Laid Off to a Rude Awakening
HILLSBOROUGH, N.J. - As chief financial officer of a top New York advertising agency, Jeff Boose boasted annual pay exceeding $400,000, a spacious office and a lifestyle to match.
Boose and his family live in a sprawling house in this affluent suburb, belonged to a country club and took numerous lavish vacations each year.
But since he was laid off in late summer 2008, they've made a head-spinning pivot. It's no surprise the country club membership, the vacations and a Volvo sport-utility are history. More tellingly, the Booses question every dollar they spend, sometimes eating pancakes for dinner and borrowing from their parents to pay the bills.
Boose, 43, is equally dumbfounded by his inability to land a position despite a resume brimming with accomplishment and a steady, 20-year rise to the upper echelons of Corporate America.
"I never thought this would happen to me," says the burly, easygoing Boose. "It's a punch in the face."
Highly compensated executives such as Boose, a group typically insulated from heavy job losses during recessions, have been hit much harder in the current slump, experts say.
"Relative to a typical downturn, this has been a much more egalitarian recession," says Lawrence Katz, a labor economics professor at Harvard University.
To be sure, the carnage has not been nearly as widespread for senior executives as for those at lower levels. And they generally have bigger financial cushions that often include generous severance packages and substantial nest eggs.
But they're competing for far fewer positions - keeping them out of work longer, in many cases - and grappling with professional failure for the first time in their lives. They're also saddled with significantly higher expenses, such as large mortgages.
As Boose has found, severance and retirement savings can eventually run dry, making for a more dramatic adjustment.
The Labor Department doesn't track unemployment by salary level, but some barometers suggest those earning $150,000 and above are feeling more pain than usual. The jobless rate for chief executives averaged 3.4% in the third quarter. That's below the U.S. unemployment rate of 10% but higher than the 2.1% jobless rate for CEOs in the third quarter of 2003, when unemployment born of the 2001 recession was peaking.
Similarly, unemployment for all management workers was 5.1% in the third quarter, vs. 3.4% in 2003. Katz cites severe job cuts and consolidation on Wall Street during the financial crisis, as well as a deeper slump that prompted panicked employers to slash costs, and in some cases, view high earners as big targets.
Some firms reassigned executive duties to middle managers, easing the need to reinstate top-level jobs at least until they gauge the strength of the recovery.
Many senior executives, meanwhile, "don't know how to look for work because they never had to," says Matt Bud, chairman of the Financial Executives Networking Group. Many were with their companies for decades or were recruited by executive search firms. Those 50 or older often face age bias, Katz says.
Boose, who has a master's in business administration, began his career as an analyst at Moody's Investors Service with a goal of earning $100,000 a year by the time he was 30. He blew past that milestone at 28, rising to become CFO of Grey Healthcare, a unit of WPP Group, a British-based ad giant, at 35.
In 2007, Momentum Worldwide, an event sponsorship company, recruited him to be CFO after winning a bidding war for his services with WPP, which brought Boose a 30% raise. He increased its available cash by 20% and widened the profit margins of clients such as Budweiser and Microsoft.
The Booses' lifestyle grew proportionately. They moved from a tiny apartment to a townhouse, then to their current 4,000-square-foot brick house here on a quiet, winding street lined with expensive homes, having four kids, now ages 7 to 14. Several years ago, they began splurging on vacations, taking seven a year to places such as Hawaii and Costa Rica, and spending $500 a night at the Four Seasons. They joined the country club in 2007.
"Every year, the bonus got better, the salary increased steadily," Boose says as he and his wife, Karen, sit in a family room dominated by a large Christmas tree and a 52-inch flat-screen TV, the thermostat set at 66 degrees, on a recent weekday. "I just never thought it would end."
But as companies chopped advertising as the financial crisis deepened last year, Boose, a relative newcomer to the firm, was laid off. He wasn't worried.
"I thought I would be easily employable," he says, noting that a day later, the family took its annual trip to Hilton Head. By January, he realized, "This isn't going to be as easy as I thought."
Boose has sent out 300 resumes, mostly for CFO jobs, answered hundreds of online ads and enlisted top executive search firms. He's come in third place for two spots, second place for four and was the lead candidate for a job that was put on hold.
His main obstacle? "There's only one CFO position" at a firm.
Meanwhile, so many executives are job hunting that employers are being extraordinarily specific about their requirements. Boose lost out on a CFO job at an ad agency because he didn't have "interactive media" experience.
"Before, if you had eight out of 10 things, you were in good shape," he says. "I start to question if my skills are as good as I always thought them to be."
Each month or two, he has reduced the salary he's willing to accept by about $20,000.
The Booses, meantime, have gradually, sometimes painfully, downsized their way of life. In late 2008, they suspended the country club membership, stopped maid service and didn't schedule anymore vacations. In the spring, Boose laid his own mulch in the yard instead of hiring a landscaper, saving $500. Last summer, they turned off the air conditioner and axed their DirecTV NFL package.
