How Safe Is Your Job?

When Sara Proman arrived at her cubicle at a consulting firm in Boston on a recent morning, she received an ominous voice mail. A partner wanted to meet with her. The agenda? His assistant wouldn't say. So Proman, a 24-year-old research consultant who joined the firm 17 months ago, began working the office grapevine. A supervisor confided that she'd be one of 400 staffers terminated in what a spokeswoman later termed "a periodic rebalancing of the skill sets of our work force." Proman, a self-assured, chatty Wellesley College grad, was hurt but not devastated. She sat stoically while a partner broke the news. Within two hours her AmEx corporate card had been confiscated and her phone disconnected, and she'd been escorted from the building.

It's a grim scene playing out in too many offices as America's smooth-running economic engine suddenly sputters. Pink-slip parties are already old hat for dot-comers, whose jobs have been vaporizing for months. Now invitations are spreading across the Old Economy. Last week a new list of employers--AOL, JCPenney, Lucent Technologies and Sara Lee--announced massive cutbacks, which may lift January's layoff tally ahead of December's, which was already the highest in eight years. Half of all Americans now expect unemployment to rise in 2001, according to the University of Michigan consumer survey, double the number in November. And when the new consumer-confidence numbers come out this week, they'll likely show the sharpest two-month decline since the last recession. A remarkably frank Alan Greenspan worried to Congress last week that in the echo chamber of our wired economy, this drumbeat of bad news could discourage spending, undermining the Fed's efforts to finesse a soft landing. In lunchrooms and on e-mail, workers who once bragged about fat job offers are asking anxious questions. How safe is my job? Could I be next? Says Mark Oldman, cofounder of Vault.com, a job-research site where employees trade gossip: "There's almost a layoff panic."

Grizzled veterans who've ridden over the crest of past business cycles find this unsurprising. Booms always end, and workers lose their jobs. But there are numerous signs that the new shakeout signals a more dramatic shift in employment trends. Witness the stunning speed with which companies are pre-emptively jettisoning workers, before it's even clear the slowdown will be that long or deep. Another new twist: as so many Internet start-ups implode simultaneously, a younger generation accustomed to employers' begging for their services is catching its first glimpse of a normal job market, where not every worker is pursued like Alex Rodriguez. The final striking feature is just how matter-of-factly--even happily--many elite workers are taking their "reduction in force" notices. That's partly because they've become resolutely optimistic after growing up in a strong job market. It's also because after years of near-continuous downsizings (many due to mergers), many workers have come to accept the risk of layoff as the price of admission to the New Economy. "It's almost a rite of passage," says Dale Klamfoth, a VP at the outplacement firm Drake Beam Morin. "If you haven't lost at least one job in your career today, you haven't taken enough risk."

Let's be clear: despite all the dour headlines, today's job market remains remarkably strong. Unemployment still hovers near a 30-year low, and recruiters say most laid-off workers are finding new jobs quickly. Even with dot-coms evaporating daily, people with computer know-how remain in high demand. And while some businesses, like retailers and auto-parts suppliers, are cutting jobs, other sectors such as health care, insurance and education remain desperate for workers. And despite all the scary talk about a downturn, most experts expect sharp interest-rate cuts to cure the anemic economy before it suffers two quarters of contraction, the classic definition of a recession. Hardly anyone expects the jobless rate to rise much above 5 percent this year, far below normal recessionary levels.

Still, even that 1 percent rise in the jobless rate would sting, translating into more than 1 million new job hunters pounding the pavement. Says economist Allen Sinai of Primark Decision Economics: "Five percent is a low rate historically, but tell that to the unemployed--to them it's going to feel just as bad as it's always felt." Jackie Chase is painfully aware of his point. The 33-year-old single mom earned $35,000 a year laboring at Cleveland's LTV Steel plant until her November layoff. On a recent morning she sat at her kitchen table, trying to conjure a way to buy food after using her $261 weekly unemployment check for rent and car payments. She's agonizing over whether to take a sub-$10-an-hour job, the only kind she can find. Her family is so distraught that daughter Melody, 8, took $10 of her Christmas money, put it in an envelope and crayoned a note to LTV execs suggesting they use the money to rehire workers. "When times are good, you think they'll stay good forever," Chase says, staring at bills. "Then suddenly you're one of those people they're talking about on the news."

