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Dot-com troubles spin revolving door for tech workers
By Sandeep Junnarkar, Cecily Barnes and Rachel Konrad
Despite the dire warnings that have induced investors to abandon dot-com
companies, many other high-tech businesses are expanding exponentially--and
they can't find enough people to hire. Even as some high-profile areas such
as e-tailing undergo difficult consolidation, less glamorous fields like
Internet infrastructure are creating jobs faster than failing Web companies
can eliminate them.
Complicating matters further, this unique labor market is the first for
many young workers whose values regarding time, money and life in general
differ vastly from those of their predecessors. This Generation Y work force is also learning what rights they have--and do not have--when faced with sudden unemployment, and the resulting brick-and-mortar education is not always a happy one.
The unprecedented labor landscape is forcing major changes among both companies and candidates. And the resulting new job model will undoubtedly influence other industries, perhaps redefining the American work ethic in the 21st century.
Silver lining in layoffs
Bill of rights for labor
A new attitude in force
Where are the hot jobs?
Go to: Silver lining in layoffs |
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Silver lining in layoffs
By Sandeep Junnarkar
NEW YORK--Geoff Fellows was about to go under the knife for the second time in a week: His company had just cut his job, and he was only days away from having knee surgery.
Instead of panicking, the 28-year-old marketing
"I had a lot of confidence that I was going to find something soon,"
Fellows said after moving here from Boston, where he worked for consulting
company Zefer. "I interviewed with as many people as possible, and the very
next day they were throwing job offers my way."
The story is a familiar one, from Manhattan's Silicon Alley to San
Francisco's Media Gulch: While the demise of dot-com companies makes the
headlines, employment continues to boom across the board for positions as
diverse as accountants, lawyers, engineers and producers.
The unemployment rate in some technology niches is less than 1 percent,
mocking the national rate of 4.1 percent in May, according to the Bureau of
Labor Statistics. Government studies also project that the top five of the
10 fastest-growing occupations between 1998 and 2008 will be related to
technology.
Computer engineers, support specialists, systems analysts,
database administrators and desktop publishers are expected to see the
largest salary growth.
To be sure, the consolidation of the new economy this year has not been
free of pain. More than 22,000 technology workers have been told to pack
their bags since December, according to one study, and the pace of cuts has
only
Content companies and online retailers, such as Oxygen Media, Amazon.com and
AllAdvantage.com, constitute the bulk of the layoffs, climbing to a sector
record of 5,677 in October, according to a report by outplacement firm
Challenger, Gray & Christmas. The cuts are also beginning to seep into the
wider tech world, affecting such stalwarts as Xerox and Lexmark
International Group.
Yet unlike the dark days of the early '90s when large corporations like
AT&T and IBM announced massive layoffs on the order of 40,000 jobs, today's
cutbacks are hardly making a dent in the overall economy or in the psyche
of those who are let go. In fact, many of those receiving pink slips exude
optimism.
"The market is pretty good and there are a lot of opportunities out there. I am in no rush to get something," said 23-year-old Carlos Famadas, who was
laid off at the end of September from consulting company Gen3 Partners. Confident that he would find work, he took the opportunity to stay home with his dog and take care of personal business for a month.
Such is life in this revolving-door job market. For all the recent
pummeling the industry has endured on Wall Street, most technology
companies continue to have a difficult time filling all their job openings.
The steady closure of dot-coms and other companies does not mean that people have lost all viable employment options; they're just being shifted to other parts of the industry.
"Yes, the markets are jittery and you see individual companies that do
better than others on some days," said Michaela Platzer, vice president of
research at AeA, an industry
group representing computer and technology companies. "But the bottom line
is that companies are wrestling with not having enough skilled workers to
meet their demand."
And as the industry creates new jobs at a breakneck pace, companies find
themselves in a perpetual game of catch-up.
Even as the dot-com meltdown continues, other parts of the industry are
still benefiting from the original enthusiasm the Internet generated
for all technology stocks. Investor interest has shifted from consumer Web
companies to other sectors, including optical networking, wireless,
Internet infrastructure and business-to-business companies.
People who lost their jobs in content, e-tailing and other areas that have
fallen out of favor are still hot commodities.
Rich Hampton, who last month lost his job as the lead technical designer at
teen site Kibu.com, said prospective employers are "desperate." After
posting his resume on Kibupeople.com, a site set up by the defunct company
to help employees find work, he said, "I got tons of calls; I've talked to about 30 HR people."
"One man is calling from Los Angeles at night to get me to visit his
company. Another person is calling from Chicago," said Hampton, who has
become so confident that he is restricting his job search to the narrow
confines of Fremont, Calif., a suburb of San Francisco and an extension of
Silicon Valley.