Recently, they put off their kids' semiannual (AT)dental checkups and braces for their 11-year-old, Emily. They didn't put up their outdoor Christmas "icicle" lights to save power.
"If he comes home with a sandwich for lunch, I'm like, 'Why did you spend money on that?' " Karen says. "It's not the stuff I miss; it's the insecurity, the not knowing."
The kids are feeling it, too. Christmas lists were halved to five items. Still, Jillian, 10, said, " 'Mom, you can take off two things, cause that's a lot of money,' " Karen says. "They know, and that breaks my heart."
Jeff, whose $450 a week in unemployment runs out in March, adds: "When you read about people who can't afford to buy food you said, 'How do they do it?' Now, we're living day by day."
Gone are the couple's $200,000 in retirement savings and Jeff's six-month severance. "People say you should have three months in reserves," Karen says. "We had that, and it didn't do any good. No one says (have) 15 months."
Boose, meanwhile, struggles with the loss of professional stature. "I've been used to being in firms that make and spend a lot of money and meeting with very senior people. Now, I'm looking at the guy in Home Depot, thinking how lucky he is to have a job."
Their ravaged balance sheet has strained relationships with friends still enjoying the good life.
"We're kind of on the outside with everyone still taking vacations," Boose says. "They know we're not going to spend $200 on dinner, so they don't even ask you. Then you feel slighted that they don't even ask."
The travails of some senior executives have been compounded by the housing downturn. In 2005, Dave DeGeorge was recruited by Prudential Real Estate and Relocation Services to be vice president of information technology development. DeGeorge moved his family to Phoenix from New Jersey, buying a new $750,000 house loaded with amenities to ease the transition for their two boys, ages 9 and 13.
He was laid off in late 2007 just as the real estate market tanked. His house is worth half of what he paid. While DeGeorge, 53, has had periodic contract work, the wages don't approach his former $215,000 in pay. He now collects $265 a week in unemployment. Besides $75,000 in credit card bills - about $50,000 rung up after he lost his job - he owes a $4,500 monthly mortgage payment that he's seeking to modify.
"I was really in denial for a while, and what I did was try to maintain the same lifestyle with some cutbacks," he says.
Since he owes far more than his house is worth, DeGeorge can't sell it, forcing him to limit his job search to the Phoenix area. And he can't get a home-equity loan to pay off his other debts. His wife recently took a part-time job at Barnes&Noble, and DeGeorge filed for Chapter 13 bankruptcy protection. Unlike Chapter 7, which lets a debtor relinquish his assets and walk away from his debts, Chapter 13 sets up a long-term payment plan.
"It's extremely tough," he says. Before, "I borrowed, I paid back." He routinely paid his credit card bills with a yearly $55,000 bonus.
Low-key on background
Some try to break the executive-suite logjam by targeting growing industries such as health care.
Doug Ryan, 43, who lost his job in May as finance director for a top energy and mining concern, barraged health care firms with his resume. Little good it did in a market flooded with out-of-work executives of every stripe.
"They're dead set on hiring people with health care experience," says Ryan, of New Orleans.
Others seek jobs at lower corporate rungs.
Since losing his marketing director position at a publishing company last year, Fred Cecala, 44, of Mount Prospect, Ill., has applied for slots that pay at least a third less than his former $150,000 compensation.
"Every hiring manager tells me, 'You're way overqualified for this . . . and we know when the market turns around, you're going to leave.' You can't win for losing."
To combat the bias, executives sometimes downgrade titles or achievements on their résumé. Chris Campbell, head of the Executive Network Group of Greater Chicago, advises against that, noting employers can easily do background checks. "Inevitably, they question your . . . integrity."
A few find refuge at small start-ups. "It's not going to pay as much, but some of these folks are getting in on the ground level and getting equity," says Scott Kane, founder of Gray Hair Management, a career coaching firm.
Many give up, and launch franchises or consulting firms. Campbell, a former senior vice president at Mattel, earns half as much consulting, but, "I enjoy it twice as much. I work with a variety of customers."
To make ends meet, some executives take unusual part-time gigs. Nicholas Tucker, of Wilmette, Ill., worked behind the counter at See's Candies this holiday season after he was laid off last August from his job as project manager at a health care service company. He put in 15 hours a week - at $10 an hour, a far cry from his former six-figure salary.
"I'm not too proud," says Tucker, 58, who lives with his teenage son. "The fact is, I'm meeting people, helping them make choices. The skill set is no different than in business, and it beats the hell out of sitting at home."
Meantime, the market for upper managers seems to be brightening.
Sales for Korn/Ferry International, the top executive search firm, rose 20% its last fiscal quarter, vs. the previous quarter after falling 50% during the recession, a sign employers have more senior executive slots to fill.
Yet, even after Boose lands a position, he and his wife say they won't return to their old lifestyle.
"My Coach bag, my $150 woven baskets, my designer pocketbooks that sit in my closet," Karen says. "They just seem so silly now when they were so important before."
Adds Jeff: "We've seen the other side of it."