Monday, July 02, 2007
White Collar Layoffs Are The New "Normal"
Here are a couple of recent articles from the Chicago Tribune about the prevalence and effects of white collar layoffs. One article focuses on an affluent community in the suburbs of Chicago named Barrington. Although the median household income is $110,000, "below the surface of a strong economy is an unsettling trend that may be contributing to worrying changes in the school lunch program and elsewhere. Residents seem to be losing jobs at a faster clip. They land back on their feet but not necessarily at the kind of salaries to which they had become accustomed." Fear of losing their jobs has shifted the priorities of Barrington's residents considerably. When surveyed in 1996, they listed "difficulty finding child care" as their prime concern. In contrast, "By 2005, 'involuntary job loss due to downsizing or other reason' topped the list, followed closely by 'difficulty paying bills' and 'put off health care' because of cost or lack of insurance. By comparison, child care had become a minor issue." When the 2005 survey was done, 16 percent of the respondents reported that either they or a loved one had lost their jobs within the last year.
Income loss is more permanent, but less visible, than job loss. Although a glance at unemployment figures suggests that the nation is doing well, many of those employed make far less than they once did. According to Princeton job-loss analyst Henry Farber, "The average earnings decline including lost raises was 21 percent for workers forced to find new full-time jobs between 2001 and 2003, four times the mid-1990s rate." The earnings decline after a layoff is particularly acute for white collar professionals, especially for those in middle age. The psychological impact is also more profound, and that in turn jeopardizes the health of many whose health care benefits have vanished. Richard Price, a leading researcher in the psychological effects of job loss, says the "increased rates of illness, depression, anxiety and marital conflict that [have been] documented among displaced U.S. workers stem mainly from the economic fallout -- the 'cascade of stressors' flowing from reduced income and loss of benefits like health care."
Nearly 10 percent of white collar workers lost their jobs between 2001 and 2003 - as opposed to only 7 percent during the recession of the early eighties. According to Price, "Globalization is a small piece of it. Businesses have gone from making things to buying each other, and that has produced these large-scale changes in the predictability of jobs at all levels."
When complacent economic pundits review the statistics with their rosy-colored bifocals, they cite the low unemployment rate, but not the dramatic losses of income in the recent history of those employed, praise the rise in "average income" when they really should be looking at "median income", and declare the land virtually inflation-free simply because wages remain flat while gas prices, health care premiums, tuitions and countless other key expenses are skyrocketing. It is time we looked beyond the disingenuous optimism of the so-called "experts" at the reality of what's really going on.
"Layoff fears part of 'new normal'" from Chicago Tribune
"Tough Climb To Reclaim Career" from Chicago Tribune