Content sites like Kibu may come back into vogue as other sectors come to
rely more on the Internet. For example, wireless companies are racing to
bring content, financial services and shopping to their devices.
"There's going to be some interdependence between the different tech
areas," AeA's Platzer said.
According to staffing and consulting company Management Decisions Inc., the tech industry will produce an estimated 1.5 million new positions next year alone. Moreover, because of the severe shortage of qualified workers, roughly half of those spots will go unfilled.
With those numbers, salaries are not likely to dive anytime soon.
"Generally speaking, there is still an immense shortage of the best talent,
and compensation packages are staying the same," said Jeff Christian,
chief executive of recruiting company Christian & Timbers. "They may not be
escalating as fast as they were; they may have taken a breather."
The Internet's legendary lure of stock options, however, may not carry the
same weight as in previous years.
"People are still looking for stock options, but they are not willing to
take as many risks to get more options," said chief executive John
Bongiorno of Myrecruiter.com, a staffing company based here that specializes in Net jobs.
Accordingly, those who have been laid off are giving more scrutiny to
companies that come courting.
That's what Fellows did before signing on with another Net consultancy after his knee operation. And even though he was laid off by that company as well just this week, he's as upbeat as ever.
"I am still optimistic about finding work quickly," said Fellows, though he
admits that he was a little unnerved by his second pink slip. "There is still a possibility of layoffs in any company, but there is a little bit more volatility in the Internet economy. I still think it is somewhat of a crapshoot."
Go to: Bill of rights for labor |
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Bill of rights for labor
By Cecily Barnes
Maggie Pace was nearly seven months pregnant when the start-up
where she worked, Vox.com, lost its venture capital and shut its
doors.
But Pace was relatively lucky. Cybergold, which had funded Vox and
operated out of the same building in Oakland, Calif., agreed to hire Pace and pay for her maternity leave. Furthermore, Vox was able to pay the final paychecks of all its employees, including accrued vacation pay.
"Nobody got stiffed," she said.
Pace's tale ended on a positive note, but her initial anxiety is being
experienced by thousands of dot-com workers as the go-go days of the late
1990s are supplanted by a new sense of fiscal sobriety. Although they
represent only a small fraction of the overall tech work force, layoffs are
becoming more common as new companies cut costs or close altogether.
Laid-off employees in many other industries--from autoworkers to bank
tellers--have long faced questions about medical coverage and 401(k) plans.
In many cases, the company has filed for bankruptcy protection or has simply locked its doors. That could leave former employees among a long list creditors--but instead of being owed
money for chairs or desks, they would be owed a final paycheck, unused vacation time or overtime payments.
So just what rights do fired employees have, and where can they go for help?
The basic benefit, unemployment insurance, is available to all employees who have worked for a certain amount of time depending upon the state. To be eligible, the employee must have been laid off through no fault of his or her own.
Still, though the checks can help buy groceries and pay rent,
unemployment insurance offers little to those making more than $30,000 a
year, as most in the high-tech industry do.
The payments are based on a percentage of earnings during the past 52 weeks, up to a maximum set by the state. In California, this maximum tops out at $230 a week, or about $920 per month. This applies to people who earn more than $7,634 in their highest-grossing quarter, or the equivalent of $30,536 annually. Anyone earning more, regardless of the amount, will receive this same top-level compensation.
As for health benefits, a federal law dubbed COBRA (The Consolidated Omnibus Budget Reconciliation Act) allows most people to continue the medical coverage they had at their company if they make the full payments.
But COBRA generally covers companies that have insured at least 20
employees in the past year. If a company has insured fewer than 20
workers, it may not fall under the law's protection. In this scenario, an
individual's only options would be to pay for an expensive individual health plan or apply for government-funded health coverage.
"If the policy had been an insured policy, they may have some rights. If it
was uninsured, they may not," said John Jacobsen, an employee benefits
attorney and partner with the Illinois-based firm Vedder Price. Employees
are advised to check with the employer on the type of coverage--insured or
uninsured--before any signs of fiscal stress.
Collecting unpaid wages--a possibility when companies file for bankruptcy
protection or shut down--is even trickier.
In the case of a company that files for bankruptcy, unpaid employees must
contact the court and ask to be added to a list of creditors. Unfortunately, employees are considered unsecured creditors and can be paid only after a potentially long list of secured creditors receive their money.
The odds of collecting owed wages depend on the amount of assets the
company lists in the bankruptcy filing and the amount of its debts. In most
situations, the debts exceed the assets--leaving little left for
employees after the secured creditors have been paid.
