Whitecollar unemployment...

[Meridae'n]

As a rank white-collar worker myself, i found this article interesting. He is obviously talking about America, but it rings true in other Western economies as well...

Professionals have never had a tougher time finding a job. It's not just the economy; the rules of the game are changing.

FORTUNE
Monday, June 9, 2003
By Nelson D. Schwartz

As far as Brian Hill's four kids are concerned, nothing has really changed. Dad still dons a suit and tie every morning and catches the 7:45 a.m. train to downtown Chicago, spends the day at a desk by a window on the 11th floor, and returns home to the leafy suburb of Winnetka in time for dinner and maybe a game of catch in the backyard. But the 40-year-old engineering exec has been out of work for three months now. His last job was with a small energy-consulting firm. Now his office is an outplacement center where he searches for work along with some 30 other professionals. Hill is relatively lucky--down the hall, 58-year-old Mike Thompson has been looking for more than a year, often going months without landing even an interview. Hill is out there making the rounds, and seems enthusiastic when potential employers tell him that his resume is great and that he "shouldn't be on the street for long." His attitude is still good, and as Hill will tell you, that's more important than fancy degrees or work experience. "Getting up every morning and going downtown helps me keep focused," says Hill after another day of working the phones and searching the Net. "My kids think I'm still working. My oldest knows I'm looking for a job, but not that I'm out of work."

Finding a job has always been hard, of course, even for someone like Hill, who holds a bachelor's in engineering as well as an MBA. But whether you're a newly minted college grad or a seasoned exec with Fortune 500 experience, the job market now is the harshest it's been in decades--bleaker than the "white-collar recession" of the early 1990s and by many counts even more severe than the downturn of the early 1980s. "I've been in this business for over 20 years, and it's the worst I've ever seen," says David Hoffmann, CEO of DHR International, a Chicago-based recruiting firm. "Nothing even comes close to this."

At first glance, the pain seems hard to understand. After all, at 6.1%, the unemployment rate is still well below the 7.4% it averaged in the 1980s and early '90s. The stock market has gained 13% since January, while corporate profits are up 15% from last year's levels. And for all the talk of double dips and deflation, the economy is growing--by 1.9% in the first quarter, according to just-released government numbers.

So what's keeping people like Hill and Thompson from finding jobs? The rudderless recovery and economic uncertainty deserve much of the blame. But it's bigger than that. Increasingly, supereducated and highly paid workers are finding themselves traveling the same road their blue-collar peers took in the late '80s. Then, hardhats in places like Flint, Mich., and Pittsburgh were suffering from the triple threat of computerization, tech-led productivity gains, and the relocation of their jobs to offshore sites. Machines--or low-wage foreigners--could just as easily do their work.

The white-collar crowd was concerned, but they knew that those three forces would also help get the American economy humming. And they did. Now that trust has come back to haunt them. Technology has allowed companies to handle rising sales without adding manpower. Gains in productivity mean one white-collar worker can do the work that would have taken two or three of his peers to do ten years ago. All that has led to slower wage growth. Back in 2000 wages for professional and technical workers were growing by nearly 5% annually--today they're rising by less than 2% a year.

The scariest blue-collar parallel, however, is only just beginning to be felt in the white-collar world: overseas competition. Like automakers that moved production from Michigan to Mexico or textile firms that abandoned the Southeast for the Far East, service firms are now shifting jobs to cheaper locales like India and the Philippines. It's not just call centers anymore. Indian radiologists now analyze CT scans and chest X-rays for American patients in an office park in Bangalore, not far from where Ernst & Young has 200 accountants processing U.S. tax returns. E&Y's tax prep center in India is only 18 months old, but the company already has plans to double its size. Corporate America is quickly learning that a cubicle can be replicated overseas as easily as a shop floor can.

None of this bodes well for the jobless white-collar workers who are hoping that a more robust recovery will bring the next paycheck. The numbers of those who are searching are staggering. Of the nine million Americans out of a job, 17.4% are managers or specialty workers, according to a study of Labor Department data by Hofstra University economist Irwin Kellner. During the 1990-91 recession only 10% of that group was unemployed. Even after the much deeper recession of the early 1980s, just under 8% of unemployed workers were white collar. Sure, there are more white-collar workers today, but joblessness among them has risen faster than their share of the overall job market.

"White-collar workers and college graduates are in a state of shock," says Kellner. "It appears these job losses are permanent. They're not necessarily coming back when the economy does."

At the bleeding edge of the blue-collarization trend are techies--not just the twentysomethings who jumped on dot-com jobs either, but people like Jim Klinck, a 52-year-old IT exec out of West Windsor, N.J. Klinck joined MetLife straight out of college, and by the late 1990s was responsible for software application development throughout the company, reporting directly to the CIO. Once upon a time, working for an insurance company was about as secure a white-collar job as you could find. Klinck never expected to go anywhere else. But in the fall of 2001, after spending 27 years at the insurance giant, Klinck was laid off along with hundreds of other MetLifers.

