Unemployment will be the running story of 1983. Two days after Christmas, Bethlehem Steel announced it would close its plant in Lackawanna, N.Y., permanently eliminating 7,300 jobs. New claims for unemployment insurance, while lower than they were last fall, are still running at an uncomfortable rate in this, the longest recession since World War II.
A Chicago-based consulting firm, Challenger, Gray and Christmas, reports that middle-management cutbacks rose significantly in the second half of 1982 compared with the same period a year earlier.
Many of the people losing jobs today are unaccustomed to periodic layoffs, so they're not prepared--emotionally or financially--for the sudden shock. After the pain of the pink slip comes the inevitable questions: How will I pay the bills? Will I lose the house? Can we keep food on the table or the children in college?
"Often, such questions are overwhelming," said John May of the District, who has lost a job with the federal government. "The apparent sense of impending financial doom may make it difficult to lead a normal day-to-day existence, let alone find another job."
May has written a short book that should be helpful to many people suddenly struck with an end to their daily incomes. It's called "The RIF Survival Handbook," ($5.95, including postage, from Tilden Press, Suite 300, 1737 DeSales St. NW, Washington, D.C. 20036)--RIF being bureaucratese for "reduction in force," or fired. May's intent is not to help you find work, but to help with the financial planning while you're between paychecks. It eases the mind to know how much money you have and how long you can reasonably expect it to last.
The sooner you start thinking about your financial situation in an orderly way, the sooner you'll take the worst pressure off yourself.
Start your survival planning at the office, by finding out how large your final paycheck is likely to be. You should have severance pay, money for vacations not taken and the cash equivalent of two-weeks' notice.
If your company hasn't given severance pay in the past, have a talk with your supervisor about it. "Initially, my suggestion received an icy reply," one D.C.-area reader wrote me recently. "The conversation ended with what I considered a brush-off." But later her boss called and asked her amiably what she had in mind. "Just a few days later I was told that the president of the company had agreed to it," she wrote. "As a result of my breaking the ice, others who were laid off after me received severance in keeping with their years of employment."
If you have a loan from the company credit union, it may be deducted from your final check. You can usually arrange to stretch out payments on the amount remaining.
You should apply for unemployment benefits right after your last day on the job. You'll need your termination notice and Social Security card. There is usually a one- or two-week waiting period before checks start: They'll generally continue for 26 weeks or more, depending on the severity of unemployment in your area.
If you qualified for payments under your company's pension or profit-sharing plan, ask if you can receive the money in a lump sum. Such distributions are favorably taxed and can cushion the family while you look for work.
Don't skimp on health or life insurance. This may be the time you need them most. Consider converting your company health plan into individual coverage (you might be able to lower the cost by taking a higher deductible). And protect your family with an inexpensive term life policy.
Then sit down with your checkbooks and bank statements and figure out where you stand. You'll need a bare-bones survival budget for the weeks ahead, plus a list of all your possible sources of income. Look for sources of cash, starting with earnings from other family members, unemployment pay and money in the bank. If you're due an income-tax refund, you can get that money by filing your tax return right away.
Next consider loans. "A good rule of thumb is to borrow on assets before selling them and to borrow from family before trying financial institutions," May said. When you set your list of expenses against the income expected from cash and loans, you'll be able to see exactly how long your assets will last.
One strong suggestion from May: Don't stint on job-search expenses. You'll need money to travel to job interviews, consult employment specialists, photocopy resumes and perhaps take job contacts to lunch. One comfort is that such expenses can be deducted on your income-tax return.