Financial Turmoil and Your Job Prospects

Startling news this past week, Readers. We will all be figuring out the implications in the days and months ahead. The country came perilously close to a complete financial meltdown, and, I’m afraid, we are not completely out of danger yet.

So I’d like to briefly explain how this crisis impacts the companies you work for, even if you are far, far away from Wall Street, and then let you know how this is going to impact your job prospects in the months ahead. When large forces beyond our control determine such a large part of our destiny, the sense of uncertainty and unease grows. I hope I can help reduce some of that unease...

Well, you’ve seen the headlines. The bad bets of fancy speculators finally caught up with them, and the losses started mounting. And the problem grew as people started worrying about all sorts of investments related to the bad ones. Write-downs followed write-downs, and the financial health of many investment firms declined.

It came to a head last week.

The bankruptcy of Lehman Brothers caused one of the money-market funds – the “MMA” accounts that you might be sweeping your cash into in order to get a slightly higher return on your money – to “break the buck.” So your dollar invested in that particular money market was now worth only 97 cents. That is, the account that we all thought was safe turned out to be not safe.

As a result, reasonable people like you began, not surprisingly, to withdraw cash from MMAs and put it into super-safe investments like government bonds and gold. At one point during the week, some government notes were trading at a negative interest rate – that means people were willing to pay more than a dollar today to make sure they got back their dollar in thirty days!

Extraordinary times, indeed.

Because this “money market” has historically been very, very, very reliable, operating companies had come to depend on it for daily financings of really mundane stuff – buying inventory, financing payables, funding payroll.

So with MMAs draining cash, the real operating companies of the country, from the Fortune 1000 to your local beer distributor, began to find that the funds they needed to operate their daily business were not there, or were priced with ludicrously high interest rates. As a result, real companies, not just those on Wall Street, were facing a dire situation.

By Thursday evening, it got so bad that Secretary Paulson and Chairman Bernanke went to Capitol Hill to explain the situation to lawmakers. Senators present commented they were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.” Another said: “History was sort of hanging over it, like this was a moment.”

In the absence of action, what we would have faced this week were real companies unable to do business. Unable to buy inventory, unable to pay their bills, unable to meet payroll.

Thankfully, the plan announced Friday has reduced the impending panic for the moment. But I’m afraid we may see further difficulties in the months ahead. It is rare for a great trouble to end with a quick fix.

And, so, what does that mean for you and your job prospects?

Get prepared. If you’re looking for a job – whether you’ve been laid off, are looking for new challenges, or just anxious about the state of your company or industry – the best advice I can give is to get prepared. When economic uncertainty clouds the skies, it can lead us to feel very uncertain, and very worried ourselves. Information and preparation are the best ways for you to reduce that feeling.

Get your resume together. We have loads of free advice on writing a resume in our Career Advice section, and we have the largest network of resume writing professionals in the country standing by to help you put together a professional resume that really markets your skills, rather than just listing them.

Define what you want and focus on those types of opportunities. It’s easy to waste a lot of time on the internet applying for and following up on all sorts of interesting sounding jobs that are far afield from your specialty. Heck, we have over 70,000 jobs on the site right now, and sometimes I get drawn in to surfing through them because it’s interesting to find out who’s hiring and for what.

But that is a big distraction, folks, and it squanders the precious time you have for job-hunting. Employers want to hire people who are focused on doing the job they are hiring for. So you have to decide what your focus is and concentrate on that.

Don’t despair. A recession, if a recession is coming, definitely makes for a more challenging job market. But when you look at the big picture you may get a different view. In a typical year, U.S. employers hire about 4 million people at the $100K+ level. In boom times, that can get as high as 4.5 million. In a recession, it drops to 3.2 million or a little more. That certainly is a big swing, but when you realize there are still 3.2 million chances in a bad year, I hope you’ll agree with me that the situation is not completely hopeless.

If change is needed, change now. One thing we can learn from Secretary Paulson is that changing quickly in the face of a great crisis can lead to a not-as-bad outcome. Secretary Paulson has long been against government intervention in markets, but with the writing on the walls this past week, he adjusted quickly to the circumstances and changed his course of action (as outlined in really great detail in this New York Times article.)

Similarly, if you are in an industry or company that is going to be facing difficulty, if the “writing is on the walls,” the time to act is now. Sometimes we hope that just waiting will make things better, or that we can tough it out. But if the underlying business that provides your job is going away, it is far better to take your lumps now and get moving. The situation will only grow worse.

Get active. When we look into the people who have had the most success on TheLadders, it is those folks who have applied to a few dozen jobs, related to their past experience, in industries or geographies that make sense. Sometimes, we’ll find that people report no success, and when we look into it, they haven’t contacted any recruiters or applied to any jobs! TheLadders.com is an active system, and it requires that you take the lead in sending your information out. We’d love it to be a system where you can just sit back and watch the offers roll in, but that’s just not the reality. You need to take an active part in creating your own success.

OK, Readers, that’s a long email for a Monday, but I hope it proves constructive for you as we all negotiate our way through the times ahead.