a no-win position because he's too far from retirement age to simply retire early but he's too old to start over in a new career. A lot of those guys ended up in some variant of "sales" and sank or swam based on their ability to get enough commissions. Maybe they got their realtor license and tried selling houses. Maybe they scraped together enough money to start a small business.

My grandfather was in one of these kinds of jobs and got forced into retirement when he turned 65; his boss all but explicitly told him it was because he was "too expensive" and it would be cheaper to just hire a twenty-something.