Five unfortunate ways the financial crisis affects your daily grind

Five unfortunate ways the financial crisis affects your daily grind

Summary: By now, you're probably up to your eyeballs in unsettling economic crisis news. The stock markets, tanked.

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By now, you're probably up to your eyeballs in unsettling economic crisis news. The stock markets, tanked. Mondays $700 billion Hail Mary of a bailout plan, dead on arrival (though since resuscitated). Real estate value, sunk. Federal Reserve chairman Bernanke warned last week that the difficulty households and businesses were now to face obtaining loans posed "a direct threat to economic growth."

But much less has been said about probably a more pressing concern to most workers--your job. Is it safe? Is the credit crisis going to make it impossible to find a new one if you get unceremoniously evicted from your current position? How long will it be before you can ever expect to see a raise or bonus again?

1. It has already hurt job growth.

Unfortunately, the credit crisis has already begun affecting job growth. The unemployment rate has grown an entire percentage point--from 5.1 to 6.1--between the month JPMorgan Chase moved to bailout Bear Stearns, March, and last month, August. Furthermore, it is likely to get worse before it gets better. Goldman Sachs Group economists wrote in a report to clients yesterday that they expected unemployment to rise to seven percent in late 2009.

2. The damage is likely to spread to other sectors.

At the outset of housing market's turmoil, most expected jobs in the banking, finance, construction and real estate sectors to take a direct hit, as the problems started in those areas. However, now it is clear that the damage is likely to spread to other industries, including ones that who use credit to buy their goods or rely on new investments to move forward. In short, most of them.

As for the IT department, David Foote, CEO and chief research officer at the IT workforce research consultancy, Foote Partners told Computerworld this week that he thinks more companies will be looking more closely at what parts of IT spending are actually critical, and some IT workers may be safer than others. But, overall, he finds little reason for techies to worry.

"Bottom line, considering tight credit, oil prices, and overall consumer confusion and pessimism, plus the lag time between business decisions and direct labor market effects, we won't see much IT workforce reduction or jobs shifted to outsourcing for the next few quarters," said Foote.

3. Skilled workers might not be spared.

Historically, most downturns have spared white collar and highly-skilled workers while hitting the least skilled the hardest. Yet observers believe that this downturn is likely to be more democratic than ones previously, because of the severity of the credit crunch.

"Research indicates that employers hire relatively more skilled workers when they invest in new plant and equipment, especially high-tech information and computing equipment (the so-called “capital-skill complementarity” hypothesis)," Alan B. Krueger, an economist at Princeton, told the New York Times this week. " If funds for investment are not available because of the financial crisis, however, companies will hire fewer skilled workers."

4. If you were going to retire soon, it will be a lot harder to.

If you've just retired or were about to, sadly, your timing could not be worse as by beginning to withdraw from you nest egg just as the markets tumble, you are essentially locking in your losses. But what if the wheels of your retirement were already in motion? What if it plummets the day after your retirement party, increasing the risk that you will outlive your retirement savings? Experts say, as depressing as it sounds, working just a few years longer can make a big difference.

"It does not have to be entirely unpleasant," writes New York Times columnist Tara Siegel Benard, trying to put a good spin on the depressing news. "Maybe you could continue to work a bit longer but start taking the trips you planned for retirement: say, keep your job, but go to Maui. Or perhaps you could work part time and earn enough to cover the amount you would have drawn from your retirement portfolio. At least you are not dipping into your savings while they are down."

5. It looks like this downturn is in for the long haul.

The next logical question is, "Well, how long will this last?" and while nobody agrees on an exact date, few have any confidence that it will be over by the holidays. Many argue that it will be at least 30 months long, and although no one goes as far as to liken it to The Great Depression, more than one parallel has been drawn.

And it's not just economists and pundits. One reader poll in a business newspaper found the 54 percent of respondents consumers believed that the recession would last through the second half of 2009 and possibly as long as 2011.

But does this mean that you'll never, ever get a new job? Not exactly. Most hiring experts suggest that you simply market yourself differently than you may once have, not by skills and career path maneuvers, but as someone who helps save organizations money and how will can do this for them.

