Thousands of stockbrokers, lawyers, computer programmers and other white-collar workers are losing their jobs in New England during an economic slowdown some analysts are calling the "yuppie recession."
In Massachusetts alone, 5,000 more middle-income workers were fired than hired over the last 12 months. In all of the Northeast, more than 60,000 such jobs were lost, and the toll is sure to soar as the recession spreads.
Those layoffs signal a dramatic reversal of a decade of growth in financial, real estate and other white-collar jobs here and elsewhere. "Unless there is a miracle," New England "will end the year with a loss in service-sector jobs for the first time since we've been keeping records," with a high proportion of the reductions coming in the highest-income jobs, said Anthony Ferrara, who runs the Boston office of the U.S. Bureau of Labor Statistics.
Felix Rohatyn, the investment banker who helped rescue New York City from fiscal ruin more than a decade ago, said, "This recession is just savaging the financial services and related industries like law, accounting and real estate. The ripple effect is going out into retail stores, restaurants, luxury shops. ...
"It has a very devastating economic impact and a shocking social impact on people who all of a sudden see their incomes go from six figures to practically nothing."
Victoria Ogden never earned six figures, but she had risen from reporter to executive editor during 13 years with the Harte-Hanks newspaper chain. "You think you're kind of recession-proof because of your years with the company and good reputation, then all of a sudden the job that defines a great deal of who you are is gone," said Ogden, whose position as executive editor of the Daily Transcript in Dedham, Mass., was eliminated as part of a recent austerity program.
Stockbrokers, bankers and many others in the financial world rose so high during the boom years of the 1980s that they were bound to fall when the economy softened, analysts say. The only surprising element is that it took so long for reality to catch up with them.
"Immediately after the stock market crashed in 1987 the clerical force was reduced" in investment banks and brokerages, said Edward O'Brien, president of the Securities Industry Association, the trade group for those industries. With the latest setbacks on Wall Street, he added, "firms needed to cut costs by going to the second level ... so investment bankers lost their jobs, lawyers lost their jobs."
A total of 13,000 employees were laid off at brokerage houses and investment banks nationwide between the second quarters of 1989 and 1990.
Meanwhile, in real estate, "the whole growth in the 1980s probably could not be sustained," said Ferrara. "It was too much of a good thing."
White-collar workers also are more likely to be laid off simply because there are so many more of them around. Together with other service workers, they make up 70 percent of the national work force, up 4 percent in just eight years, while manufacturing, construction and other blue-collar trades have dropped 3 percent.
That trend is even more pronounced in New England, where high-tech, health-care and other service industries have replaced the mills and manufacturing facilities that have dominated from the dawn of the Industrial Revolution.
"This is not the recession of 1982 or 1975, when Massachusetts was a predominantly manufacturing state," said James French, commissioner of the state Department of Employment and Training. "Our work force has changed so dramatically that when you look at the over 100,000 jobs lost last year, you see a growing percentage are white-collar."
The loss of those higher-paying jobs also has a greater ripple effect on the economy than when lower-paying workers are laid off. Lawyers and bankers, for instance, are more likely to go out to dinner, shop and otherwise spread around their money in ways that help other businesses during heady times and severely hurts them when the spending stops.
That does not mean white-collar workers are the only ones suffering. Employment in New England's construction industry fell 16 percent over the last 12 months, while manufacturing suffered a 4.6 percent loss.
The reduction in white-collar jobs, however, is much more unusual -- even during a recession. Job losses among managers and professionals, for instance, are 8 percent higher than in 1982, while they are up 16 percent for technical and sales workers.
How long will things stay this bad? Some economists predict an upturn next year, but Ferrara was skeptical: "The fear now is that the nation is entering the same kind of downturn, and for us that would be like getting hit with the second barrel."
Being fired from any job is tough, but analysts say it is especially devastating when it happens for the first time and is entirely unexpected, which is the case for many white-collar workers.
"Blue-collar people in manufacturing and construction have an understanding of unemployment and unfortunately have accepted it as part of being in those professions," French said. "For white-collar people in the service sector, it is a radical change to experience layoffs."