Archive for February, 2009
Business, Finance, and Careers Issue: Bankruptcy and other bad news
Last year, I wasn’t too picky about where I worked — because I couldn’t afford to be. That’s why I ended up working the weekend closing shift at a Hollywood Video store in El Cajon. It was one of three part-time jobs I had at the time and it’s a good thing I had the others as backups. The company filed for Chapter 11 bankruptcy and closed down more than 1,000 stores in an eight-month period. The store I was working at was one of them, so I was “let go,” with fondest regrets.
My story is not abnormal. As businesses struggle to survive our economic woes, they are forced to resort to unpleasant tactics — namely, shedding any excess expense. That means canceling grand openings of new locations and shutting down enterprises that aren’t producing enough profit.
Many recent headlines have flashed familiar business names paired with the word “bankruptcy.” Mervyns filed for Chapter 7 bankruptcy, which means it’s actually going out of business. Mervyns began liquidating its stores last semester and Circuit City began liquidation of its new stores this month. This is good news for bargain hunters who can find deeply discounted merchandise at liquidations, but it also causes sadness and fear. Shoppers are sad to hear about at the loss of well-known small businesses such as local favorite San Diego burger chain Boll Weevil, which also filed for Chapter 7 in December.
Consumers also have fear when they see the loss of former industry giants such as the Tribune Company, which owns, among other things, The Los Angeles Times and The Chicago Tribune, newspapers with circulations of more than 700,000 and 500,000, respectively. The Tribune Company filed for Chapter 11 bankruptcy in December, which will allow it to reorganize its company. Although it is not going out of business yet, it’s hard not to fear what its bankruptcy means.
The bad news for workers is that one of the best ways for businesses to avoid having to file for bankruptcy — or if they do file, avoid going out of business — is by cutting costs, and that means cutting stores and jobs.
Barratt American, one of San Diego County’s largest home-building companies, not only filed for Chapter 11 bankruptcy, but also cut 90 percent of its staff — from 140 employees to only 15. Sprint Nextel is aiming to cut 8,000 positions, and Microsoft recently announced that it would be slashing 5,000 jobs. And that’s not even counting the thousands of blue-collar, construction and factory jobs that most college students don’t apply for Blue-Collar and other jobs are being cut even more heavily, while the remaining workers are rarely called upon because of the housing downturn.
About 2.6 million workers became unemployed in 2008, causing an increase in the unemployment rate to 7.2 percent. That’s not the worst it’s ever been, but it’s still worrisome for soon-to-be graduates looking for his or her first “real” job, or for those who are struggling financially and want to bring in some extra cash. Many of us who don’t have credentials yet still rely on entry-level retail and food service jobs for income we find ourselves competing against managers laid off from other stores and other highly qualified employees.
My solution is the best one I’ve found: Don’t rely on just one job, because it may not be there when you need it. Get a few part-time jobs so you have a safety net. Keep your résumé circulating when your company is in trouble, even if you haven’t heard of layoffs yet. Then, if the axe comes, it doesn’t hurt as much.
Read the original feature online here.
