Professionals Join Ranks Of Nation's Unemployed
BARRING any sudden rebound in the giant United States economy, the unemployment rate is expected to continue its upward course, perhaps reaching 7 percent of the civilian labor force by summer, job experts say. The next federal unemployment numbers will be released in early April, covering March. In February, the civilian unemployment rate shot up to the highest level in four years - 6.5 percent, from 6.2 percent in January. Most of the 8.1 million Americans now out of work are from construction and manufacturing. But something else is happening: Thousands of professionals, many commanding salaries of up to $100,000 or more, are being handed pink slips, and not just because of the current recession.
Moreover, there is growing concern that many of these workers - who live in suburban communities, pay big tax bills, and own expensive homes with equally huge mortgages - will find it difficult landing similar jobs with identical pay.
"We're getting up to 20 professionals a week who need some type of help," says Richard von Stamwitz, manager of the New Jersey Division of Employment and Training Services office in New Brunswick, N.J. "They are scientists, engineers, teachers, lawyers, social workers, state government people - professionals from every walk of life." About 40 percent of the people coming into his office now are professionals, up from around 15 percent a year ago, he says.
"This is definitely more of a white-collar recession, unlike, say, the recession of 1981-1982, which was more across-the-board in terms of job losses," involving manufacturing and blue-collar workers, says William Morin, chairman and chief executive officer of Drake Beam Morin, the largest outplacement firm in the US. Nor, he says, is that surprising.
"Middle management has been under attack throughout the last decade," a result of structural changes in the economy. Many executives lost jobs because of the merger and acquisition mania of the late 1980s. But also, he says, service industries such as Wall Street brokerage houses, banks, and savings-and-loan associations have been facing change, often linked to federal deregulation and global competition.
"Almost all economists agree that structural reorganization will continue in such professions as finance and banking," says Karl Zandi, a banking expert with Regional Financial Associates Inc. a consulting firm in West Chester, Pa. In commercial banking, he says, many institutions make profits by computerizing operational staffs, which requires layoffs.
Large retail chains have also been consolidating.
The unemployed find it harder to land another job. During the 1980s, it took up to five months for the average worker to get a new job; that wait is up to almost seven months, Mr. Morin, says. For many middle-management professionals, it is longer.
Moreover, official statistics don't measure the full toll in lost jobs. If dropouts in the labor force were counted in - individuals who have given up looking for work - the current unemployment rate would be 7 percent, not 6.5 percent, notes S. Jay Levy, an economist who writes a newsletter for the Jerome Levy Economics Institute of Bard College, Annandale-on-Hudson, N.Y. "Unfortunately, we think the current [jobless] numbers will get far worse," says Mr. Levy. He believes the recession will not end un til sometime toward the end of the year, not midyear, which is the consensus among economists.
Indeed, recent statistics present the picture of an economy still hesitating between downturn and recovery: Detroit announced this week that sales of cars and trucks made in North America fell 10.9 percent in mid-March, suggesting that a recovery in car sales is still down the road; a slight recovery in housing, however, may be under way. In February, existing-home sales climbed 7.9 percent over January, to an annual rate of 3.1 million units.
New England, the mid-Atlantic states, and to a lesser extent California have been hit particularly hard by this recession, along with such industries as construction and manufacturing, says David Rolley, an economist with DRI-McGraw Hill, an economic consulting firm in Lexington, Mass.
"Unemployment will probably get up to 7 percent and even slightly over that level before it drops," he says.
DRI sees the jobless rate moving to a quarterly average of 6.9 percent for the three-month period ending June 30, and then "getting stuck there for the rest of the year."
It anticipates the rate will average around 6.4 percent during 1992, and then drop back to about 5.9 percent in 1993, says Mr. Rolley.
"We'll see a lot of professionals let go" during the 1990s. Although they will find new jobs, professionals will learn that "you can't look to your employer for long-term income security," he adds.