The following post is adapted from my personal academic coursework.
Downsizing has become quite a popular topic on social media over the past week due to a resurgent interest in raising the federal minimum wage and the business implications of such a move. Karfakis and Kokkinidis pointed out that “management literature presents downsizing and layoffs [as] an inevitable part of “organizational life.”” Dankwa agreed, “Downsizing is inevitable to an extent.” This seems to accurately describe the situation regarding a federal minimum wage increase. A blanket wage increase will force most companies in the United States to make tough decisions to implement changes that will negatively affect either their customers, employees, or shareholders. One such possible course of action is, of course, downsizing.
Mousa and Ayoubi explained that “downsizing mostly aims to alleviate organizational costs, improve work productivity or prepare a specific organization for an acquisition, merger or for liquidation.” Dankwa echoed this sentiment, noting that “downsizing practices represent… …the “necessary” consequence of cost cutting.” Wage increases drive up costs and downsizing is one way to minimize these increases to keep the organization profitable. If the organization does not remain profitable, then it goes under and every job goes under with it. While neither situation is ideal, one could make a reasonable ethical case that downsizing is for the greater good of the organization’s employees.
Karfakis, N. & Kokkinidis, G. (2019). On guilt and the depoliticization of downsizing practices. International Journal of Sociology and Social Policy, 39(1/2), 156-180. https://doi.org/10.1108/IJSSP-06-2018-0100
Mousa, M. & Ayoubi, R. M. (2019). Inclusive/exclusive talent management, responsible leadership and organizational downsizing: A study of academics in Egyptian public business schools. Journal of Management Development, 38(2), 87-104. https://10.1108/JMD-11-2018/0325