Topics: Enterprise Software, CXO, IT Employment

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11 comments
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  • Job Security

    While some of those points are quite good, I have to question " Skilled workers might not be spared".

    When was the last time skilled workers *were* spared? In the IT field, our jobs have been hanging on a VP's decision to outsource for years. Our jobs are not secure now. The downturn is just another type of insecurity.
    rijrunner
  • My IT job is secure.

    I'm too good at it to be fired :)
    T1Oracle
    • must not work for coke

      they are laying off I. T. people.
      sp123ice@...
  • There is always bad news - ALWAYS!

    All my life, there has ALWAYS been some sort of bad-news doomsday end of the world crisis going on. Somehow, people have managed to earn a living in spite of it, and some people have even started new ventures. I predict the world will be running in crisis mode until long after I'm dead. I have never seen a headline that says: "NOTHING BAD HAPPENED YESTERDAY-BUSINESS AS USUAL" - who'd buy that if it wasn't a scary crisis?
    scott1329
    • That headline would mean "it's so bad we can't even tell you what it is" NT

      NT
      AzuMao
    • Better Headline

      "ALL THE THINGS THAT WENT RIGHT YESTERDAY"
      "Details on how this can help you inside."

      Now people WILL buy that.
      Dr_Zinj
  • The Current Financial Crisis on a Personal Front

    First of all, don't expect this $700 billion bailout to change anything, except to increase your taxes to pay for it. Which begs the question of, "Why do it if it doesn't help the majority of people?"

    Second, if businesses required debt to pay their normal operating expenses in the first place, then they deserve to fail because that's not a viable long-term economic model. It's a clear indication that they aren't operating in a profitable fashion.

    Third, the Feds have been saying that no bailout means no credit will be offered, no loans will be made. This is a bald-faced lie. What will happen is that loans will require a higher amount of collateral to back them up, and may demand a higher rate of interest to offset the risk. You'll see fewer, more expensive loans, but you will see them.

    This "downturn" is going to be worse than you expected, and last way longer. Prepare yourself for it to last for up to 7 years.

    What we don't want to see is everyone go running to the banks to pull their money out in cash. That WILL force us into the worst depression the world has ever seen. Leave the money in the banks, use your debit and charge cards (wisely, don't overdraw!), that will keep the money circulating and prevent stagnation.
    Dr_Zinj
    • Interesting

      Good points. It appears that the people who are going to feel the crunch worst will be those who rely on credit too much. If companies are hurting because they can't borrow money to stay in business then they are going to really suffer.

      The money for the bail out and previous actions are enormous. Take the $85 billion for AIG. An email is going around saying that if the govenrment paid the $85 billion to the taxpayers that would be slightly less than $300 K per person.

      Good advice on pulling money from your bank. What happened to Washington Mutual was there was a long run on the bank with people pulling enough money out that the bank reserves were used up. FDIC will insure your account, so there is no need to pull your money out.

      If the economy gets so bad that all the banks collapse, then we will be living in interesting times.
      sboverie
      • $ Per Person

        Doing the math: Assuming 100 million (a nice round number, not necessarily a close approximation) taxpayers in the US, $85 Billion divided among them would equal $850 per person, not anywhere near $300 K per person.
        Bob C User
  • RE: Five unfortunate ways the financial crisis affects your daily grind

    What does the last sentence mean? Was it written wrong? The last 12 words of the following sentence???

    Most hiring experts suggest that you simply market yourself differently than you may once have, not by skills and career path maneuvers, but as someone who helps save organizations money and how will can do this for them.
    rdkiefer@...
  • Fortunately I have been preparing for this since 2004

    Once you study what is actually happening to the economy you realize that we are in for a very rough ride indeed. Will it be another Depression? OF COURSE NOT. The economists have studied the Great Depression at length and they will prevent that from happening again. But they are utterly ignorant of physics and thermodynamics and don't have a clue how to deal with the end of the Industrial Era. That will be must worse.
    dswanson2609