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.

The article states that they are getting food from the foodbank, getting rent money from parents, so I ask, where the h*ll is that 35K/year going? Couple of snappy roadsters in the driveway? And one other hint, if you live in an area where it costs a grand a month for a 600 sq foot apt, and you're making 35K a year, it's time to start packing.

North Central Iowa - was a computer operator/data processor in a data center for an ASP most recently - currently taking the 3rd of 4 classes for CCNA certification; previously in broadcast operations at a tv station.

Pretty amazing. I was on half time for 3 months, and have been, ummm, fully unemployed for a bit over two months now. I've only managed to get two interviews.

Usually in good times I have a new job within a month, in bad times, never more than six months.

The industry seems to be holding it's breath. I hope after the election is over and war has started the uncertainty will be over and businesses will have a better idea of their future directions...

At this point, I am so disgusted with the job hunt that I am researching the possibility of going into business for myself . . . as a tailor and costumer.

I've been doing MIS-related work for six years now. I'm currently in the process of trying to transfer to our company's woodshop. Might actually learn some skills that produce something to hold and be proud of. Working with digital-virtual-whatever is too abstract and endlessly frustrating for this brain. A serious pay cut would be in the works, but at this point I don't care. Life's too short to spend it reacting to the latest, greatest releases from every software vendor on God's green earth.

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. But they keep getting to pay FICA taxes...

...But they keep getting to pay FICA taxes...

But they keep getting to pay FICA taxes...

ain't it grand

"A serious pay cut would be in the works . . ."

Maybe. Maybe not. If you decide to go into custom cabinetry, or restoration of antiques -- something for the high-end market -- you might be pleasantly surprised.

To set Scripture on its head, "The rich you have always with you." While regular working stiffs may be reduced to eating government cheese, those who make and maintain the toys of the upper class will always be in demand.

Should have gotten a doggie bag.

I worked with a lot of "computer technicians" and "IT specialists" who didn't know meat from gravy. They were just riding the boom. When the boom ended, they whined like babies because they had acquired no skills while living la dolce vita. If you make that bed, you'll have to lie in it.

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.

Tell that to all the high school and college graduates who cannot find a decent job, and to all the old white guys who got laid off. If you know so much, then tell us all, exactly, where all these jobs are. Just who is doing all this hiring? Names please.

I'm glad they specifically mentioned Wall Street in this piece, as it certainly bears little resemblance to my area. What little it does resemble is that there were once alot of jobs held by young pukes who lived it up but are now out of work or doing menial crap work.

However, it is not the older workers who are benefitting, rather, it is they who are the ones being sacrificed as hordes of former highly overpaid web junkies are now forced to work any job for any pittance of money just to avoid the dread of cancelling their cellphone service...or the horror of horrors (gasp!), actually have to move out of town to a less trendy area.

Fricking move then!! Malene Comes and her husband lives in CA - That tells you all you need to know.

That's not an option. They will do anything, ANYTHING, up to and including mass communal living, to avoid moving out to a less trendy area. Certain other things are off-limits like cellphone service, booze, drug habits for a certain bunch, BMW & Lexus car payments, beepers, eating out, just to name a few, and if it means they have to work at Best Buy or the local cineplex to keep this lifestyle, so be it.

This has resulted in certain office jobs that require a fair amount of skill and that are highly demanding, paying little more than the $10.25/hr that the local In-&-Out Burger is hiring for, due to the dearth of these folks in the job market. I'm with you, fricken' leave already, Sacramento, no worse off in the job market than here and much cheaper to live, is only 2 hrs down the road.

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