Fired: Laid-off workers in revolving door

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.

CNET News staff
20 min read
Dot-com troubles spin revolving door for tech workers

By Sandeep Junnarkar, Cecily Barnes and Rachel Konrad
Staff Writers, CNET News.com
November 2, 2000, 4:00 a.m. PT

Reports about the death of the digital economy have been vastly exaggerated.

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
The booming technology job market has fundamentally altered the way today's workers view unemployment. Instead of seeing their world collapsing, laid-off workers simply assume they will work somewhere else--and on their terms.

Bill of rights for labor
Federal laws have long provided protection for laid-off workers. But what happens to those who work at the many young dot-com companies that do not qualify for government help when they go under?

A new attitude in force
Companies are being forced to rethink employment strategies for a growing number of young people in the work force. This new generation has very different ideas about work, and they're not about to sacrifice their lives for it.

Where are the hot jobs?
Businesses such as content and e-tailing have fallen on hard times, but there is no shortage of jobs in other fields. Wireless, networking and, as always, engineering are among the categories most in demand.

Go to: Silver lining in layoffs 

Click here to Play
Dot-com deadpool

Related stories:

Study: Dot-com job cuts continue to rise

Tech workers find high salaries, costs on the coasts

Tight job market turns tables on interview process

Interns in charge in tight labor market

Tech employees jumping jobs faster

Which tech companies are best for employees?

Bill would bring stock options to more workers

Tech firms may troll grad schools for talent

Gore outlines tech training plans

Clinton budgets more for high tech

CNET Tech Jobs

Laid off? Apply for a new job now


Silver lining in layoffs

By Sandeep Junnarkar
Staff Writer, CNET News.com
November 2, 2000, 4:00 a.m. PT

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

Click here to Play
Watch video

Eric Scheirer, Forrester Research

director returned the countless calls and emails he had been ignoring from recruiters for months. As he was wheeled into the operating room, he took comfort in knowing that he would awaken with more than a dozen companies clamoring for him even if only 60 percent of his skills matched their needs.

"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 increased since technology stocks began their steep decline in April. More than 60 companies--including AltaVista, Qwest Communications International and Drkoop.com--have slashed their work forces.

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. "Already, we see that people had to come up with ways to send the information that is already there to wireless devices, creating a whole new set of demands for wireless and Internet infrastructure companies."

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 

CMGI-backed media exchange reduces staff
October 25, 2000

Stamps.com lays off 240 employees
October 23, 2000

NBCi president, other execs leaving portal company
October 20, 2000

Red Gorilla can't survive capital-market jungle
October 17, 2000

Michael Jackson-backed start-up cuts staff
October 16, 2000

Urbanfetch to stop delivering goods to consumers
October 12, 2000

Chipshot.com bogeys into bankruptcy
October 11, 2000

Myplay edits out content, some staff
October 9, 2000

Employee resource portal slashes 16 percent of staff
October 9, 2000

Party-planning site cuts staff, including CEO
October 5, 2000

Breakaway's shares skid on earnings warning, layoffs
October 5, 2000

Impresse undergoes management change, layoffs
October 4, 2000

Net marketplace eSprocket cuts half its staff
October 3, 2000

Online drugstore More.com cuts staff by third
October 2, 2000

Net consultant cuts jobs as it sharpens focus
October 2, 2000

Garden.com trimming nearly 40 percent of work force
September 28, 2000

Sporting goods store changes gears
September 25, 2000

Ailing Gazoontite remedies site with closure
September 25, 2000

Online jeweler loses luster after lender forecloses
September 25, 2000

Music security company cuts staff by a third
September 19, 2000

Furniture e-tailer turns lights out on e-commerce
September 18, 2000

CMGI's iCast lays off 30 employees
September 18, 2000

Deja.com staff cuts reach executives
September 15, 2000

AltaVista slashes work force by 25 percent
September 15, 2000

Company that marked dot-com deaths is no more
September 13, 2000

Music site cuts staff as funding runs out
September 12, 2000

SCO lays off 190 workers with Caldera deal
September 7, 2000

Well-scrubbed business plan not enough for Scour
September 7, 2000

Webvan lays off 50 in wake of HomeGrocer deal
September 7, 2000

Qwest to cut 11,000 jobs in merger aftermath
September 7, 2000

Corel layoffs to hit engineering team in Ireland
September 6, 2000

Egghead pulling jobs out of pricey California
August 31, 2000

AllAdvantage slashes work force by 100
August 31, 2000

Drkoop.com to cut staff by a third
August 30, 2000

A solid finish for shares of PlanetRx
August 29, 2000

Urbanfetch takes bite out of Big Apple staff
August 25, 2000

Cash-strapped dot-coms of all types resort to pink slips
August 18, 2000

Gazoontite.com lays off over 40 percent of staff
August 2, 2000

Furniture.com sees high-level exodus
July 28, 2000


Bill of rights for labor

By Cecily Barnes
Staff Writer, CNET News.com
November 2, 2000, 4:00 a.m. PT

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. Special report: End of the Beginning But the issues facing laid-off dot-commers are often unique, as many are working their first jobs at small start-ups with no union protection and unclear rights under the law.

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  

The following sites offer valuable information on employment issues:

The National Employee Rights Institute (NERI) is a nonprofit organization that helps people understand their rights in the workplace.
Specific links at NERI:
Am I entitled to unemployment benefits?
What are my workplace rights?
What other government agencies and research tools are available to me?

The Employee Rights Advocate offers links to information about unemployment and disability benefits, as well as to the Labor Department's offices in each state.

The American Civil Liberties Union, Workplace Rights includes links to book titles and other resources to help you understand your rights on the job.

The National Employment Lawyers Association offers numerous links to information on discrimination to benefits to law journals.


A new attitude in force

By Rachel Konrad
Staff Writer, CNET News.com
November 2, 2000, 4:00 a.m. PT

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 Obispo now working for a networking company. "If the company is not flexible and requires 9 to 5, Monday through Friday, then forget it."

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 eight years in a given career, then switch jobs or go back to school. And a surprising number are hoping to drop out of the working world altogether when they start raising families.

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?  

A sampling of the more popular job search sites:

www.techies.com: Career and job search site specifically for technology workers. Includes advice, articles, research and job listings.

www.monster.com: Comprehensive job site includes email alerts, career center, relocation information and about 500,000 job listings.

www.headhunter.net: 200,000 job listings that can be searched by industry, job type or community.

www.careercity.com: Includes a separate high-tech career center with salary information, job listings and more than 3,000 high-tech companies.


Where are the hot jobs?

By Sandeep Junnarkar
Staff Writers, CNET News.com
November 2, 2000, 4:00 a.m. PT

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 and is helping consulting giant McKinsey & Co. staff its Internet unit, @McKinsey.

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.

Back to intro 

Here are the tech jobs that the Bureau of Labor Statistics predicts will grow the fastest (percentages represent growth from 1998 to 2008):
Computer engineers 108%
Computer support specialists 102%
Systems analysts 94%
Database administrators 77%
Desktop publishing specialists 73%
Data processing equipment repairs 47%
Electronic semiconductor processors 45%
Computer, information systems managers (includes engineering and natural science) 44%
Source: Bureau of Labor Statistics