Hard Times : In This Recession, Misery Has Lots of Company . . .
For all the gloomy headlines, most Americans still have their jobs. Prices aren’t rising. Interest rates are going down.
Yet today’s economic malaise carries a new and unnerving message that is sending shivers through the work force: More than ever, we all are vulnerable.
This nasty little slump has wandered far from the factory floor and found a home in the corporate office. It is tapping middle managers on the shoulder, showing service workers the door, slashing lucrative financial jobs and flattening the ranks of retail employees.
The new, wider scope of layoffs “gives everyone else a sense of risk,” said Audrey Freedman, an economist at the Conference Board in New York. “ ‘If he can lose his job, maybe I can lose my job.’ ”
For many Americans, 1991 was the toughest economic trial in recent memory, a year in which victory in the Persian Gulf and the end of the Cold War led to the emotional letdown of recession. As 1991 slumps to a conclusion, symptoms of economic illness abound.
* At some point this year, one American worker in five will have been without a job, Freedman estimated.
* Requests for welfare hit an all-time high nationally, as growing numbers of the poor line up for emergency food, clothing and shelter.
* Business failures rocketed up 52% in the first seven months of 1991, according to the newest statistics by Dun & Bradstreet. “No region of the country and no industry has been spared,” said Reid Gearhart, an analyst with the financial data firm in New York.
* Announced corporate staff cuts (not counting General Motors’ newly disclosed reduction plans) are running at 2,600 per business day since October, according to the newsletter Workplace Trends. These cuts have sliced through many white-collar occupations and reflect a corporate cost-saving ethic expected to outlive this recession.
Make no mistake; factory jobs are being slashed too. GM’s plan to sweep away more than 50,000 blue-collar jobs is only the latest and most vivid example. But GM is also eliminating 20,000 white-collar jobs, and today’s victims are increasingly likely to carry a briefcase instead of a lunch bucket.
If the right cuts are made, American corporations--and the American economy--could emerge stronger for the shakeout, just as U.S. manufacturing emerged leaner and meaner from the agony of the late 1970s and early 1980s. But that is cold comfort to Christopher A. Lewis.
For most of the year, the 27-year-old searched without success for a corporate job in his field, human resources. Living with his parents in New Jersey, he did executive recruitment for a private agency and temporary consulting for employers.
When L.A. Gear offered him a full-time job, he was happy enough to pay his own relocation costs. But the $4,000 proved a disastrous investment.
“I worked for two weeks, then they told me they were eliminating the position,” he said. “I’m praying I can get a new job by the end of January--because by that point, my savings are gone.”
Such tales, widely reported in the media, are spreading horror through the work force. Everyone, it seems, knows someone who lost a job or had their hours cut. The term “layoff,” in fact, has acquired new meaning. Once temporary, more often now it means: “You’re fired.”
Not surprisingly, surveys show that consumer confidence during 1991 tumbled to levels not seen in a decade. Dissatisfaction with the economy is rapidly corroding support for President Bush.
Yet traditional statistics don’t paint a dire picture compared to recessions of the past.
“Either the public’s perceptions are wrong or the numbers don’t capture the full extent,” said Mickey D. Levy, chief economist at CRT Government Securities in New York.
The numbers in fact suggest a mild downturn. Since the recession began in July, 1990, the U.S. economy has contracted by 0.8%. At the same stage of the 1981-82 recession, the economy had shrunk fully 3%.
The job rolls tell a similar story. On average, 8.5 million Americans have been unemployed in recent months. Yet in the 1981-82 slump, more than 10 million Americans were jobless on average. Unemployment, now 6.8%, was 10.8%. Prices and interest rates are tamer this time too.
Certain peculiarities of today’s recession help explain the public jitters.
The job losses, if less severe, are spread more widely and, in a sense, more noisily. Factory jobs, while down 4.3%, fell more than twice as fast in each of the last two slumps.
Meanwhile, jobs in finance, insurance, real estate and retail--which grew right through earlier downturns or slipped only barely--are getting the ax. Retail jobs have declined by 2.7% since July 1990, when the recession officially began.
“For three years, the industries doing the cutting haven’t been the big old Rust Belt industries,” said Dan Lacey, editor of the Workplace Trends newsletter in Cleveland. “It’s computers, aerospace, telecommunications, financial services. These, to a great extent, are the industries that were supposed to be the future of America.”
Another ominous trend: Business failures in the finance-insurance-real estate category soared 92% by mid-1991. Retail failures were up 30%, construction 65% and manufacturing 58%.
Further, the sluggishness seems to have lasted depressingly long. Corporate profits have been weak since 1989, and cost-cutting efforts have been on the rise; real estate markets in some regions have been ailing even longer.
Craig E. Thompson, 36, had a six-figure income at Security Pacific until it closed its merchant banking division early this year. Now he works “60% to 70% of the time” on financial consulting jobs.
But a permanent, full-time position remains elusive. “Everybody--if they’re not in a layoff mode, they’re in a hiring-freeze mode. There’s just no activity whatsoever,” Thompson said.
He isn’t starving. But to successful, well-paid workers who were prospering relatively recently with Southern California’s economy, the austere new world can be shocking.
“For most of my peers, this is the first time we’ve ever been faced with an economy like this,” Thompson said.
In one important way this recession is nothing new at all; as usual, the severest agonies are reserved for the poor.
At Loaves & Fishes, which provides emergency services to the needy in Southern California, the Van Nuys office recently reported an unusual leap in food requests.
“We’re not getting tons of middle-class people,” said Theresa Burks, regional coordinator of the organization, which is part of Catholic Charities of Los Angeles. “We’re getting people who were just making it by working.”
In September, 13.1 million Americans got welfare checks under Aid to Families with Dependent Children, continuing a yearlong trend of record-setting totals.
For all the attention to the middle class, “the very poorest are still being hurt the most,” said Kathy Patterson, a spokeswoman for the American Public Welfare Assn. in Washington.
Still, she note, a growing number of welfare applicants have “a mortgage, two kids and a car in the garage.”
White-Collar Blues In the past, blue-collar workers in heavy industry were the prime target of layoffs during recessions, and many of these same employees were eventually called back. But in today’s downturn, job cuts extend into a wide array of white-collar fields, as shown below, and they tend to be permanent. The following is a look at industries with the largest layoffs by quarter.