As sad as it is, there's a timeless element to her plight. Blue-collar workers are always hit hardest when business slows, says Princeton economist Henry Farber. What's changed in the last decade is how high up the job ladder that danger now extends. As the economy began its slow recovery from the 1991 recession, companies accelerated the "downsizing" of middle managers, who became expendable as computers reduced paper-pushing. During the mid-1990s the trend garnered tons of attention, mostly because the media elite had never seen so many peers suffer joblessness. Since then, white-collar layoffs have been a year-in, year-out routine, and as we face the first slowdown in a decade, these workers face bigger risks of job loss than ever before.

The upside is that white-collar folks traditionally find new jobs more quickly, and with less earnings decline, than lesser-skilled workers. Until last month David Leone, 53, was a purchasing agent at air-bag manufacturer TRW. Then his boss led him to HR for a little chat. "All I remember hearing was, 'How many boxes do you need?' " says Leone, who packed up his desk and was home by lunchtime. But the good news is that even in Detroit, hit hard by slowing auto sales, Leone could start work at a new job next week.

Rosy stories like his abound in part because so many layoffs are coming so early in the slowdown. In the past many companies waited until the depth of a recession to cut staff, which left victims job hunting when unemployment was high and positions scarce. During the 1991 recession, for example, General Motors CEO Robert Stemple waited until GM was submerged by red ink before cutting 74,000 jobs; as a result, GM's board axed Stemple, too. Today more companies cut jobs pre-emptively. So last December, after just two months of subpar sales, GM announced plans to cut 15,000 workers--despite having its second most-profitable year in history. This time, says GM vice chairman Harry Pearce: "We want to get ahead of the curve and anticipate the downturn instead of being surprised by it."

That swiftness has several causes. Blame some of it on new technology, which gives managers better information faster. "Firms know exactly what their inventories and sales are moment by moment, so they'll act faster to lay off workers," says economist Marvin Kosters of the American Enterprise Institute. Outplacement expert John Challenger calls that practice "just-in-time employment." Wall Street gets some of the blame for demanding that bosses take quick action when earnings fall short (although, contrary to populist rhetoric, the average company's stock price doesn't jump on layoff news). Blame another part on the public's growing acceptance of job cuts as an everyday management tool. CEOs used to face scorn for cutting jobs; today many Americans own stock, watch CNBC and idolize CEOs even as they downsize. "The sense of vilification isn't there anymore," says Jeffrey Sonnenfeld of the Chief Executive Leadership Institute.

Still, there's risk in putting workers on the chopping block so soon. Wasn't it only yesterday that desperate companies were doling out back massages and BMWs to attract and retain employees? If the current slowdown proves short-lived, companies laying off today could end up spending more to hire tomorrow. Not to worry, bosses say. Now that the old seniority-driven practice of "last hired, first fired" has died off, companies say they're handling layoffs with new sophistication. Today managers seek to carve out deadwood while holding on to MVPs. "The good performers are not at risk," says GM's Pearce. Outplacement pros refer to this Darwinian downsizing as "deselection." Yet despite managers' alleged growing skill in choosing layoff victims, some could still use some training in communications. Consider Curt Christensen's last day at EmployeeService.com. "I have some good news and some bad news," he says a boss told him. "Which do you want to hear first?" Christensen chose the good news. "You'll be doing a lot of skiing this winter," the boss said.

Even when executed more deftly than that, many big-company layoffs will backfire. The reason: workers who keep their jobs are often overworked and bitter. At money-losing DaimlerChrysler, where rumors began flying in December that as many as 20,000 layoffs may come in February, employees have been paralyzed. "People say 'Why do I care? I'll probably get fired in two months anyway'," says one middle manager. (DaimlerChrysler declined to comment on layoff rumors.) Even those likely to survive the purge are job hunting to avoid insane postlayoff workloads. "We're already running our asses off," says this boss, who's urged her department to send out resumes. Experts hear similar complaints across the country. "Survivors are working harder--that's feeding the whole work frenzy," says former Labor secretary Robert Reich.

Even when companies don't telegraph upcoming layoffs, today many employees are savvy enough to see them coming. In a survey by Lee Hecht Harrison, 78 percent of layoff victims say they anticipated cutbacks. At Internet firms decimated by Nasdaq's plummet, only idiots wouldn't worry. When Hunter Boyle, a Web worker at the media company The Industry Standard, strolled to his office last month, he spotted a trail of colleagues' business cards on the street. He recognized it as debris from an impromptu ticker-tape parade after their firing. "As I got closer to the building, I was well prepared for my talk," says Boyle, who was swiftly sacked. One result of this newfound awareness of layoff risks is that large swaths of the work force are becoming networked and resume-ready in what pros call a never-ending "passive job hunt." At Monster.com, an online job board, CEO Jeff Taylor expects to have 10 million resumes on file by March, many of them posted by folks who have jobs but know it's smart business to keep a baited hook in the water.