If the company essentially disappears, "then the employee would have to
hire an attorney and sue," said attorney Nina Stillman, another partner at
Vetter Price. However, it may not be easy to find a lawyer willing to track
down a few hundred or thousand dollars in lost pay.
Many employees sign up for their companies' 401(k) plans, which take pretax money out of each paycheck and set it aside in a retirement account that a trustee invests.
Some companies will match part or all of their employees' contributions. These matching funds are federally protected under the Employee Retirement Income Security Act (ERISA). Even if a company declares bankruptcy and has no assets, this money should be safe and in a protected trust, handled by
either a bank or an individual. The terminated employee must contact the
trustee and have the account either rolled over to a new company or
placed in an Individual Retirement Account (IRA).
"You have rights against the trustee if they have terribly invested the
money or stolen the money," Jacobsen noted.
Many women continue their jobs until their ninth month of pregnancy and then take paid leave. States pay a portion of the woman's salary during leave under temporary disability laws, and many companies make up the difference, resulting in a full paycheck for new mothers.
But if the woman is laid off, not only is the company unlikely to subsidize
her leave, but the state will not make disability payments because she is no longer employed. Then, Stillman said, the woman's only option is to file
for unemployment benefits, which would usually amount to considerably less
than her subsidized maternity leave.
Go to: A new attitude in force |
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A new attitude in force
By Rachel Konrad
Richard Kong works for a hot Internet start-up in Silicon
Valley, happy with his salary, options, job duties and co-workers.
But what pleases the 22-year-old software engineer more than anything is the
prospect of sleeping in, then working until midnight--or whenever the urge
strikes--and telecommuting when he can't bear the traffic.
"The No. 1 thing I look for is flexibility," said Kong, a 1999 graduate of
the California Polytechnic State University in San Luis
Kong's dismissal of the traditional workweek isn't merely rebellious bravado
or a byproduct of America's full-employment economy. Labor experts and
sociologists say he reflects the priorities of Generation Y.
The nation's youngest demographic group, born from roughly 1975 to 1988, is
just entering the work force en masse. While not necessarily rejecting
behemoths like IBM or General Motors where their parents and grandparents
spent decades, they're shunning traditional work schedules. Moreover,
because the corporate world doesn't hold as much sway over its modern
values, the Generation Y work force isn't burdened with the intense fear of
job loss that paralyzed its predecessors.
"They don't want to work all day, all night, in an office," said Amanda
Freeman, director of research and trends for New York-based Youth Intelligence. "They want to
be able to work on the go, from the train or plane, or at a coffee shop.
They're trying to find ways they can make their jobs integrate into other
parts of their lives."
According to numerous studies and focus groups, Generation Y places more
value on flexibility than on any other quality when weighing job offers or
determining their career paths. And given the size and impending influence
of this group, 9 to 5 may soon get the deep six as a general business rule.
"Employers can ignore them at their own peril," said Leslie Cintron,
a research associate at Harvard University's Radcliffe Public Policy Center in Cambridge, Mass., which recently completed a detailed study of generational
work habits called "Life's Work." "They won't be able to attract and retain
the kind of employees they say they need if they don't offer flexible
schedules that these people want."
Although world immigration trends and domestic birth rates will continue to
shape the size of the group for the next decade, most demographers agree
that Generation Y is poised to become the largest group in U.S.
history, representing roughly 80 million people.
By contrast, baby boomers are the largest generation to date, totaling about
76 million. Generation Xers, sandwiched between the boomers and
the Y's, number only 41 million.
Also known as "millennials" for coming of age at the turn of the
millennium, Generation Y workers are already starting to infiltrate
corporate America.
Sun Microsystems chief executive Scott McNealy said recently that by the
end of the year, about half of his company's employees will be young
workers with seniority of two years or less. Sun has a boot camp program
called "Best of the Best," or BOB, to
indoctrinate 500 to 1,000 college students each year in a 12-month program.
Why is corporate America making such a fuss over a group of people who just
a few years ago were learning how to drive?
For one, they're poised to become the largest consumer group in history.
American teenagers spent about $150 billion in 1998 and influenced more than
$300 billion in U.S. purchases.
More important to employers is that the career aspirations of Generation Y can provide a sketch of the American workplace in 2010 and beyond, yielding
tips about what it will take to lure the most talented young workers.
In addition to flexibility, some Generation Y members say money alone is
not as important as working in a fun or interesting situation. Others are
planning to spend five or
Young men already view themselves as fathers first and workers second,
according to a survey conducted in January and February by Harris
Interactive.
