Thursday, July 24, 1997
The Bull Market is
Ending in My Office
by
DrMovieGuy
I found myself part of a cultural phenomenon the other day -- a new experience, since usually I'm in the minority on, say, the Dennis Rodman-is-a-fascinating-human thing.
I've seen half a dozen articles in the last month about how businesses can't find enough qualified workers: on the high-tech factory floor, where the 5th-grade reading level a high-school education guarantees these days doesn't cut it; in middle management, where guys who were downsized at $50,000 are getting their next job not at $30,000 as they feared, but at $65,000; and even at the CEO level, where companies who hacked away all those vice presidents suddenly find a shortage of seasoned in-house candidates to make into presidents. (Whoa, who'd have guessed that? No way to see that one coming.)
All I can say is, mass media, welcome to my life. I'm an advertising copywriter. I got downsized in the fall of 1995. I started tentatively to look for a job right after the new year and found, to my moderate surprise, agencies flinging themselves at me right and left, desperate for experienced writerly help in this postliterate age. Eighteen months later, Newsweek has caught up with what I discovered then; it's a seller's market for the right people in the right fields.
So, of course, I took advantage of it, cut myself a better deal. And that, more than any pronouncement Alan "The Human Magic 8-Ball" Greenspan will ever make ("Too Soon To Tell, Says Fed Chairman"), spells the end of the Great Bull Market of the 90s. I killed it.
Look at the agency that downsized me. They cleaned out a whole lot of people at my level -- 10 years or so in the biz, steady raises all those years -- and replaced us with kids fresh out of school. They figured, a few $150,000 hotshots plus a lot of $25,000 kids is as good as (and a lot cheaper than) a few $150,000 hotshots and a lot of $75,000 people creeping toward middle age. And right away, they saw profits zoom. Great idea, huh?
Two years of chaos and mass demoralization later, they have lost something like half a billion in billings, the hotshots are fleeing in droves, and desperate to deepen their bench strength, they're out actively beating the world for people with experience, hiring people a whole lot like me, and having to pay $20,000 more to lure them to what now looks a lot like a sinking ship.
My ex-agency may be enough of an extreme case that its woes have been written up in Fortune, but I see every reason to suspect that it's merely at the cutting edge of a swinging pendulum. Companies got both real long-term benefits and temporary scared-workforce productivity gains out of the wave of downsizing. The real benefits may still be there, but the workforce is no longer scared; it's cutting itself a better deal (a trick it learned from ludicrously overpaid CEOs). People are abandoning the companies (like my old agency) where downsizing wreaked only chaos and made the daily grind too grinding to bear. They're repaying management's me-first mentality with the same. They're demanding a piece of the riches the shareholders have been getting.
And that's the end of the bull market, not the way all the experts say, that worker's salary demands will fuel inflation and Alan Greenspan will hike interest rates to cool it, and that will slow growth. It's actually much simpler and more direct than that; the short-term profits that fueled the bull market are being redistributed to employees, not completely, by any means, and not fairly or evenly, either -- but enough to call a halt to annual double-digit earnings growth, and to a bull market.
You can argue whether that's good or bad (and it will be fun watching as diehard champions of a free market suddenly decide that workers' demands are out of control and government must do something). I happen to think it's only fair and high time, and that a little reality and more widely distributed wealth will be good for the market (and the country) over the long term, but that's arguable. What isn't arguable is that it's happening, in enough industries to matter, and most of all in the knowledge-based industries that have led the boom. The bull market is ending in my office, right now.
Michael Gebert