Skip to comments.A Lost Generation of Job Seekers?
Posted on 10/28/2002 12:17:35 PM PST by Willie Green
For education and discussion only. Not for commercial use.
In a reversal of the late 1990s, young workers are being jettisoned right and left as companies make more room for older people many previously thought of as corporate has-beens.
A year and a half ago, Malene Comes of San Jose, Calif., and her husband, Craig, were raking in $120,000 a year and living la dolce vita. The two computer technicians indulged in lavish trips, hired a cleaning lady, and ate out almost every night. Then, both were laid off. Today, they get bags of groceries from a San Jose food bank, have joined the ranks of the uninsured, and beg their parents for $1,045 in rent for their 600-square-foot apartment.
"We didn't think we could fall this low," says Malene, 30, who has a low-paying job helping mentally retarded adults. Craig, 36, works part-time at specialty retailer Brookstone Co. and as a substitute teacher. Together they make about $35,000 a year. Says Malene: "The fun days are over. Let's face that."
Economists may say the 2001 recession is over, but it doesn't look that way to unemployed and underemployed people like Malene and Craig Comes. During the boom years, they looked set to inherit the Earth. The best and brightest earned fat signing bonuses, big salaries and fancy perks. With their futures seemingly secure, many young and mid-career workers took on big debts as they splurged on expensive houses, cars and vacations.
Now, many of them feel like a lost generation, worried that their peak earning years are behind them even as their expenses jump. For the youngest, the costs of raising families and paying mortgages lie ahead. For those closer to middle age, the burdens are heavier. "These guys are despondent," says psychologist Alden Cass, managing director at New York's Catalyst Strategies Group who studies laid-off brokers. He knows ex-Wall Streeters who are tending bar, waiting tables or working at the likes of RadioShack and the Gap.
In a reversal of the late 1990s, young workers are being jettisoned right and left as companies make more room for older people many previously thought of as corporate has-beens. As opportunities for younger workers become more scarce, their elders are staying on or returning to work, often desperate to rebuild diminished retirement savings.
Traditional unemployment measures don't capture the challenge for young and mid-career workers, who are flocking to national job fairs in an often futile search for work. They don't include people who have become discouraged and dropped out of the labor force. A better statistic is the share of the population in a given age group that has a job, for which even a small drop is meaningful.
Older Fare Better
So how are different cohorts doing by that measure? At the height of the boom in early 2000, 88% of all men in the U.S. from the ages of 20 to 44, excluding those in the military, jail and other institutions, had jobs. By September 2002, only 85% had jobs. For women 20 to 44, the employed share fell from a peak of 73.5% in early 2000 to 70.6% in September 2002.
Although women aged 45 to 54 fared slightly better -- 73.5% of them remained employed, a small drop from 73.9% -- their male counterparts were hard hit: 84.8% of them had jobs, down from 85.9% a year earlier. Surprisingly, older workers are the only ones who have done well. The share of men 55 to 64 with jobs rose from 65.9% to 67.2% over the past year, and the share of women 55 to 64 with jobs grew from 51.7% to 54.4%.
Things are likely to get worse in the months ahead as companies cut jobs to restore profitability. Sluggish economic growth is the root of the problem. "We're looking for the continuation of a grudging, difficult, gradual recovery, with a not-insignificant possibility of a double dip" into recession, says Michael D. Andrews, chief U.S. economist for WestLB Global Financial Markets.
Stuck in the Middle
The bloodbath on Wall Street is a telling, if extreme, case of the plight of young and mid-career workers. Job cuts at brokerages since the bear market began are even deeper than after the 1987 stock market crash. All told, an estimated 15% of jobs that existed at the industry's 2001 peak will have been eliminated by yearend. It will likely be years before many of those jobs return, leaving people who've been laid off with little prospect of working again in their field.
And even when those jobs do return, they'll be filled with new strivers, says veteran Wall Street pay consultant Alan Johnson. Brokerages hire scads of young people, only a few of whom ever reach the top. "The people above 45 are more likely to be senior management -- and they are the ones making the layoffs," says Guy Moszkowski, a financial-services analyst at Salomon Smith Barney.
But Wall Street is hardly the only street in America filled with the abruptly jobless. Many younger people flocked to technology and telecom companies that have been devastated by the capital-spending slump. The once-mushrooming info-tech business will add virtually no jobs this year, according to the Information Technology Association of America.
Why are young and mid-career workers bearing the brunt of the cutbacks? One reason is that many got bigger raises than old-timers during the boom, so they're no longer much cheaper to employ. At the same time, they often lack the deep institutional knowledge and personal ties with clients and customers that are especially valuable in tough times. Says Michael Recca, president of Sky Capital LLC, a startup brokerage firm: "Everybody in this market prefers a veteran."
The 20-to-44 group has other woes to contend with, too. Age-discrimination rules, by shielding older workers, may end up disproportionately exposing younger ones to layoffs. Young people have been whacked by layoffs in unionized businesses such as heavy manufacturing, airlines, and phone companies, where the least senior are often the first to go.
