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Tom Humanek is one victim--and an example of why the unemployment figure isn't higher. In October, he shut his trade consulting practice in Fort Myers, Fla., because business dried up after Sept. 11. An accountant, he is currently temping for Robert Half International, assigned at the moment to a property-management company. "I was making $100 an hour," he says of his old practice. "I make 15% of that now." Humanek, 54, was expecting a lean Christmas.
Charles Vipperman, 36, lost his job in a way that has become increasingly common. A financial analyst with Sunglass Hut in Coral Gables, Fla., he was let go after the company was bought by competitor Luxottica, which owns LensCrafters of Cincinnati, Ohio. "We arrived at work, and there was a message on our answering machines to go to a hotel," he recalls. "The room you were directed to determined whether you were invited to stay."
One factor working against Vipperman was that he was stationed so far from the new company headquarters in Ohio. "It's much easier to lay off people you don't know and never see than the ones you have looked in the eye," says John Challenger, ceo of outplacement firm Challenger, Gray & Christmas.
He attributes the record layoffs this year mainly to Sept. 11 and the sudden recession--and also to 20 years of merger mania that has made companies far bigger and more impersonal. One result: "People are now fully donning the free-agent mantle," Challenger says.
Employees no longer have a company; they just have a function. An accountant or human resources professional can do just as well at Sears as at Cisco, which explains why 41% of people who switched employers last quarter also switched industries.
Many without jobs don't qualify for unemployment benefits
Sean Bassett, 27, earned a great living as a network administrator for Silicon Valley's biggest companies. He was on track to make $150,000 a year before the tech meltdown. The only job Bassett has had since April is as a bartender. As an independent contractor, he had been part of the fastest-growing segment of the labor force. Yet it is one whose workers often don't qualify for unemployment benefits. Only 39% of unemployed Americans looking for jobs collect unemployment benefits--down from 50% in 1975, says the Labor Department.
Roughly 20% of the labor force is ineligible, including temps, part-timers, subcontractors and the self-employed. Even some full-time workers are disqualified if they didn't work enough months at their last job before losing it. In 30 states, you don't qualify if you are willing to accept only part-time work, a restriction plainly out of sync with today's flexible work force.
The 401(k) that made you feel rich can make you feel poor
In the 1990s, 401(k) plans replaced traditional pensions for many workers and became the main savings vehicle for many more. Underpinning the 401(k) was a guaranteed return for most participants in the form of company-contributed shares of stock. As the bull market roared, 401(k) assets soared, and almost no one bothered to check what was in the account. An ever increasing portion, naturally, was employer stock.