Klinck earned more than $200,000 a year at MetLife, managed more than 1,000 people, and knows languages and programs ranging from Fortran to PeopleSoft, but cold-calling for jobs has been--well, cold. "I thought it would take a while, but I didn't think it would take this long," says Klinck, who looks for work from his home. So far he's been consulting to keep busy and landing about two interviews a month. "If I've sent people my stuff and haven't heard back in a week and a half, I call them," he says. "Honestly, it's not something I like to do, but you learn how to do it. It's just about kick-starting yourself."

As someone who has been out of work for more than six months, Klinck has earned the title of "long-term unemployed" according to the Labor Department classification. Traditionally a college degree or senior-executive experience protected people from the threat of years of unemployment. Not in this economy, says Jeffrey Wenger, a labor economist with the liberal Economic Policy Institute (EPI). An analysis of Labor Department data by EPI found that in 2002, 18.1% of the long-term unemployed had college degrees, up from 14% in 2000. Similarly, 20.1% were from the executive, professional, and managerial category, compared with 14.2% in 2000. "Not only are college-educated workers becoming unemployed more often, but they're staying unemployed longer," says Wenger. "I think they're surprised at how the economy can mistreat you."

Business school students aren't just studying in Starbucks; they're worried they'll end up working there. At the University of Chicago Graduate School of Business, 96% of grads in 2000 had an offer when they collected their sheepskin. Only 72% of last year's grads were as lucky--and this year isn't shaping up any better. Even at Harvard the percentage of grads without job offers has gone from 3% in 2000 to 13% now. For schools further down the food chain, almost half the class will graduate without even one offer.

As much as that terrifies me, I think the article is being a little alarmist in its conclusions. Everytime the US economy isn't Clintonesque it is the 'end of the system'. Its interesting he points to the unemployment shift that blue collar workers suffered in the 80s with rellocating businesses, but doesn't point out that eventually those people obviously found work or the US wouldn't have had fractional unemployment in the 90s. Why does he believe the same won't happen for white collar workers when they readjust to the new economic reality that the jobs you did for the last 10 years may not be available for the next?

I must admit that i don't know that much about the US economy, which is why i decided to post this.

What's your take on the emerging rellocation of service companies to overseas countries, where ample talent can be bought at bargain basement prices? I see it happening here in Australia and it disgusts me, but why should i complain? We've had it so good for so long, do we really have the right to complain because competition is globalising?

[Sparhawk]

Just remember this when you cast your ballots, white-collar professionals.

[Liquor Dealer]

The thing I got most from this is people who work in technology are always coming around saying if you buy this new technology from us you can eliminate a lot of labor costs. Who has been the reason for unemployment - should we blame improved technology? It would seem for the thread that they are putting themselves out of work too.

[smooth]

@Meridae'n,

Unemployment figures over here only count people actively searching for work.

If someone gives up, goes to school, etc. then they aren't counted in that figure.

A certain portion of those blue collar workers joined the working poor, the burn-outs on their couches, or went to a junior college to obtain a certificate or trade degree as opposed to finally finding work.

[Scipio]

Part of it is that way more people have college degrees now than did in the 80s. Part of it is that in the aftermath of one of the strongest economies in human history, it's going to seem doubly bad. Part of it is, this recession really is pretty bad. It's lasted a long while, and it's going to be many months before we recover.

However, althought the point of the article is that it's somehow different this time, the economy of today is not the economy of 1991, and the conclusions should be taken with a grain of salt.

[Sensei]

I guess my job prospects when I graduate with a degree next year aren't so rosy, huh?

[Meridae'n]

I wouldn't be worried Sensei, my guess is he didn't stop looking until he found figures that agreed with what he was trying to say...

[Sun Tzu]

Whats is your degree going to be in Sensei (just curious)

I'll be receiving mine as well.

[4thTimeLucky]

HoHo. So its all fine when the blue-collars are laid off. That's just structural adjustment, taking up the slack, fine-tuning the economy, stream-lining the company, re-engineering the firm. But God forbid that the white-collars should go through the same thing!

The lesson for the new graduates of this world: white-collar is no longer top of the food chain. If you want to be seriously safe and seriously well paid then you'll have to make yourself a gold-collar worker. Otherwise get used to the fact that the management fads of the 70s, 80s and 90s have cut the bond of loyalty between company and employee. We are all now disposable.

[hlprmnky]

Originally posted by 4thTimeLucky
HoHo. So its all fine when the blue-collars are laid off. That's just structural adjustment, taking up the slack, fine-tuning the economy, stream-lining the company, re-engineering the firm. But God forbid that the white-collars should go through the same thing!

The lesson for the new graduates of this world: white-collar is no longer top of the food chain. If you want to be seriously safe and seriously well paid then you'll have to make yourself a gold-collar worker. Otherwise get used to the fact that the management fads of the 70s, 80s and 90s have cut the bond of loyalty between company and employee. We are all now disposable.

What's a 'gold-collar worker'? Mistress/kept man of a CIO/CTO/CEO?