Even global outsourcing may play a role. Gartner Inc. researcher Frances Karamouzis says a New York company that recently laid off 500 people is retaining its generally older software system designers while dumping its younger coders and programmers. Says Karamouzis: "The work is going off to India, where they get much better value."
Back to School
Many laid-off workers, realizing that the jobs they lost may never return, are striking out in new directions. Dan Arol Jahns, 32, who lost his six-figure job at Goldman, Sachs & Co. in August 2001, chased a lifelong dream of becoming an actor. He first found work playing a chess piece at a Toys 'R' Us Inc. store opening. Since then, he has landed roles on stage and TV.
Most, though, are more prosaic. A record 31,000 people took the Foreign Service exam this year, more than double last year's total. The number of those taking the law-school placement test is up 17% this year, and B-school applications for this fall's class were up 25% to 30%.
Applicants had better hope conditions improve by the time they get out: Only 70% of the graduates of BusinessWeek's top 30 business schools landed jobs by graduation last spring -- a lower percentage than during the last recession. "We expect  is going to be another tough year," says Kim B. Clark, dean of Harvard Business School, where nearly 20% of 2002 grads had still not found work by graduation.
Only workers nearing retirement age are faring well: A greater percentage of those over 55 are working today than a year ago. In part, that's because older workers are prized for their experience and stability: "It's not at all surprising that we're seeing people who have come from an Old Economy set of values becoming more attractive again now," says Barry Honig, president of New Jersey-based executive-search firm Honig International.
Companies such as AMR Corp., parent of American Airlines, are trying to retain older workers as they cut jobs because of the brain drain they suffered in the past from offering early-retirement incentives. They also want to avoid the high upfront costs of employee buyouts.
Smashed Nest Eggs
But for the silver-haired generation, rising employment is not entirely by choice. Many are staying on the job or reentering the workforce because they need the money: The bear market has smashed their nest eggs. Shel Hart, a vice-president at staffing firm Spherion Corp., says 40% of executives aged 55 and older who are applying for jobs now are doing so because of damage to their retirement portfolios. James Alexander, 55, retired from Westinghouse in April 2001, but a year later, after losing big in stocks, moved from Pensacola, Fla., to Sandusky, Ohio, to take a job as a plant manager at a consumer-products company -- at a 30% cut in compensation.
Young people who can't find jobs and older people who can't afford to quit: All in all, it's not a pretty picture. But until the economy revs up, it's a fact of working life.
As Gray-out gets reelected things will only get worse.
How infantile are these overgrown children? What exactly did they blow their money on? Food, clothes and trips? Are they sorority girls fresh out of college?
I really have no sympathy.
This doesn't sound like a disaster to me. What we have is effectively a 3% drop in employment. Yeah, it sucks to be one of the three percent, but the vast majority of people are still working. (Why wouldn't they count those in the military as working?)
(Why wouldn't they count those in the military as working?)
I would hope that they'd exclude ALL government employees.
Once I lived the life of a millionaire
Spent all my money, didn't have a care
Takin' my friends out for a mighty good time
Champagne and whiskey, gin and wine
Who'd ever think I could fall so low
Ain't got no friends and no place to go
If i ever lay my hand on a dollar again
I'm gonna squeeze it till the eagle grins
'Cause nobody loves you
When you're down and out
In your pocket not one penny
And your friends, you haven't any
But if I ever get back on my feet again
Everybody's gonna be my long lost friends
It's mighty strange but without a doubt
Nobody wants you,
I got to tell ya
Nobody needs you
Nobody loves you when you're down and out.
When you're down and out
There's a whole generation who've never heard of it.
Similarly, they are unaware that you can make popcorn on top of the stove.
I'm now paying off almost 60K in student loans for the MBA I got two years ago. Stupidest damned mistake I made in my life. It represents exactly one line on my résumé and has had no appreciable effect on my job hunt.
It would have been a better investment to spend the money on lottery tickets.
But that beats a Walmart job for $6 an hour. At least he was able to get a job unlike tool & die makers, factory workers, programmers, etc.
It is not just an old "Set of values". It is being educated in basics, before the NEA managed to start teaching "Feeling good about Failure", rather than teaching people to succeed.
It is being able to make change mentally, and knowing how to do long division and communicate in writing, and have some basic general Science.
Now, we are awarding PhD's in (Hahaha) "Urban Studies".
I know stockbrokers and dot-commers. What special skills are needed for either, that a bright 14-year-old could not acquire? How to fleece widows by churning their portfolios, or how to hire a thousand people to "manage a WEBSITE"?
Sorry, but these were never real jobs in the first place. And if a child-free couple made a few hundred thousand in the good years, and saved nothing, while having few expenses, now they know more...and have learned more then a hundred thousand in "Feel Good about Failure" tuition could ever have taught them. The good ones will rise stronger for it, the bad ones will be doing what they should have been in the first place.
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