Surviving a Layoff
by Paul Keegan
May 11,
2009
After being laid off, Carl Clay was lucky enough to find a new position. Just one problem: It ends in 10 months.
Last fall Carl and Brenda Clay thought they had their financial life under control. After years of struggling to support themselves while Carl got a Ph.D. in molecular medicine, they were finally earning enough to start paying down student loans and credit card debt and saving in earnest for retirement.
Carl, 36, made $135,000 a year, plus bonuses, as medical director for a pharmaceutical communications firm. Brenda, 37, chipped in another $14,000 as a teacher's aide. And the couple had more than they'd hoped for: three beautiful kids; a lovely split-level home in Wilmington, Del., with a recently renovated kitchen; two new cars; and three cats, a dog, and a turtle named Snickers.
But a few days after Christmas, Carl was called in by human resources: His company was downsizing. He was being laid off. "I was stunned," he says. Despite the economy, the firm had seemed to be doing well.
When he told Brenda, she tried to be optimistic. And when he gathered Eric, 11; Hannah, 9; and Mark, 8; the next morning to explain why he was still home in his slippers, Mark hugged him. "It's okay, Daddy," he said. "You'll find another job."
Two months later, however, Carl had few leads and no offers. The pharmaceutical industry was suffering—and so was he. With no emergency savings, the Clays had burned through Carl's two weeks of severance. His unemployment benefits and Brenda's salary were hardly enough to get by on; they were buying groceries on credit.
Just as Carl felt at his personal nadir, the phone rang. It was a temp firm calling about a résumé he'd sent to pharmaceutical giant Astra-Zeneca: Would Carl be interested in a 10-month contract job directing clinical trial publications for close to his old salary of $135,000 a year?
"I was thrilled," he says.
Then he read the fine print: He'd technically be an employee of a temp firm, Yoh Staffing, which offers no 401(k) plan, no bonuses, and no vacation (besides six paid holidays). He'd have to pay for his own health insurance. And, of course, if his contract wasn't renewed, he'd be back in the same boat in 10 months.
Still, Carl felt he had no other choice. He took the job.
In this economy he's probably not the only one who's been forced into temporary work: The number of unemployed people who've accepted short-term assignments is up 73% over the past year, reports the Bureau of Labor Statistics.
Trading full-time staff for freelancers and contractors lets businesses cut the cost of benefits and payroll taxes. It also gives companies the flexibility to adjust headcount according to economic demands, says James Ziegler of Solo W-2, which provides services for independent professionals.
A few months into his new job, Carl likes the work he's doing. But he can't help feeling unsettled. He's full of questions: How can I get hired? How do I budget knowing my salary might again disappear? What about saving for retirement? The following answers should help him—and you, if you end up in the same predicament.
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