Unlike older men who perceived themselves primarily as breadwinners, at
least 80 percent of more than 1,000 men aged 20 to 39 interviewed said that
having a work schedule that allows them to spend time with their family
takes a higher priority than doing challenging work or earning a high
salary. Only about a quarter said that having a prestigious job was very important.
According to the study, 82 percent of men aged 21 to 29 say it's "very
important" to have a job that leaves time to spend with family. By
contrast, only 67 percent of men aged 40 to 49 rate family time as "very
important." The gap is even larger for women.
Many believe that the quickest way to flexibility is to be their own boss.
That's
a stark change from the baby boomers, who tended to work for larger
companies before becoming disgruntled and striking out on their own.
Two decades ago, most new entrepreneurs were 35 to 45, according to the
Young Entrepreneurs' Organization in Alexandria, Va. Today, people 34 and
younger account for more than 40 percent of all business starts. The
Collegiate Entrepreneurship Organization, a 2-year-old association that
helps college students learn about business ownership--with the appropriate
initials CEO--already has 57 chapters.
Jawed Karim isn't his own boss, but he did divert from his corporate path to
work at a Silicon Valley start-up. The 21-year-old Palo Alto, Calif., resident
dropped out of college after summer internships at IBM, Silicon Graphics and
the National Center for Supercomputing Applications.
Stock options and a high salary were obvious attractions, but Karim said
his real
motivation had little to do with money.
"What is most important to me about a job is that it is cutting-edge," said
Karim, who still has senior standing at the University of Illinois. "Whoever
I work for must be a worldwide leader in the field they specialize in."
Go to: Where are the hot jobs? |
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Where are the hot jobs?
By Sandeep Junnarkar
If the companies flocking to job fairs are any indication of
which fields are hot, then careers in consulting, business-to-business,
wireless products and networking are on fire.
Of more than 90 companies that descended on the University of California at
Berkeley last week for its "Start-up and Dot.com Career Fair," the vast
majority avoided any obvious ties to the once-hot Net content and e-tailing
fields.
Instead, the positions most companies wanted to fill were software and
hardware engineers, sales and marketing representatives, and e-business
consultants.
Even content companies are looking for people to fill those jobs.
"Companies are all facing a major job shortage in terms of skilled workers,
and the supply is not meeting the demand," said Michaela Platzer, vice
president of research at industry trade group AeA.
"This is a big challenge: Do we have enough engineers to develop the next
generation of tech products and services?"
The fair at UC Berkeley was markedly different from a similar event held on
the same campus in January. These days, far fewer online retailers and
content companies are offering jobs.
"Counselors monitor the job listings and companies coming to the fairs, and
we can see what jobs are coming and what is hot," said Linda Hernandez, a
counselor at UC's Career Center. "We are definitely seeing a shift to
business-to-business, optical networking, traditional telecommunications,
and Internet consulting and infrastructure companies."
The enthusiasm for consultants is surprising, given the rash of layoffs at
some of the smaller consulting outfits that have sprung up over the past
year. But human resources experts note that as larger Fortune 2000 companies
move their businesses online, they are turning to established companies to
help
them make the transition.
"Consulting is hot," said John Bongiorno, chief executive of
Myrecruiter.com, a New York-based staffing company that specializes in
Internet jobs
Executive recruiters, human resources professionals and labor analysts are
stressing
that there is a tremendous shortage of qualified employees in the high-tech
industry.
As a result, recruiters are increasingly poaching traditional businesses
for nontechnical positions.
"With the stock of many of these wireless, infrastructure and B2B companies
still performing well, it is hard to recruit people from those sources
because of the value of their unvested stocks," said Jeff Christian,
founder of recruiting company Christian & Timbers.
Christian, who helped place Carly Fiorina as Hewlett-Packard's chief
executive last year, said talented CEOs and other top executives are still
the hardest to
find.
A good place to look for talent aching to jump ship is the beleaguered
online retail field.
"E-tailing companies attracted some good talent that had expected to create
considerable wealth," Christian said, adding that a strong chief technology
officer is a rarity. "There's just a finite number of people who can
combine technical ability with leadership ability."
But with sectors going from red-hot to stone-cold almost overnight, what
should employees do to maintain their currency?
In addition to reading business journals to keep abreast of new
developments, consultants suggest researching particular companies and their
management goals to evaluate opportunities for growth.
"A year ago, everyone wanted to be in a dot-com," Bongiorno said. "Now you
should really look at the company and see what skills it will be able to
teach you."
Christian suggests that employees build strong reputations, similar to the
way companies develop their brands among potential consumers. That could
persuade companies to adapt candidates' skills to their needs even if they are not a perfect fit.
"I would tell people to sit on panels at industry conferences and become
known as a key 'go-to' person," Christian said. |
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