A Lost Generation of Job Seekers?

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.

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.

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."

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 [2003] 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.

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.

I worked for a telecom equipment manufacturer and was recently laid off (after 9.5 years of dedicated hard work).

Luckily I have about 8 months of back-up cash + my severance package.

Word to the wise: high tech/telecom is the pits.

Trajan88; TAMU Class of '88; Law Hall (may it R.I.P.) Ramp 9 Mule; f.u.p.

The days of young americans earning $100,000 are gone forever.

This is Free Republic not the Democratic Underground. Many young Americans are earning much more than $100,000 a year and will continue to do so long after your gone.

Sorry to hear about your job losses. And you are right - it hasn't been this bad in a long, long time. My brother was laid off last week from a semiconductor equipment manufacturer - and he's got a master's degree and 8 years experience under his belt. I wish him the best and pray for him, but I am realistic when I say he probably won't find a job until spring time next year. He was fortunately able to pay off most of his student debt, but he's going to be eating his retirement funds soon enough.

My wife and I are relatively young, so kids are still in the future. No car payments - both our cars are 8-10 years old and we will drive them until they die. We are making extra payments on the mortgage so we can pay the debt off early.

Regardless of how 'unpatriotic' some people make us out to be, we are clamping down on any and all unnecessary spending. God has given us this time to save and be good stewards. We are being frugal because we are not fools.

The good ones will rise stronger for it, the bad ones will be doing what they should have been in the first place.

I once told my dad (after I was benched on our high-school basket-ball team), that the cream always rises to the top (the cream being me)...my dad looked at me and said, "So does scum!"

I'm now paying off almost 60K in student loans for the MBA I got two years ago.

A recent study compared folks with MBAs to folks who got an intensive 1-3 week indoctrination session into the company culture. No difference in productivity. Still, I have to believe you have enriched your own inner life to some extent!

Once upon a time, so they say, there was a travelling Wise Man who came to a village. He had a little cannister of magical pills. He promised that eating these little pills would instantly make one more intelligent. So, up comes this bumkin to him: "How much for the smart pills, O wise one?"

"Well, young man, that will cost you a gold coin."

So the bumpkin gives the Wise Man his life savings in exchange for the magic pills, which he promptly gobbles down. He chokes, and spits out the pills: "Pardon me, O wise one, but it appears I have given you a gold coin in return for rabbit sh_t."

"See, you're smarter already!" and the Wise Man walked away to the next village, richer by a gold coin.

Yeah, I learned LOTS in business school. One of them is the concept of ROI -- Return On Investment. In the case of an MBA, there ain't none.

Thus endeth the lesson.

I once told my dad (after I was benched on our high-school basket-ball team), that the cream always rises to the top (the cream being me)...my dad looked at me and said, "So does scum!"

Wow, he is a hard marker.

Actually, that is the Rule of Middle Management...haha!

I was making about $30 an hour as a systems guy at a hospital company with 11 years in. We got gobbled up and I had to leave. I went back to school and learned to be an Aircraft Mechanic and loved it, although I only made about $10 an hour. You have to make a mental shift that's hard for some people to make. I'm back in the computer business and although I'm making an excellent salary I miss the airplanes.

Howsabout 'Ethno Urbanology'...(and, as Dave Barry would say, I am NOT making this up).

Most of us could not make up these things. Schools will dream up any easy five credits for a quick sale.

One that infuriated me when I was tutoring was something like "Chemistry for Divinity Students"...the tiniest smattering.

So these scam victims are graduated out into the Corporate World and baffled when they are unemployed. It is not the student's fault, really. They are actually conned into thinking they are learning something. After the damage from the public schools, how can they have the critical skills to even know any better? If it sounds like a long word, it must be a real subject.

We were in the same place in the '70's. Paying down debt turned into the smartest thing we ever did.

If you make $100,000, and owe $500,000, you can live the same way with a lot less stress and fear by making less and owing still less, and are a lot more flexible in adjusting to setbacks. And if the career gets back on track in the future, you are way ahead.

I don't know where he received his MBA, mine only cost 18,000 grand. 60 G for a business degree, bad business if you ask me. I work in total 24 hours a week, I don't make much cash but the money I earn goes into my home so I can sell it in a year, buy a boat and not work at all for one to two years...you have to know what to do with the education you buy; cheap cars, affordable food, good investments, and health insurance...

Problem is that the retirement money is now gone and companies DO NOT HIRE people over 50 (except MAYBE McDonalds). I have to face the fact that I am in my last good paying job and make to best of it.

If you have talents, don't lose faith.

I was 56 when, after 23 years with the company, the division closed. I was offered a transfer to a place I politically hate,(CA) and turned it down.

But I had worked hard and had a good reputation, and because of it, got a better job before I even touched my severance!

This, despite my being certain I had lost the last job I would ever have.

So you never know...someone you did a good job for years before, or someone who had heard of you may come through if you develeloped a good network!

You are missing the big picture. There are plenty of jobs, but they are being shipped offshore to foreign countries. How does this effect the economy? It's not just unemployment. It's thousands of workers who make good money that is longer going into our economy. It's going into the economies of India, Pakistan, China, and Russia to name a few.

That and H1-B visas being granted TODAY because American companies "can't find" American engineers and scientists to fill jobs.

I'm looking for an engineering postion in processing for MEMS (Micro-Electro Mechanical Systems) or Nanotech. FReep mail me for a resume...

One word for you : deflation

And if it continues much longer, The Grapes of Wrath may again hit the bestseller list after 70 years.

BUMP

I have a friend who was a $70,000 a year "Technology Consultant" who recently took a job as a help-desk worker for $12 an hour

I'd be damn happy for that $12/hr job right now...unemployment sucks. Big time.

Those under the age of 50 are far more likely to see all of the dead aliens and crashed flying saucers out in Area 51 than a Social Security check that won't bounce.

I disagree. We will get EVERY PENNY we have put in Social Security. (A hamburger will cost $399.99, but we'll get every penny)...

In 25 years of engineering .... I have NEVER seen it anywhere near as bad as now. That means since the late 70's thru the 80's and the 90's.

30 years for me.

Problem is that the retirement money is now gone and companies DO NOT HIRE people over 50

Well, you're just one big frickin' ray of sunshine, aren't you? ;^)

. Schools will dream up any easy five credits for a quick sale.

My MS thesis made a contribution to the home schooling movement. Having done my bit to replace the public elementary school paradigm, I now dream of helping to devise cost-effective substitutes for university education! (think I can find a dissertation in that notion somewhere?)

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