Monday, October 08, 2012

RIFty Fifty

It's not personal, it's just that wages are sticky ...

Poorer but Wiser After a Year of Unemployment -

They are skilled workers who should be at the top of their games, their incomes peaking as they approach retirement...

... For the last 20 years, after each recession, workers have been hired back at lower salaries, with the baby boomers losing the most income. Unfortunately, it makes sense. People that age hold the most senior jobs and make the best salaries. Lowering their compensation saves the most money, or, as the financial analysts say, increases productivity...

Not everyone in their 50s is equally vulnerable to the RIF. [1] Senior leadership, for example, is expected to be between 40 and 60 years old. From a short term return-on-RIF perspective the most at risk targets are highly paid "senior" workers who are at the high end of their pay grades. Even if these workers are currently valuable, they're not going to make the leap to the next level -- that has to happen in the 40s or earlier. They're not going to get more productive either; most corporate knowledge workers are probably maximally productive around ages 45-50. So there's a pretty good return on the RIF.

Kind of sad if you're the one wearing the arrow, but that's the nature of the hive. In the ancient world wages rose until retirement, in the less sentimental world of 2012 they're likely to peak around 50 and fall from there.

So what should we do about it?

One reasonable response is just to gather ye rosebuds while ye may. After all, none of us gets out this alive. Take the family vacation, spend the money, enjoy it while you can. Winter will come, but Fall is sweet. When the RIF comes, expect to dye hair, chop all dates from your resume [2], and find a lower paying job.

There are other responses of course; but at this age circumstances vary a lot. Sometimes it might, for example, make sense to switch employers and trade current income for a better long term employment picture. I like to get the house paid off, so income loss need not mean house loss. Most of the time, though, it makes most sense to ride the horse until it dies. Then live more simply.

[1] Reduction in Force. Nobody is fired any more, they're simply part of a 'reduction in force' that just happens to catch the expensive or the unwanted (best of all - both at once). Many corporations, perhaps most, routinely "RIF" about 6-10% of their workforce every year on the principal that a little bleeding strengthens the body.
[2] LinkedIn profiles are the worst. They require years of attendance to be attached to schools, which makes age calculation pretty trivial. FWIW, i just chopped all schooling from my resume and all positions > 10 years past. 

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