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
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
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
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
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
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
“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
“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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