Even though jobs are looking up this year, it's still not a buyers' market. As thousands of formerly unemployed workers dust off their ties and Oxfords and head back to the office, what are they finding? Is their paycheck better or worse? How have their benefits changed? Are their hours longer? Shorter? More flexible?
True, the unemployment rate is slowly ticking down--from 9 percent in October 2011 to 8.5 percent in December. Nonfarm payroll employment rose by 200,000 in December, and hiring was up in retail, hospitality, professional services and health care.
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Yet, for the majority of U.S. workers, average wages have remained stagnant for decades, and median household income dipped during the recession, declining 6.4 percent between 2007 and 2010. According to a study released in December by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who were let go during the recession have matched previous income. A little over half reported taking a pay cut – and of those, 29 percent took a reduction in salary by 30 percent or higher. To top off the bad news, 30 percent of the reemployed percent took a reduction in benefits.
Kenneth Couch, an economics professor at the University of Connecticut, has studied previous recessions and estimates that it can take six years or more for reemployed workers to reach a point where they’re earning 80 percent of their old paycheck.
We talked to five laid-off workers who have recently been hired again and learned the real deal about finding new jobs in this economy.
1.Jeffrey Kraut, 51, from textile controller to accounting consultant
Kraut worked at a textile converter in New York City since 1993, managing their financial and accounting functions, and making just below six figures. But in June 2007, after 14 years of service, his job was eliminated. “China had basically taken over the market, so they consolidated two positions into one,” he says. “They said they needed someone that had an MBA in ‘business operations’– I didn’t even know that existed, much less had one.”
Since then, he’s bounced around from unemployment to freelance consulting gigs, to a short stint as the accountant for a Canadian-owned GPS company – at a 45 percent pay cut. Today, he’s found another accounting consultant position, but he’s making 55 percent less than his salary at the textile company – without benefits. He currently pays $1,500 a month for his family’s health care plan, and says he hasn’t contributed to his retirement plan in over four years and had to dip into his old 401k. “Right now, I’m contributing to food and gas and oil – the essentials. I don’t have anything to put away for retirement.”
Though he’s struggling to pay basic bills and the mortgage, he says it’s not the paycheck he misses the most. “I miss the security, just knowing I had a job. I had responsibility and I had moved up over the years and finally had a position with respectability, and now it’s all gone.”
2. Robert Jacobs, 59, from photo supplies salesman to self-employed business consultant
“Is my new job better or worse? I guess the true answer would have to be it’s both,” says Jacobs, a former buyer for a photo supplies manufacturer, working with large clients such as Costco, Sam’s Club and Best Buy. He was laid off in November 2008 after 22 years with the company. After job searching for eight months, he was contacted by a former competitor to do some retail business consulting and he’s been working to increase his client base for his own consulting business ever since. “The worst part is that I’m working longer hours to build up my business and earning less money at the same time. My wife had to increase her hours to help make up the difference in income, and we've had to dip into our retirement savings.” But he says it’s not all bad and he’s optimistic that his business could grow to a point where he’s surpassing the income he made at his former job. “It's fantastic to be building my own business. I go to bed every night and get up every morning with great, new ideas to help my retail customers and supplier clients grow their businesses. I've been reading about two books per month this year – more books than the previous 15-20 years combined – and I'm constantly improving my sales, marketing and people skills. My efforts of the past 18 months are beginning to show results and I expect the next 12 months to pay huge dividends.”
3. Neil Provo, 39, from Microsoft project manager to technical project manager at a small consulting company.
Provo was laid off in October 2010 after 10 years as a technical project manager making about $100K a year at Microsoft in Redmond, Wash. Three members of his five-person team were let go in company-wide cost cutting measures. This past July, after nine months of job searching, he finally found a similar position with a smaller tech consulting company – only he had to take a 25 percent pay cut and has lost many of the benefits provided at Microsoft. His new 401(k) has no matching program and his health benefits were cut back significantly. “I like that it’s a small company instead of the large corporation I was used to, and I feel like my opinion matters more here,” says Provo. “What I miss the most are the health benefits.”
4. Kevin Kemper, 36, from newspaper reporter to public relations rep
After 12 years as a reporter for a newspaper in Columbus, Ohio, Kemper lost his job when the paper downsized the editorial department by 20 percent. He started job searching and doing freelance projects for newspapers (including his former employer) as well as an advertising agency. Three months later, he landed a job as a senior editorial specialist at the ad agency, for a 35 percent pay increase. “For me and my family, the layoff turned out to be the best thing that could have happened,” says Kemper. “I love writing, I love reporting, but unless you’re working at a major daily paper, you can only go so far. The new job helped my wife and I grow our family and we now have a five-month-old daughter in addition to our three-year-old son. We wouldn't have been able to afford to have another child had I stayed at the paper.”
5. Anastasiya Kuzmina, 25, from applicant coordinator at a staffing company to marketing rep
After graduating from Western Michigan University with an advertising degree in 2008, Kuzmina applied to over 700 jobs across the country. She finally landed one as an applicant coordinator at a local staffing company in Kalamazoo, Mich., making $11 an hour. But two months later, before her benefits kicked in, she was let go. For the next few months, she collected unemployment and moved back with her parents to save the little money she had. Not finding anything locally, she moved to Washington D.C. and found a job as a sales manager at Sport Honda, but she was again making only $11 an hour and was having a hard time making ends meet. “I remember one time calling my dad crying when I had to ask him to borrow money.” Six months later, she was laid off again. After doing odd jobs in modeling and public relations for the next few years, this past September she finally landed a full time job as a marketing rep at a hospitality design firm in California. “The pay is entry level, but I’m so happy and blessed to have found this opportunity,” says Kuzmina.