CHICAGO`, Ill., July 15 (UPI) -- The good news is thousands of executives and managers caught up in the wave of corporate downsizing have found new jobs.
The bad news is a quarter of the recent job seekers failed to find new positions that paid salaries equal to or better than that at their former employers
"That is the worst salary drop-off we have ever tracked, going back to 1986," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, a Chicago-based international outplacement firm that follows corporate layoff announcements on a daily basis.
These are among the most employable of nearly 3 million workers laid-off in the last 18 months -- top executives and managers with high earning potential in a normal economy.
The firm's quarterly Job Market Index also found job search times rose to 3.6 months for newly discharged workers in the second quarter from a historic low of 2.1 months in the same quarter of 2001.
The uncertainty over employment prospects is undermining the recovery, according to Challenger.
"Right now, however, it appears that the economy may continue to stagnate," he said. "Until job search times fall and rehiring salaries increase, most unemployed managers and executives are going to minimize their risk in all matters, including job seeking, investing and spending."
Challenger's survey tracked about 3,000 job hunting mangers and executives each quarter from a range of industries. This spring the vast majority did find jobs that paid as well or better than the ones they lost.
"In the fourth quarter of last year, only 77 percent of jobless managers and executives won equivalent or better salaries," Challenger said. "Here we are two quarters later -- supposedly in a recovery -- and yet the percentage dropped to 75 percent. The figure was 83 percent in the first quarter this year."
More than 11 percent of discharged managers and executives took the plunge and started their own businesses in the first and second quarters, up significantly from the average 7.3 percent who launched start-ups since 1997.
"The rise in start-ups may also be an indication that job seekers are wary of re-entering corporate America because of the growing list of scandals," Challenger said. "There is now a perceived risk that a corporate employer may have to restate earnings due to questionable accounting, which could lead to mass job cutting, as it has in several recent examples," said Challenger.
Challenger said the trend of longer job searches and lower salaries is worrisome because high-earning and high-spending individuals may have to change their spending habits.
"It is clear that employers are in no rush to hire, and apparently they are secure enough to believe they can find the talent they need for a lot less money," he said. "With employment searches nearing the four-month mark, some of these jobless managers and executives will be forced to stretch their money a lot farther, especially considering that the average severance allowance period lasted only three months in the second quarter."
