For Gen X, It's Paradise Lost
Michael Laskoff made all the right moves. Graduating early from the University of Chicago with honors, he married his college girlfriend and went on to finish his Harvard University MBA in '94 in the top 10% of his class. He quickly landed a cushy job in New York at the tony boutique investment bank Furman Selz (ING ) For the über-achieving golden boy, it seemed as if nothing could ever go wrong. Back then, he even had hair.
But Laskoff soon entered the funhouse world of the dot-com hiring binge, bouncing to bigger and better positions at Bertelsmann, Cozone.com, McKinsey, and WorldQuest Networks. During his run, he experienced one firing, two resignations, two contract nonrenewals, and three layoffs. Still, between 1989 and 2000, his salary ballooned 1,300%, to $350,000. Life was good.
Today, the 35-year-old Laskoff laughs about the absurdity of his rise and fall. His risk-averse best friend from B-school, who stayed put at Goldman, Sachs & Co., is now a managing director, pulling in compensation in the millions every year. Laskoff, on the other hand, has the kind of bungee-jumper résumé corporate recruiters often wince at. He's hoping to make a new career out of a field he knows well -- getting canned -- by ministering to the only growth market he sees: the unemployed. For a book advance estimated at $50,000, he's writing Landing on the Right Side of Your Ass: A Handbook for the Recently Fired, due out in January from Random House Inc. "I went to Harvard Business School -- 20 years ago, that would have meant employment for life," Laskoff says. Instead, he sees graduates of elite b-schools experiencing rampant joblessness. "If this can be happening at the same time we should be stepping into senior management, something serious is going on."
It might be hard to muster sympathy for the same dot-com wunderkinder who made you feel hopelessly lame and risk-averse for slogging it out in your corporate job during the apex of Internet insanity. Gen X certainly isn't the first generation to suffer setbacks. But as far as making enough for a decent living and a secure retirement goes, no generation since the Great Depression has had the odds so stacked against it, notes New York University economist Edward Wolff. Those born roughly between 1965 and 1975, now in their 20s and 30s, are a tiny lot, just half the size of the mighty Baby Boom. Because there are so few of them, they should be doing better. But several factors are converging to make the white-collar among them, especially those who tasted the Internet's elixir, feel as if they are living in some sort of postmodern Paradise Lost -- kicked out of the garden of guaranteed bonuses and lush perks.
Just three years ago, educated Gen Xers seemed set to rule the world. But since the downturn, it's evident that many are getting their comeuppance. Indeed, the young are getting poorer. From 2000 to 2002 alone, the household income of those under 35 dropped 14% -- the biggest decline of any age group, according to the Federal Reserve's Survey of Consumer Finances.
Why are young people getting slammed, when usually it's older workers who get dumped in recessionary purges? This downturn has hit the educated young harder for a few reasons. During the boom, skilled Gen Xers were scooped up disproportionately by the very sectors -- dot-coms, information technology -- that later imploded. Their pay also got bid up far beyond their worth -- which made them prime targets for slashing.
As the ax landed more severely on younger workers, the unemployment rate for 25-to-34-year-olds rose higher than that of 45-to-54-year-olds and even those over 55. Now, many Gen Xers face a future of trying to catch up. Jared Bernstein, an economist at the Economic Policy Institute, says that wage growth is typically steepest in a worker's first decade, though options-heavy compensation packages can sometimes inflate income in mid-to-late careers. The dramatic salary deflation -- and the realization that those growth years may be lost -- is leaving many Xers feeling as if they're already economic has-beens. "It's pretty hard to recover those losses," Bernstein says. "They can reverberate for decades."
The lost or reduced paychecks aren't the only source of strain. Gen Xers have far bigger student loans than their parents did and face rising costs for housing, health care, and education. Many are also saddled with record debt and have squandered their 401(k)s during the years when they should be aggressively socking it away.
They are also caught in a demographic sandwich. On the one end are all those sitting bulls: the baby boomers and seniors who are hanging on to their executive jobs, clogging up the promotion pipeline. Since 2000, labor force participation among 55-to-64-year-olds has jumped nearly 6%. Some have hung in because their retirement portfolios have vaporized and their companies have taken back promises of retiree health care. Others are benefiting from the fact that their employers don't want to buy out their costly packages or open themselves up to age-discrimination suits, which workers over 40 can file. Corporations burned by inexperienced staffers are also putting a premium on seasoned -- read wrinkled -- employees. On the other side of the squeeze are cheaper Gen Yers, who come without the baggage of having cockily carpetbagged their way through the boom.
Meanwhile, after rising rapidly in the late 1990s, Gen X's labor-force participation rate -- which includes those who have stopped looking for jobs -- declined more sharply than that of any generation since the Korean War, says Mark M. Zandi, chief economist at Economy.com. Already, Gen X joblessness is leading to all sorts of economic strains. Gen Xers now make up the biggest group of coupon clippers, for example, and the bulk of those making partial payments on credit cards, according to Vertis Inc.
Many Gen Xers have now been flushed out of their first, second, and third-choice careers -- and dumped firmly on the path of downward mobility. Just to stay afloat, many are taking low-wage jobs. One Stanford University MBA scooped sherbet in a Palo Alto ice cream shop. A former Wall Streeter sold electronics at RadioShack (RSH ) Their sudden detours left both feeling as if they were finished -- before their 40th birthdays.
"My life has stopped, but I continue to age," deadpans Karen Levine, a Wharton School MBA who has worked at General Mills (GIS ), Unilever, Deloitte Consulting, Condé Nast, and Hearst. She has even served as a Six Sigma Black Belt at NBC (GE ). But in real terms, Levine made more in 1988 fresh out of Harvard College than she earns today in the marketing department at Hachette Filipacchi Media US Inc., where she's temporarily filling in for a woman on maternity leave. During her two years of battling unemployment, Levine has worked for $8 an hour at Pottery Barn and for $18 an hour as a temp for a Wall Street trading firm. "I can't even afford a dog," she says.
Certainly, if the economy undergoes a vigorous rebound, Gen X's fortunes will improve. Remember the predictions in the early 1990s that college-educated slackers would be slinging fries at McDonald's? Some economists already believe that unemployment may have peaked. But if the economy keeps moving sideways -- fueling corporate austerity -- Gen Xers in the near term will continue to face a world of demolished expectations and shrinking resources.
Their declining fortunes are also coinciding with the same period in which their costs are starting to soar -- especially for their kids. The thought that keeps rolling through 31-year-old Sean O'Brien's mind is how he'll pay for his three little girls' college educations -- not to mention their weddings.
After watching his $500,000 portfolio sink to zero after the crash, O'Brien, then a Charlotte (N.C.) broker, started thinking his family would be better off without him. He imagined steering his car into an oncoming lane. At least, he thought, his wife would have the insurance money. One day in May, 2000, he got so desperate he dialed his company's employee-assistance line. Hours later, he was hospitalized.
After losing his brother and brother-in-law in the World Trade Center attacks (both worked at Cantor Fitzgerald), O'Brien's depression returned. He and his wife lived off their credit cards and once even sold their compact disks to buy food. Since then, he has become a financial planner, a career he's excelling in, and he hopes to use his experience to one day warn brokers of the job's dangers. With the help of doctors and religious faith, he says he has recovered. But financial health still eludes him. "It doesn't feel like saving $400 a month is going to make for diddly squat. How do you get back to where you were before?"
The answer for many: They won't. For a time in the late '90s, it seemed as if Gen X would be defined by what they got. Now, it seems more likely that they'll be best known for what they lost.
By Michelle Conlin in New York