When the bad news comes, some workers put on a remarkably happy face. David Weiner, a techie laid off by Merrill Lynch last July, paid $15,000 to attend trade school and learn to install the newest Cisco routers. "I'm probably entering my most productive years, I've got good credentials and I'm ready to go," he enthuses. When Roberta Peterman, senior VP at ad agency FCB Worldwide, became one of 500 workers laid off after the firm's biggest account jumped ship, she declined a great job offer from a rival firm. "When else will I have an opportunity like this?" asks Peterman, 47, whose savings and husband's solid income will let her spend time contemplating a career in landscape design. Pamela Gross, who's been downsized three times in her 17-year Wall Street career, gets anxious every time it happens, as it did last fall after her employer, DLJ, merged with CS First Boston. But she usually networks her way to multiple offers; now she's at Banc of America Securities. "Wall Street is high risk, high reward--you're always planning for these down times," she says. Even some college grads who've lost their first jobs boast of a silver lining. Michelle Tsai, 22, laid off from Vault.com last month, admits she's a little anxious because--as a non-U.S. citizen--she must find an employer willing to sponsor her for a work visa. But mostly she sees an opportunity to find a great new job. "There's a sense of freedom--I can start all over again," she says.

Diehard optimism isn't universal. Victor Ozols, laid off as an analyst at Xceed, a Web consulting firm, sees nothing to be happy about: he's borrowing from his parents to stay afloat. Many recent downsizees, especially former dot-comers, say the experience will make them do more due diligence as they job hunt. In interviews, "one of my questions is, 'You might not be laying off now, but will you be in six months?' " says Richard Brodsky, laid off in November. And some still feel ashamed by the experience. After losing his market-research sales job in August, Rich Deeter, 52, spent three months dreading a simple cocktail-party question: "What do you do for a living?" "It takes a hell of a lot to say 'I'm between jobs'," Deeter says. "People look at you funny." Eventually Deeter landed at eFunds Corp., a financial-services firm. "This changed my life," he says. "Until you're in a position to resell yourself, you take everything for granted."

The layoffs are also a wake-up call to workers who've grown a bit too comfy with the notion that every employer is dying to hire them. "One college student actually put his feet up on the desk during an interview," says William T. Wilson, senior economist at Ernst & Young. Students at the University of Michigan business school already sense "a more sobering landscape," says Al Cotrone, who oversees M.B.A. placement. Even a slight decline in demand for workers will mean a new equilibrium of less lavish pay packages. But it may bring other shifts, too. "There's worry now we're going to return to the dark old days where it's an employers' ball game, where the quality of life is diminished," says Oldman of Vault.com. If those fears prove valid, say goodbye to perks like free latte, casual dress, bring-your-iguana-to-work and rampant telecommuting.

If the slowdown lingers, some regions will fare worse than others. The job market remains unusually tight in some cities, including Los Angeles, New York, Chicago and Houston. Fed research highlights Philadelphia as the hardest-hit region so far. But as layoffs spread, smaller company towns will suffer more. In 1994 Harvard, Ill., celebrated Motorola's decision to build a $100 million cell-phone plant on the town's north side. This month the company announced it will lay off half the plant's 5,000 workers by July. "There's some bitterness," says Robb Hogan, bartender at Windy's Lounge, a nearby hangout. Others are sanguine. "Motorola was supposed to make us rich, and for five years it did," says Greg Morris, 27, a machine operator. "Now me and 2,500 other people have to figure out where we're going to go." Even after the cuts, the town's fortunes will still ride largely on Motorola, which will remain the county's biggest employer.

For now, layoff victims like Sara Proman, the downsized consultant, still have much to be thankful for. Out of work since Jan. 5, she's spent more time cooking and at the gym. Last week, as her four weeks of severance pay dwindled, she walked by her old office in downtown Boston, her backpack filled with job-hunting books. Upon reaching her new office--cubicle 629 at Right Management, an outplacement center--she looked over her resume, then surfed the Internet, discovering a company that's hiring health-care consultants. "That would be cool," she mused, reading the job description. Whether her tale has a happy ending will depend partly on luck, partly on skill and partly on whether the Fed's maestro finds a way to get this economy back to the right tempo.