If you look at the root of decimate—deci, from the Latin—its literal meaning makes itself known. Deci means “one tenth part of.” Think decimal, for example: decimals divide units into tenths (or hundredths).
Decimate, then, originally meant “to kill every tenth person”—a means of controlling the populace that hearkens from Roman times. Through popular usage, the term now also applies to drastically reduced numbers, particularly casualties.
This means that you can use decimate to describe, say, layoffs of even small percentages. Say you have ten coworkers and one is let go. You can protest, “Our staff has been decimated!” without exaggeration.
To decimate has also come to mean to cause great damage (e.g., the recession has decimated the economy), but given the word’s origins having to do with people, this usage isn’t recommended by Chicago. Moreover, because decimate is rooted in parts, don’t use it when referring to complete destruction (the bombing completely decimated a city block). Nor should you use decimate alongside a specific percentage (the monsoon decimated 26 percent of the island’s population—which is it, ten percent or 26?)
Chicago Manual of Style, The. 15th ed. Chicago: The University of Chicago Press, 2003.
“deci.” Merriam-Webster Online Dictionary. 2009. Merriam-Webster Online. 17 September 2009 <http://www.merriam-webster.com/dictionary/deci>
“decimal.” Merriam-Webster Online Dictionary. 2009. Merriam-Webster Online. 17 September 2009 <http://www.merriam-webster.com/dictionary/decimal>
“decimate.” Merriam-Webster Online Dictionary. 2009. Merriam-Webster Online. 17 September 2009 <http://www.merriam-webster.com/dictionary/decimate>