Pink slips hit the white-collar set

As recently as the 1980s, terms like recession and mass layoffs typically led into phrases like Rust Belt and plant closings.

White-collar workers, whether working in private offices, cubicles, or at retail counters, had more job security than their assembly-line counterparts.

Whenever sales slowed, companies laid off batches of blue-collar workers for a month or two or longer until inventories shrunk to a reasonable level. The clean-shirt employees in the office, though often paid less than the unionized men in the plants, were sheltered from the cost-cutting.

No longer.

Today, companies ax white-collar workers as routinely as they do those in denims and overalls. And since many more Americans are employed in the service sector than in manufacturing, white-collar workers have received most of the 1.3 million layoffs announced since the beginning of the year.

"It's one of the fundamental changes that has occurred in the last decade," says John Challenger, who heads outplacement firm Challenger, Gray & Christmas in Chicago. "The white-collar workforce, to its great outrage and chagrin, has found itself subject to the same instant job loss and no-fault job loss that the blue-collar workforce has always been subject to."

The shift stems partly from changes in US work culture. The prospect of a job for life at one company has faded. In an era of job-hopping and freelancing, company loyalty to employees and worker loyalty to employers have weakened.

Another factor is management's age-old, but still controversial, practice of moving quickly on behalf of shareholders when times get tough and profits get thin. The difference now is that downsizing increasingly has to target the white-collar staff, because, as Willy Sutton once said, "that's where the money is" on today's corporate payrolls.

The trend was visible in the 1990-91 recession, but it has accelerated and has become a prominent feature of America's current economic doldrums.

A recession is not officially under way, but the high-tech and industrial sectors have faced harsh slowdowns. Those have begun to ripple out to the service companies that often ship, market, and maintain the goods those industries produce.

"The services industry, which has been a steady source of employment growth for decades, has shown no net job gain since March," Katherine Abraham, commissioner of the US Bureau of Labor Statistics, said Friday.

The temporary-help industry alone has lost 429,000 jobs in 10 months. Separately, a gauge of nonmanufacturing industry fell below 50 in July, a drop that suggests shrinkage rather than growth in that part of the economy. The National Association of Purchasing Managers announced the news Friday.

In some cases, shell-shocked recipients of pink slips have sabotaged the operations of their former companies.

While such cases are rare, layoffs are putting thousands of workers through periods of emotional and financial strain.

"It is healthy that people are more willing to change their jobs," says Louis Lavarone, who was laid off two months ago by Compaq's Internet marketing division in Houston.

But he says he would have liked to stay longer at his job and is now looking for work outside of high-tech in industrial firms that he hopes will offer stable work.

Wherever his transition leads, it is being eased somewhat by a generous severance package, including outplacement help.

He can spend days in a large Compaq office with about 50 computers, free phone service, private offices, and counselors. Compaq is giving a minimum of three months salary and 2-1/2 months of benefits.

Such severance perks reflect a softer side of the current layoff boom: Many firms, while slashing costs, want to retain the goodwill of workers they may someday hope to rehire.

Still, total US job cuts announced in July set a monthly record - 205,975, Challenger reported yesterday.

Layoffs never really stopped after the early 1990s slump, as companies continued waves of restructuring during the decade.

Amid a general boom, most of those laid off found new work quickly. Unemployment sank to new lows.

"Now, suddenly it has become harder," says Robert Reich, secretary of Labor during the Clinton administration.

Unemployment is expected to rise from today's 4.5 percent for several more months, even if an economic recovery begins.

The fact that many of those lost jobs will be white-collar is partly explained by the shift in employment into these positions.

In 1989, 18 percent of US workers were in manufacturing. By last year, it was 14 percent.

At the same time, the difference between a blue- and white-collar workers has become fuzzy. Factories have grown cleaner and more automated. Computer chips are made in something appropriately called a "clean room."

"This whole distinction between white collar and blue collar has broken down," says Lester Thurow, an economist at the Massachusetts Institute of Technology in Cambridge.

Despite their increased vulnerability to layoffs, white-collar and service workers do not yet have the same jobless rates as those on the assembly lines.

Since last October, the unemployment rate for managers and professional workers has risen from 1.7 percent to 2.2 percent in July; for technical, sales, and administrative-support workers, from 3.6 to 4 percent. But for operators, fabricators, and laborers, the jobless rate has climbed from 6.4 to 7.2 percent.

To many liberal economists, the current layoff wave signals that America's brand of capitalism places growing emphasis on quarterly earnings, leaving workers and communities out in the cold. Other economists say capitalism's ways haven't changed.

"Corporations are set up to maximize profits," says Gordon Richards, an economist at the National Association of Manufacturers.

Still, there is considerable agreement that the increased willingness of companies to lay off workers quickly has damaged employees' sense of loyalty. This leaves mixed feelings, even while American optimism remains alive and well.

"I like the change, and it being acceptable to move between jobs," says Dean Burris, a product marketing manager laid off by Yahoo! in Atlanta three months ago. "It is also stressful."

Scouring websites like Monster.com and Headhunter.net for a post he hopes will be secure, he complains: "The job market is terrible."