WHEN the nation's economy slid into a recession, Boston painter Jane Smaldone went back to part-time waitressing, and Roger Essley, a painter living in Alexandria, Va., decided to try his hand at commercial illustration. David Dunlop, a landscape painter in Norwalk, Conn., gave up New England scenes for images of the land in Texas and California, where the recession and the concomitant downturn in the art market have not yet taken such a hold. Many people whose hopes for full-time careers as artists were buoyed by the high prices and large demand for art by private collectors and corporations during the 1980s have found themselves hunting around for work and money. A number of art galleries have closed, and the owner of one gallery on Manhattan's fashionable 57th Street informed his artists that ``they all better get teaching jobs.'' In addition, one of the factors in the recession - higher oil costs - has led to higher prices for art materials of between 10 and 15 percent over the past six months. Petroleum is used in acrylic paints, organic pigments, wetting agents, and solvents. Buyers disappear The largest problem for artists, however, is the drop in buying. This most greatly affects lesser-known artists whose work is less expensive than the more established creators but is also more risky as an investment potential. ``Collectors of lesser-known artists have less income to spend on art,'' says Nina Nielsen, a Boston art dealer. ``They also may be losing their jobs or just find that they have to be more careful how they spend their money. That group of collectors has been wiped out, and there is no one else to take up the slack.'' Other dealers complain about the decline in corporate purchases of art. ``Half of our business is selling to corporations, and that has dropped out,'' says Fran Kaufman, director of the Stephen Rosenberg Gallery in New York. Companies would find it quite awkward, these dealers say, to be purchasing artwork even as they lay off some employees. The worst scenario for artists is their galleries going out of business, as that eliminates the main venues for bringing their artwork before the public. The result has been a search for ways to bring back as many previous buyers as possible. Artists who frequently receive public sculpture commissions from corporations are offering to create large-scale pieces for prices that in the past would have only been paid for a much smaller work. Other artists and dealers are willing to cut their prices or take larger discounts off the stated price for their work, sometimes as much as one-third off. Galleries cut prices ``We're certainly offering more discounts in the past year than before,'' says Joy Horwick, a Chicago art dealer. ``We're even contemplating advertising the discounts.'' Some dealers are also allowing collectors to buy on time. As well, some are advising their artists to create works that aren't as large - and expensive. Other dealers are making even less pretense of keeping prices up. The Barbara Fendrick Gallery in New York, for instance, has recently begun exhibiting photographs, which is a new and lower-priced area of art buying. Many artists are responding to the changed art market by looking to diversify their dealer representation. Simon Gaon and Hugh Kepets, both painters in New York, for instance, have traveled to Europe a number of times in the past year to find dealers and buyers. ``I went to Germany, where the taste for my kind of expressionistic work is more accepted than in the US right now,'' Mr. Gaon says. ``You just can't stand still and hope for something to change.'' Mr. Dunlop, meanwhile, went west. ``Personally, I love to paint winter scenes, the snow on the ground,'' he says, ``but you can't sell winter paintings in the South, Texas, or California, and you can't sell them at yacht clubs. There's just no interest in winter. You want to be able to paint what you love, but you have to think about making a living at the same time.'' Teaching at art schools or universities has been the old standby for many artists, although these institutions have made cutbacks, too. For every studio art teaching position available in 1990, there were 65 applicants, estimates Susan Ball, director of the College Art Association. The ratio is likely to increase this year as open positions are down 20 percent. -PATHNAME- /usr/local/etc/httpd/plweb/DBGROUPS/paper/database/tape/91/mar/week10/fpaint.