Layoffs, Foreclosures Impact Few in New Economy
During the week ending 16 February
2007 layoffs were announced at DaimlerChrysler, Boston Scientific, HB
Performance Systems Inc., Nokia, IBM, Viacom, Qwest, Tecumseh Products,
Gateway, Alcatel-Lucent, and others as businesses strike a response to
lower profits and reach towards higher returns through cost-cutting
measures. For the fourth quarter of 2006 layoffs impacted the Chicago area more so than other metropolitan areas with job losses affecting some 15,000 professionals, through 91 mass layoffs. In southern California during the same time frame there were 71 mass layoffs affecting almost 10,500 workers.
The Entrepreneur’s Source of Southbury, CT, found that corporate layoff is simply part of the new economy in the United States. The group found that the only way to avoid losing one's job is to manage a career through self-employment or contracting and other alternative career options. The net result could mean higher pay, but the worker manages all benefits and taxes on his own.
“We’re at a tipping point in the American job economy,” said Terry Powell, founder and CEO of The Entrepreneur’s Source. “The traditional job market no longer offers the security individuals and families need to live well,” he added.
Birkman International of Houston, TX, called recent layoffs at Ford Motor Company "symptomatic of a shift in the United States' manufacturing sector, where automation, outsourcing and globalization are forcing American workers to reevaluate their skills and search for new niches, using innovative tools such as the Birkman personality assessment to launch a new career."
Such a shift is particularly problematic for those professionals 10 to 15 years away from traditional retirement. The result is that 50-year olds either hang-up their careers all together or return to college to compete with 20-and-30-year-old first time college entrants.
"But really, a layoff can be an opportunity to reevaluate what is important to them as far as well-being, and may be the catalyst that they need to start a more fulfilling career," said Sharon Birkman-Fink, president and CEO of Birkman - developers of the Birkman Method.
According to Birkman, people may have skills they have never even considered using for at work, skills which may have lain dormant during a lengthy tenure at a job where workers may have lacked the ability to advance in responsibility and leadership.
The Birkman Method offers a self-assessment exam on-line, which take about 45 minutes to complete. The respondents answer 125 True/False questions about self and 125 True/False questions about most people. Additionally, the test contains 48 multiple-choice questions that determine interests and job preference.
Layoff in the new economy however threatens overall job security and financial freedom (that never existed before,) according to Entrepreneur’s Source. Downsizing, lengthy layoffs, the elimination of benefits, enormous corporate bankruptcies, colossal consumer debt and social security insolvency all add up to another issue, which just become part of the new reality of life in the United States: Home foreclosures.
Those professionals who purchased homes prior to the real estate boom are considered safe, only because mortgage payments are manageable. However, for those couples who purchased homes at the going rates in 2004-2006, they are saddled with $350,000 or more in debt, to which job loss is an immediate catastrophe for their financial stability.
Home foreclosure hit thousands of new professionals in the Midwest during January. Fueled by job cuts and layoffs in major manufacturing metropolitan areas, the region reported 18,207 foreclosure filings in January, with Illinois, Ohio, and Michigan, leading the way, according to ForeclosureS.com, a California-based real estate investment advisory firm.
Cook County, IL, (which includes Chicago, accounted for well more than half of that state’s 5,849 foreclosure filings. Lucas County, OH, which includes Toledo and Bowling Green, accounted for nearly half that state’s 3,898 filings. And in Michigan where the auto industry is king, Wayne County which includes Detroit, along with its wealthy northern suburb county, Oakland, accounted for more than half of all that state’s 3,484 foreclosure filings for the month.
Nationwide, 103,075 filings were reported in January, which was on top of the nearly one million (983,290) filings reported in 2006, according to ForeclosureS.com.
“The numbers sound bleak. But there is a light at the end of the tunnel,” said Alexis McGee, president of ForeclosureS.com.
While the real estate boom is over for now, McGee said, "We’re just not through yet with the after effects of all the people who used creative financing to buy homes beyond their means. Now payments on those creative mortgages have ballooned; home prices in the region have stagnated and even dropped, and homeowners’ equity has eroded.
"Combine that with major auto industry cutbacks, and many homeowners are left with few options to foreclosure.”
Despite the numbers of layoffs and foreclosures in the United States, analysts concluded that opportunities remain positive for those professionals who retrain, and thus secure a new job (although often times the new job means a lower salary,) and that younger generation of workers who enter higher-paying jobs (financial markets) would likely take-up the slack in the foreclosure market to keep real estate prices stable.
“Overall nationally, though, the economic news is good,” adds McGee. “Interest rates remain low. Housing inventories are dropping, and new home starts are slowing."
Salary is key to success, with the Roper Institute placing the bar of wage earnings (compared with affordable cost of living and home ownership) of at least $150,000 in the United States.
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