Listless economy is squeezing from the bottom - HR Update: News that Works - Brief Article

HR Magazine, Nov, 2002 by Terence F. Shea

Employees at the lower levels of companies' pay scales are starting to feel pinched by the economy's uncertainty. For example, one of the conventional assumptions about downsizings--that lower-paid workers are relatively insulated because the first to go in layoffs are usually higher-paid employees--may not be true anymore.

The percentage of discharged workers earning less than $50,000 has risen sharply in the past year while the percentage of those discharged from $85,000-plus jobs has fallen, according to the Job Market Index, prepared by Challenger, Gray & Christmas, a Chicago-based outplacement firm. What this indicates, according to the firm, is that with talent plentiful in the ranks of the unemployed, "employers are not as concerned [as they once were] about refilling positions when business rebounds."

Even when the economy picks up, Challenger says, "We may not see a revival in hiring of the rank-and-file worker." Instead, companies "will rely more and more on a just-in-time workforce of contract and contingent workers."

Another employee segment affected by tightness in the job market is the latest crop of college graduates. Generally, they're having an even tougher time finding work than last year's graduates did, according to the National Association of Colleges and Employers (NACE), in Bethlehem, Pa. Employers expect to cut their college graduate hiring by 3.6 percent, NACE says.

Moreover, starting salaries for this year's college graduates have fallen below last year's levels, according to NACE. Accounting grads dropped 0.6 percent, to $39,494. Almost all engineering graduates were down, as much as 4.7 percent, though most were just over $50,000. Computer science majors started work this year making 5.8 percent less than last year's graduates, averaging $49,413.

For many liberal arts majors, starting salaries were as much as 12 percent lower this year, generally below $30,000.