The Company of One

How the out-of-work elite fights a jobless recovery that has left others powerless
By Jonathan Adams
Newsweek International

Issues 2004 - Michael Lang gave up on the traditional job market in late 2002 after interviewing at least 10 times in four months for a position with far less status and pay than his old job: founder of the Internet start-up, and before that, COO of “All the leverage has shifted completely to the employer now,” says Lang. “Not only can they negotiate much harder on terms of compensation, but there’s times when you won’t hear from them for months.” After recession hit in 2001, clout in the white-collar job market shifted away from senior executives who spent the boom years demanding crazy perks, from the right to bring their dogs to work, to gyms on the job site. “During the 1990s employees had the power, and they used it to the hilt,” said Kate Wendleton, president of the Five O’Clock Club, a job hunters’ network in New York. “Now the employer has the power. And guess what? They say, ‘I’m going to work you to the bone, and just be glad you have a job, and if you get a divorce it’s a sign of your devotion to the company’.”

Yet to a surprising degree, top executives have been thumbing their noses at recruiters who now demand sacrifice. The United States has produced 4 million fewer jobs than expected at this stage in the business cycle, two years after the end of a recession. Many Americans fear that the “jobless recovery” is threatening to become a jobless economy, as companies either replace knowledge workers with computers or send their jobs to China and India. Yet rather than lower expectations, many senior executives have simply opted out of the traditional job market and gone into business for themselves. The outplacement firm Challenger, Gray & Christmas has seen a recent surge in entrepreneurship among unemployed high-fliers (those previously making $100,000 or more), with 15.1 percent starting new businesses in the third quarter of 2003, compared with just 11.3 percent in the previous quarter. And the high-rollers are 94 percent more likely to start businesses than their more junior counterparts.

Lang is a case in point. He started a consulting business, teaches a course on small-business management, assistant-coaches varsity basketball at Claremont McKenna College, spends more quality time with his wife and takes his two black Labradors down to the Manhattan Beach, California, dog park every morning. “I basically came to the conclusion that even if I could find an opportunity at a traditional firm, it wouldn’t get me excited relative to my consulting projects,” says Lang.

Now there’s anecdotal evidence that this sideline strategy is paying off. Since August, Wendleton has seen an influx of employed people back into her club, looking to change jobs—a trend reminiscent of the end of the previous recession in early 1992. And L.A.-based executive agent Neal Lenarsky talks of “corporate anorexia,” whereby businesses just can’t operate any leaner. “If they don’t start feeding, they’re going to have to go to the emergency ward,” says Lenarsky. Those companies that are feeding seem to like their meat aged. Challenger reports that unemployment for workers 55 and older is the lowest of any age group and falling, while unemployment has risen this year for those 25 to 44. And senior workers are facing much shorter job searches and getting fatter paychecks than the whippersnappers.

Some of the seniors have quit the rat race, insisting on a career on their terms. When his Silicon Valley software start-up went belly-up in April 2002, Al Hulvey found himself at loose ends. But he soon grew to enjoy the freedom. He became more active in his church and in outreach to Bay Area immigrants. And every other day, to help fill the time, he hikes up Mission Peak, the 670-meter-high mountain near his home in Fremont, California. The companies he does interview with are being far more selective, but so is he. Now he’s also looking to start up or buy a company, and will take a traditional job only if it’s the right fit. “In today’s business environment you can’t just do one thing,” says Hulvey, who is in his late 50s. “You’ve got to look at yourself as a corporation of one.” For those with job expectations held over from the fat years, that may be the only satisfying option in the lean.

Newsweek, February 3, 2004